Recording HSA Withdraw

I'm one of those people with a high-deductible HSA (Health Savings Account). My company contributes $750 each year which is very nice of them. When I withdraw some of that $750, I'm wondering how to accurately record it in Quicken 2006. For starters, a "HSA Medical" assest account was created and at the beginning of each year, an entry is made for $750. Here is what I originally did for a withdraw but it isn't quite right.

  1. Physically, used debit card to withdraw cash from account and deposit money into checking account. Now for Quicken.

Method #1

  1. Created a transaction in the HSA Medical account reducing the asset by the withdrawn amount. The category was set to Checking Account. (I guess the opposite could have been done - Checking Account transaction as a deposit and the category set to HSA Medical.)

This flawed method has the correct amounts in the HSA Medical and Checking accounts but no budget category was involved. I'd like my "medical" category to be reduced by the amount of the withdraw. For example, at the end of the year, if there is $1000 medical expenses and all $750 is withdrawn, then the medical category should show my outlay as only $250.

I haven't tried it but here is a two transaction method that seems like it would work.

Method #2

  1. Create a transaction in the Checking Account as a deposit and select the medical expense category.

  1. Create a transaction in the HSA Medical account to reduce the asset and select the same HSA Medical account.

Is method #2 okay? Any improvements? Any way to only have one transaction?

Thanks, Tim Updegrove

Reply to
tupdegrove
Loading thread data ...

The "flawed" method is just fine, you just need to add a year-end adjustment. But first ....

Why do you want to reduce your medical expense category total? It is, after all, money you spent on medical care. There are two different questions that can be asked here: how much medical service did your family consume? and Who paid for it? The medical category(s) answers the 1st question and you don't need Quicken to answer the second - as you already know the answer.

Now for the year-end adjustment (thus keeping you to the single transfer entry throughout the year): The only thing you need to adjust at year end is taxable medical expense. Medical expense reimbursed by that $750

- AND YOUR OWN PRETAX CONTRIBUTIONS - is not tax deductable medical expense. If you are tracking medical expense for tax deductions then you already have both tax-deductable medical categories and not tax deductable medical categories, so choose (or create) appropriate categories and then at year-end make two entries for the total plan reimbursements:

medical-tax-ded -750 medical-not-ded 750

dick w

Reply to
Dick Weaver

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.