TAX EXPERTS?? Medical bills question??

[aczlan]

Tough to do anything at work today. But I need to make some calls tonight. I was reading through some IRS forms online, and it is reading like the distributions from HSA accounts are taxable as income at year end?? And I seem to remember vaguely in years past something about that on my returns. And if that is the case what's the point??

Per TurboTax last year (when I was doing our taxes) distribution from a HSA (in my case, I had contributed the money pre-tax) wasn't taxable IF it was for approved expenses (ie: medical bills).

Yeah ... thats where Im at. Alledgedly the employer contributions are pre tax and gain interest tax free. ... so you may have to pay tax on principle and intererst maybe. But what about when you supplement up to the max contribution. Thats after tax money. There, I would think only interest would be taxable. :confused2:
larry

It probbaly depends on where and how you contribute. In my case, it comes off my paycheck pre-tax and is direct deposited into my HSA account. Interest has been marginal (under $1/year), so I haven't worried about it's tax implications (other than entering it into TurboTax).

Aaron Z

 

[LD1]

I don't plan on supplementing anything with after tax money. But with the limit at something like 6000 or so for 2014, I am wondering if it is possible to contribute 500 per month pretax from check, and see about setting up a payment plan with the hospitals @ 0% for a payment of 500/month till paid off.

Obviously this will take more than a year to pay 10k in bills, so I wonder if after this first year, if they are still considered "qualified" medical expenses?

 

[randy41]

do they have a cafeteria plan where you work? just pay it through there. then it will be pretax.

 

[KubotainNH]

HSA money is really quite painless to use. I have a checkbook and 2 debit cards (they work more like credit cards, no pin), one card is in my wife's name. I am the only one who can write a check against the account. My health insurance is a 3/4k deductible plan, an MRI and doctors visits for my wife's hip issue used up that deductible pretty quickly so I set up a payment plan with the clinic and send them a check monthly. Taxes appear to be easy enough to deal with, my CPA deals with it but more because of my kids being in college than the medical aspect. I pretty much max out what can be put into the plan. It's nice to have the pre-tax money there for whatever comes up... braces, wisdom teeth, glasses and the medical stuff.

 

[LD1]

Well, problem solved.

I talked to a CPA, and he said there is no issue paying for bills from the HSA in 2015 if I go the payment plan route and the money goes straight to the hospital. He advised against paying in full now and paying myself back later, cause that would be okay for the $6,550 max this year, as I would have bills dated for 2014 that cover that. But without a payment plan, and technically not receiving any bills in 2015, it would be an issue if I got audited.

So I set up a payment plan with the first hospital. They could go 18 months at 0%. The next big chunk that will come from childrens hosp. hasnt finished processing through insurance yet.

So I will boost HSA contributions starting ASAP. Will likely have it so I hit the $6550 max around mid year. and then drop the contributions off. That way it gives us alot more in the account sooner, to take care of the slew of smaller $80-$100 bills from various doctors and such. And then set up payments for the large ones.

Then will do the same next year. Hopefully I aint missing anything. And hopefully the CPA is correct. I havent read anything that would make me think he is wrong, but it did take calling 3 different CPA's before one would even give advise over the phone. They all wanted a consultation.

 

[SPIKER]

LD1:

Great to hear ya got it figured out... Check with the company (new job & all) some of them will let you PAY OUT even if the $ is not in the account. (Not really a LOAN but they pay the bill even though you have not deposited the $ just yet as it is a paycheck withholding figured in already for the year.)

Also on the self managed IRA/Savings account, I checked my accounts today (yearly thing) and in 5.5 years I'm up 66% and 65% in the two accounts I managed for myself Happy YEP is it some work sure but I do it while watching TV most of the time so only partly watching TV and doing stock market research.


I did pretty good this year, last year was good but not nearly as so... the first 6 months I was in I lost pretty bad but gained it back over the 18 month time range (I got into markets in July 2008 one of the WORST times to get in...) Last year I was 38% and 45% overall, this year has boosted that to the 66% and 65% number (Really a great year!!!)


I think first half of 2014 is going to be similar but the election in 2014 will flatten 2nd half out if we get too many incumbents staying in office.

Mark