? - HSA distribution

#3 09-26-2005, 04:13 AM

George wrote:

- quote -

> I've had an HSA (nee MSA) for quite a while, and never been
> sure I really understood it. Other rules aside, it appears
> that I could take a distribution and make an equal
> contribution in the same year - effectively converting
> medical expenses which are less than the Schedule A
> threshold into 'deductible' expenses.
> This seems to give my medical expenses a privileged status,
> compared to someone without an HSA. Am I misunderstanding
> something?

Yes. To have an excludible (from income) distribution, it
may not exceed the (previously unreimbursed) [qualified]
medical expenses that have accumulated since you opened the
account. There is no connection between the exclusion of
the distribution and a contribution, same year or otherwise.

You did understand the gist of it - in that it does allow a
way to effectively "deduct" one's medical expenses that are
under the threshold.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#2 09-22-2005, 03:49 AM

- quote -

> I've had an HSA (nee MSA) for quite a while, and never been
> sure I really understood it. Other rules aside, it appears
> that I could take a distribution and make an equal
> contribution in the same year - effectively converting
> medical expenses which are less than the Schedule A
> threshold into 'deductible' expenses.
> This seems to give my medical expenses a privileged status,
> compared to someone without an HSA. Am I misunderstanding
> something?

Well, the whole purpose of an HSA is to provide a tax break,
right? Otherwise, nobody would bother starting one.

If you ask me, Congress should've eliminated the Schedule A
threshold rather than inventing the HSA.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#1 09-22-2005, 03:30 AM

"George" <gbeccles[at]verizon.net> wrote:

- quote -

> I've had an HSA (nee MSA) for quite a while, and never been
> sure I really understood it. Other rules aside, it appears
> that I could take a distribution and make an equal
> contribution in the same year - effectively converting
> medical expenses which are less than the Schedule A
> threshold into 'deductible' expenses.
> This seems to give my medical expenses a privileged status,
> compared to someone without an HSA. Am I misunderstanding
> something?

Other than the fact that people who pay for the cost of
their health insurance through their employers also are
"privileged"?

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

09-22-2005, 02:52 AM

"George" <gbeccles[at]verizon.net> wrote:

- quote -

> I've had an HSA (nee MSA) for quite a while, and never been
> sure I really understood it. Other rules aside, it appears
> that I could take a distribution and make an equal
> contribution in the same year - effectively converting
> medical expenses which are less than the Schedule A
> threshold into 'deductible' expenses.
> This seems to give my medical expenses a privileged status,
> compared to someone without an HSA. Am I misunderstanding
> something?

No, but HSA's are not the only way of accomplishing this.
So-called "cafeteria" plans do the same thing.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

#-1 09-21-2005, 05:54 AM

I've had an HSA (nee MSA) for quite a while, and never been
sure I really understood it. Other rules aside, it appears
that I could take a distribution and make an equal
contribution in the same year - effectively converting
medical expenses which are less than the Schedule A
threshold into 'deductible' expenses.

This seems to give my medical expenses a privileged status,
compared to someone without an HSA. Am I misunderstanding
something?

Thanks,
George

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

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