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Posted by mmurrell on December 27, 2007, 6:52 pm
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My client used his HSA to pay his HDHP insurance premiums. He was
completely unaware he could not do that. It amounts to about $7,000
and the checks were written out directly to the insurance company. He
has at leaste that much paid out in "qualified medical expenses" from
his personal checking account
Do you think he could just refund the HSA for the insurance premiums
and request reimbursement from his HSA for the out of pocket pualified
medical expenses he paid from his personal account....
I understand there should be a 10% penalty for distributions not used
for qualified medical expenses, but this is a true misunderstanding on
my client's part. I was hoping for some sort of way to reimburse the
account.....I am advising the client to reimbuse the HSA an amount
exactly equal to the insurance premiums paid out, and then write a
check to himelf for the qualified expenses he paid out of his personal
account, but not in excess of $5500....what do you think?
I worry the bank (trustee) will not know how to code the
reimbursement, and we could open things up even more.
The client also over contributed to the account. He contributed about
$5400. This is for an individual over the age of 55 but under the age
of 65. I understand the contriburtion limit is $3650. I am advising
the client to withdrawal this excess with it's earnings before April
15, 2008....would you agree with this advise?
Any thoughts and help is appreciated
Marie
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