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Can a qualified medical expense for which the HSA account holder knows will be reimbursed by his insurance be paid from his HSA? If so, is the subsequent insurance reimbursement considered a Contribution to the HSA?

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A medical expense is only a qualified medical expense eligible for an HSA distribution if it is not reimbursed by insurance. If you know that you will be reimbursed, do not pay for it through your HSA.

Think of it this way: you can only be reimbursed for a medical expense once. Either you get reimbursed by your insurance, or you get reimbursed by your HSA, but not both.

If you pay for the expense with your HSA and are later reimbursed, you need to return the money to your HSA through a mistaken distribution repayment. This is not considered a contribution, but you need to make sure to tell your HSA provider that it is a mistaken distribution repayment and not a contribution, so that it gets accounted for correctly.

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  • If I have a medical expense that is partially reimbursed by insurance (e.g. coinsurance), can I still take an HSA distribution for the part of the expense that is not reimbursed by insurance?
    – Pwnosaurus
    Nov 10 at 15:47
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    @Pwnosaurus Yes. Any amount that you pay toward medical expenses out-of-pocket and are not reimbursed by anyone for is a qualified medical expense for the HSA. If you have a $1000 medical bill, but you have 20% coinsurance so you only paid $200, then $200 is what you can take out of your HSA.
    – Ben Miller
    Nov 10 at 19:00
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If you mistakenly pull money out of the HSA all the ones I have looked at have a mechanism of returning the funds. Sometimes they have a form, other times the doctor or pharmacy can put the money back in.

Money put back into the fund doesn't count as a contribution for that year.

You shouldn't have to pull money out that you know will just be reimbursed. But there are occasions where there is no other way. Sometimes you are not sure what the exact fee will be when visiting the doctor. In other cases you have a rebate that will only be received weeks later.

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