USA HSA accrued qualified medical expenses

[Ryan Mulligan]

Hi.

In the USA, you can fund a Health Savings Account (HSA) with pretax dollars that you can invest. If you incur a qualified medical expense, you are allowed to withdraw money from the HSA account tax free. As long as you properly record them, you can withdraw money equal to these expenses at any later date tax free.

In my particular case, almost 100% of my HSA balance is invested in a stock market ETF.

How would you set up accounts to track the amount you can withdraw from the HSA account tax free? It seems like maybe it has to do with setting the cost basis of the ETF in the HSA, but I wouldn't be surprised if that was overly complicating things.

Sincerely,

Ryan Mulligan

[Aaron Lindsay]

Why does the cost basis of the investment in your HSA matter in terms of tracking the amount you can withdraw?

My understanding is that the amount you are allowed to withdraw is accounted using the cash value you withdraw *at the time you make the withdrawal*. If my understanding is correct, you would not need to account the cost basis of your investments in the HSA any differently than any other brokerage. The accounting of how much you are allowed to withdraw could be done independently.

What if you setup two accounts like:

  Expenses:Medical:HSA-Qualified

  Expenses:Medical:HSA-Withdrawn

And whenever you incurred a qualified medical expense, book it against 'Expenses:Medical:HSA-Qualified'. Then, whenever you pull money out of your HSA, move that same amount to 'HSA-Withdrawn'? It would probably be preferable to come up with some way to tie the two events together, but I haven't conceived of a simple way to do so.

-Aaron

[Ryan Mulligan]

Hi, Aaron.

I think I was trying to use the cost basis to tie it together, like maybe have one commodity for HSA dollars that can be withdrawn and one that cannot, but I think your solution is way simpler and will actually work. Thank you!

- Ryan

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[Martin Blais]

Yes. I was going to suggest something very similar, using a fake commodity and some level of discipline. Basically, when you spend on health care, decrease A / increase B some other pair of accounts, and when you withdraw from the HSA, decrease B / increase C. B tracks how much $ you should be allowed to withdraw from the account at any time.

A: Expenses:Healthcare:Spent

B: Assets:BalanceClearedToWithdraw  (choose a better name)

C: Expenses:Healthcare:Withdrawn

Commodity: HSAUSD ("HSA withdrawal dollars")

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[Ryan Mulligan]

Hi.

Thanks! Just so we're all clear, I made a ledger about how I would expect Martin's proposal to play out and attached it.

Sincerely,

Ryan Mulligan

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[Martin Blais]

You got it, precisely that.

If you want to get more hip (hipper?) you could modify this plugin:

https://github.com/beancount/beancount/blob/master/beancount/plugins/ira_contribs.py

which automates something similar for IRAs, or perhaps even generalize it so it's not IRA specific and can work in any such scenario.

This way you wouldn't even have to explicitly update those accounts.

I think the plugin can be generalized.

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[Ryan Mulligan]

Cool. I can get pretty far with the existing plugin. I just have to add a posting flag when withdrawing. Attached the updated ledger using the ira_contribs plugin.

Ryan

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