HSA Reimbursement

Adam_1234

I contributed the maximum amount allowed to my HSA at the beginning of the year. I spent $200 on glasses, and my insurance company sent me a $100 reimbursement check. How do I deposit that check into my HSA without the IRS thinking that I’ve over contributed? Thank you.

Austyn

Hello,

Great question! The key here is whether you paid for the glasses using HSA funds or personal funds.

If you paid for the glasses with HSA funds:

You'll want to contact your HSA custodian (the bank or institution that holds your HSA) and let them know:

"I received an insurance reimbursement for a medical expense I already paid from my HSA, and I need to redeposit it as a return of an improper (or mistaken) distribution, not as a contribution."

When you redeposit the $100 this way, it's treated as a corrected distribution rather than a new contribution, so it won't count against your annual contribution limit. The IRS won't see this as an over-contribution.

If you paid for the glasses with personal funds (not HSA funds):

In this case, you wouldn't deposit the insurance reimbursement into your HSA. Since you didn't use HSA funds for the expense, and insurance reimbursed you, the expense isn't eligible for HSA reimbursement. You'd simply deposit the check into your regular bank account.

The important distinction is that HSA funds can only be used for qualified medical expenses that aren't reimbursed by insurance. If insurance covered part of it, that portion isn't HSA-eligible.