What happens if an individual withdraws money from their HSA to pay a medical bill, but is later reimbursed by their insurance company for that medical expense?

This situation is referred to as an "erroneous distribution". The HSA accountholder can repay the mistaken distribution by April 15 of the following year with no penalty if there is reasonable evidence that the original distribution was made in good faith and that it was a qualified medical expense. The repayment is classified as a "re-deposit", not a contribution; therefore, it would not count "twice" toward the yearly maximum. Individuals could use the HSA contribution form to send with their repayment, indicating “Re-Deposit” on the form.

Introducing UMB HSA Saver

UMB HSA Saver is a unique investment platform designed with ease in mind. Account holders can easily research, buy and sell funds with a couple clicks.

How to Use ReceiptVault

HSAs are available to help pay for current qualified medical expenses as well as to save for future expenses, all in a tax-exempt account.

HSA FAQ Resource

Find answers to your most common HSA questions in our comprehensive HSA FAQs section.