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I have an HSA for my HDHP to which I contribute the maximum IRS allowed pre-tax amount every year to save up for future medical expenses.

Last year (2014), I had my wisdom teeth removed, and the cost of the operation was going to be around $2,000. The healthcare provider offered a 10% discount if the entire cost was paid the day of the surgery, or you could elect to only pay half and let the insurance deal with the rest. If you paid up front, the claim would be submitted to the insurance and you would be refunded through the provider. My insurance would cover half of the cost, so ultimately I would save $100 ($2000 * 90% = $1800 * 50% = $900 out of pocket as opposed to $2000 * 50% = $1000 out of pocket). Given that the money would be absent out of my HSA and not my personal account, this seemed worthwhile.

Well, it is now 2015, and insurance being the slow beast it is, I still haven't gotten my reimbursement, though I expect it to arrive any day. But the problem is that I have received my tax forms for my HSA and it shows that I contributed $3300 in 2014 (IRS Form 5498SA) and I took approximately $2000 in distributions (IRS Form 1099SA) ($1800 for the surgery and ~$200 in other expenses). That is fine, except that $900 will be deposited into that account when I receive the refund, so my concern is that the insurance refund deposit will show up as a contribution on my 2015 Form 5498SA to the account when it is not, thus limiting my ability to contribute to the account this year.

It looks like the appropriate form to deal with this is IRS Form 8889, but as of right now I haven't been able to make enough sense of it to feel comfortable with the situation. So my question ultimately is how are normal transfers/deposits/reimbursements handled/counted for HSAs and has anyone dealt with a similar situation?

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Don't panic this happens all the time. I looked online for a form that can be used to redeposit funds back into the HSA.

This form can be used to redeposit funds withdrawn in error and cannot be used to correct an Excess Contribution Return. Funds will be posted as a correction and not as a contribution. The deposit will be entered for the year the distribution occurred.

It allows you to specify the year the incorrect distribution occurred.

I authorize Optum Bank to make the withdrawal correction indicated above. I have enclosed a check made payable to Optum Bank for the amount I’d like redeposited to my account. I understand that this can result in a possible corrected 1099-SA for the tax year indicated above.

Of course you need to get the forms for your account.

  • Do you think I should I wait to see if I get the reimbursement before April 15th so I can try to get a corrected 1099-SA or should I just file my forms as is now and deal with the refund whenever it arrives? I'm within days of being ready to file, so I don't like the idea of waiting, unless it might save me headache down the road. EDIT: Great answer, by the way :-) – StephenH Feb 3 '15 at 16:03

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