se health insurance paid by h.s.a.

Technical topics regarding tax preparation.
#1
zl28  
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client told me he paid his se health insurance with an h.s.a.

seems like a bad idea

now i'm not planing on taking a deduction for the se health insurance.

agree?
 

#2
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You may only take deductions for unreimbursed medical expenses.
Reimbursed or paid from HSA precludes deduction.
~Captcook
 

#3
WEISSEA  
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Since HSA paid health insurance premiums are not a qualified HSA expense, distribution is subject to income tax and a 20% penalty. Since taxable might as well get an SEHI deduction.
 

#4
zl28  
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wow didn't know that...do the h.s.a. folks looks to see if the money was used for something qualified?........be nice if someone alerted him
 

#5
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zl28 wrote:wow didn't know that...do the h.s.a. folks looks to see if the money was used for something qualified?........be nice if someone alerted him


Maybe his tax guy could let him know.
~Captcook
 

#6
CathysTaxes  
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zl28 wrote:wow didn't know that...do the h.s.a. folks looks to see if the money was used for something qualified?........be nice if someone alerted him

Nope. HSA doesn't know if you're buying prescription drugs or groceries with the funds.
Cathy
CathysTaxes
 

#7
zl28  
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that's itneresting...sort of a crazy system
 

#8
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Cathy, some HSA cards will decline the purchase if it is for disallowed expenses. A few years ago, my wife used her HSA credit card to purchase vitamins or something along with prescriptions and they only allowed the Rx. She had to pay for the balance with a regular debit card.
 

#9
Doug M  
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There is no gatekeeper like 125 plans.

There are exclusions for health premiums (Medicare premiums are one of the exceptions), but the health premiums that are not for Medicare are not eligible expenses to be reimbursed.
 

#10
zl28  
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actually it turns out its cobra. he was a partner in a firm, the firm dissolved, he did cobra for the insurance; wonder if that changes anything
 

#11
zl28  
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looks like Cobra is fine to pay with h.s.a. from what i have read. such a fine line between health insurance when you are self employed but the policy is not in your name; thereby disqualifying it as se health insurance...turns out client made a good move
paying for cobra with h.s.a. thank you for input!
 

#12
Jake  
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I am certainly glad that Congress is simplifying the tax code . . . .NOT!
 

#13
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HSAs are starting to have the card owner provide receipts to prove that the expense is legitimate. It depends on the company if they have implemented this requirement yet.
 

#14
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zl28 wrote:looks like Cobra is fine to pay with h.s.a. from what i have read. such a fine line between health insurance when you are self employed but the policy is not in your name; thereby disqualifying it as se health insurance...turns out client made a good move
paying for cobra with h.s.a. thank you for input!


Also since Hsa is pretax funds, you would not gain any further deduction for the premiums.
 

#15
makbo  
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Cvtaxgal wrote:HSAs are starting to have the card owner provide receipts to prove that the expense is legitimate. It depends on the company if they have implemented this requirement yet.

I don't see how that makes sense. On the one hand, even if they get receipts, what are they going to do with them? There is no form for the HSA custodian to report this information to anyone.
On the other hand, an HSA account holder can take their money out any time they want for any reason, if they are willing to pay tax and possibly penalty. So why would they need receipts?

This is different from HRAs or FSAs, where there typically is a rigorous requirement to provide documentation of medical expenses before reimbursement.

p.s. welcome to the forum, don't take any comments personally. 8-)
 


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