How to track medical expenses.

[Michael DeBusk]

Svetoslav Trochev wrote:

> Equity Insurance #1 Insurance #2 Gains/Losses

Insurance isn't equity. In a business context, with accrual accounting,
it's an income. Assuming you're keeping personal books using cash
accounting, you might consider making your insurance reimbursements a
contra expense. Just credit your expense account when you deposit the
check or get the EOB.

My insurance pays the provider directly, so I only get a bill for
co-pays and deductibles. Those are all I track. If your insurance pays
you, though, it might be smarter to do it the other way.

> Liabilities Dr. X Dr. Y

Do you make monthly payments to them, like a loan? If so, this is great.
If you pay them in full, like I do, credit cash or FSA and debit medical
expense.

> When I visit a doctor:  credit "Expenses:Medical Expenses" from 
> "Liabilities:Dr. X"

When you visit a doctor, your expenses go up, as does your liability to
him, so you'd debit medical expenses and credit liabilities.

> When the insurance pays 80% I will credit "Liabilities:Dr. X" from 
> "Equity:Insurance"

You would debit liabilities and credit medical expenses. Or, if you
chose to use reimbursement as an "other income", debit liabilities and
credit other income:insurance reimbursement.

> When I receive and pay the bill from the Dr. X I will credit 
> "Liabilities:Dr. X" from "Assets:Cash"

Debit liabilities, credit cash.

Again, regarding the above transactions: under cash accounting, you only
track the movement of cash. Nothing happens until you get a bill. I
think you're wanting a lot of detail, and I can respect that, and at the
same time it may be that you're tracking stuff that doesn't need
tracking. (Do you really need to know how much your insurance company
paid over the year? What are you planning to do with that information?
And if you do need it, wouldn't it save time and effort to just call
them early next year and ask?)

> Finally at the end of the year if any money are left in FSA account I
> will lose them so I will transfer remaining balance from
> "Assets:FSA" to "Equity:Gains/Losses".

This is the reason I don't use an FSA.

I'll suggest that you treat the involuntary contribution to your
employer as an expense, not a direct hit against equity. All of your
income and expenses get moved into equity after you close your books.

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