HSA Question

I just got a check from Blue Cross that said I was a "qualified participant in their individual deductible credit program. This exclusive program was designed to increase the value of your health coverage by decreasing the amount you pay toward your health care expenses when you need it the most. You have had deductible-related claims that make you eligible for this payment from your special incentive account." Apparently related to deductible expenses related to my cataract surgery. The questions is, since this is related to deductibles, and I paid those deductibles through my HSA, do I need to put this back in the HSA and, if so, how do I account for that? ============= If paid with the account, you don't have taxable income for the rebate.

You need to ask your custodian if they will accept the rebate as a deposit other than a contribution. There isn't a provision in the tax law (section

223) for this, but I don't see it as forbidden either. I don't recall seeing rebates mentioned in any of the IRS revenue procedures issued for HSAs.

So, can I keep it without penalty or do I have to put it back in the HSA? I talked to the custodian and they said they could take it back by just calling it rebated payments and not characterizing it as contribution or as 2012 erroneous distribution. Does this sound right? K

This is fairly common situation that occurs when a claim is submitted to an HSA before the health care insurance carrier completes processing of the claim. Thus, you have received a erroneous distribution and should return it.

Dick