health savings account

[David T.]

Um...

I preface everything by saying I am Not an Accountant, and any decision you make should be based on an accountant's direct advice. In every case below, where I state something with an asterisk, please infer the phrase "As I understand it" as a predeccessor.


That said, Health Savings Accounts in the US are a complicated thing, and different than US Dependent Care accounts. Generally*, these accounts are considered a Liability, since you agree with some agency (the FSA provider) to contribute a certain amount of money to the account over the year. The liability account balance 
gets set at the beginning of the year to the dollar amount you say your 
FSA will receive over the year. 


Within Gnucash*, a second account gets set up in Equity, and this is where the other side of the Yearly Opening Balance transaction comes from. 


As your paychecks roll in, you transfer from the income account on your paystub into the liability account (thus lowering the Liability balance). At the end of the year, this should arrive at zero with your last paycheck.

When you get reimbursed from the FSA is where I have always had fuzziness. Probably, what you are supposed to do is: 1) pay for the service against an expense account (Expenses:Medical) 2) make a second transaction that transfers from the Equity account to the expense account, and 3) make a third transaction from the expense into the current asset account that receives the payment.What I have tended to do is conflate 2 & 3 and transfer from Equity directly to Current Assets (I already have the first transaction anyway, since I am paying out of pocket first).


I am not sure if that is fully correct, but someone else can help with the last part. I am reasonably confident about the Equity and Liability accounts, though.

David



________________________________
From: Richard Bishopp <rbishopp44 at gmail.com>
To: suk wah bernstein <sukwahbernstein at gmail.com>
Cc: gnucash-user at gnucash.org
Sent: Wednesday, October 26, 2011 8:33 AM
Subject: Re: health savings account

I put my HSA account under current assets with my savings and checking
accounts. My employer funds that account as well as myself with each pay
period as an automatic deduction from the pay check (pre-tax). So deposits
are splits from my pay check or other income when employer make a deposit.
When I record a transaction against it I select the appropriate medical
expense account for that transaction.  I also created more specific expense
accounts under medical so I can see what was spent where and what needs to
be reimbursed if that case arises.

Not an accountant just makes sense to me when I look at it.  Hope this
helps.

Rich...

On Tue, Oct 25, 2011 at 1:02 PM, suk wah bernstein <
sukwahbernstein at gmail.com> wrote:

> gnucash-user at gnucash.org
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