For starters, it looks like your Debits and Credits for the transactions and
reimbursements are backwards,
When you use a card to pay for something, you credit the card account and debit
an expense. In this case, you are taking on a liability (card debt) on behalf
of someone else. (the reimbursement asset)
So that should be:
Dr. Assets:Receivable:Health Reimbursement Arrangement
Cr. Liabilities:Credit Card
Note:
Credits increase liabilities. You’ve increased your liability (debt) on the
card, so that has to be a credit.
Debits increase assets. When you pay with the card (up to the $200 limit), you
are promised to be reimbursed. That is an asset for you. So it has to be
debited to increase it.
Then you receive the reimbursement you want to increase one asset (Checking)
and decrease another (amount still to be reimbursed).
So that would look like:
Dr. Assets:Checking
Cr. Assets:Receivable:Health Reimbursement Arrangement
------
Another way to treat this is that the reimbursement is a source of funds to be
used. (and is easier to track how much is left to use) That can still be
tracked as an asset, but instead of only recording when you make the payment,
you record the promise of it up front.
So at the anniversary of the $200 rollover:
Dr. Assets:Receivable:Health Reimbursement Arrangement:Person_1 $200
Dr. Assets:Receivable:Health Reimbursement Arrangement:Person_2 $200
...
Dr. Assets:Receivable:Health Reimbursement Arrangement:Person_n $200
Cr. Assets:Receivable:Health Reimbursement Arrangement
$200*n
Note that each person has a sub-account for individual tracking purposes.
Also note, these initial ‘fundings’ are balanced out against the parent
account, essentially making this entire part of the account tree ‘zero'.
(technically, the funds are promised, but aren’t legally owed in any sense
until you incur the expenses first)
When you pay for covered dental/health visits on your credit card, do this
instead:
Dr. Expenses:Dental/Vision (as desired/needed)
Dr. Assets:Receivable:Health Reimbursement Pending
Cr. Liabilities:Credit Card
Cr. Assets:Receivable:Health Reimbursement Arrangement:Person_X
This will record the payment as your expense. (it really is yours, not your
employers)
It will record you temporarily paying for the expense via your card. (which you
did)
It will reduce the amount left available to be reimbursed per person.
It will track how much is now a real asset waiting to be received.
When you receive the reimbursement check:
Dr. Assets:Checking
Cr. Assets:Receivable:Health Reimbursement Pending
This will increase the checking account and decrease the amount still pending
to be reimbursed.
The 'Health Reimbursement Pending’ is what is known as a ’suspense account’ and
is used to track funds owed or owing but which haven’t technically changed
hands yet. Another example would be an ‘undeposited funds’ account which some
people use to record the receipt of checks, pending their deposit into the
checking account. (this helps keep real-world accounts accurate while allowing
for the time delays in physically making the deposit, clearing is a separate
function) If you instantly ‘deposit’ checks via a smart-app, you may not need
an ‘undeposited funds’ account. If you used one, it would be an additional
transaction to record the actual deposit to checking. (the reimbursement would
be debited to the undeposited funds account instead)
When it is time to rollover the HRA, you can do something like this:
Dr. Assets:Receivable:Health Reimbursement Arrangement (total
unused)
Cr. Assets:Receivable:Health Reimbursement Arrangement:Person_1
(balance)
Cr. Assets:Receivable:Health Reimbursement Arrangement:Person_2
(balance)
...
Cr. Assets:Receivable:Health Reimbursement Arrangement:Person_n
(balance)
That will still leave a balance in the parent account, for anything reimbursed.
You could employ something like this as the final transaction for the year:
Dr. Assets:Receivable:Health Reimbursement Arrangement
Cr. Assets:Receivable:Health Reimbursement Arrangement:Used
This would also give you an annual tally in one transaction of how much was
reimbursed for the whole family without any report or filtering gymnastics.
-----
Some may advise to put the 'Health Reimbursement Arrangement’ and personal sub
accounts under Equity, or even a new top-level account (of type Equity or
Asset) called Reimbursements or Budgeting, etc. There might even be a case for
putting it under Expenses in some form.
Be cautious too, that there might be tax implications for how this is setup and
how the funds are handled and recorded. Be certain to get professional advice
before going too far with any method. The above are just outlining possible
options. They may not all be allowed.
Regards,
Adrien
> On Jun 3, 2020 w23d155, at 3:56 PM, Duncan Johnson <[email protected]>
> wrote:
>
> Hello,
>
> I am new to this list. I have not quite seen an answer to my scenario in
> the archives that I've seen online, so thought I'd join the list and ask.
>
> I'm in the USA, and my employer offers a Dental/Vision health reimbursement
> account. Each year, the employer will reimburse up to $200 for each person
> in my family to use for dental/vision. When I use the benefit, I put the
> charge on a credit card, then submit a reimbursement form, and then the
> company writes me a check.
>
> Right now, I'm just using an A/R account to basically zero-out the
> difference between the credit card charges and the deposits of the
> reimbursement checks. The benefit of doing it this way is that it doesn't
> show up on my monthly income statement as an expense that corresponds to
> some income. Details below:
>
> First, my account structure:
>
> Assets:Checking
> Liabilities:Credit Card
> Assets:Receivable:Health Reimbursement Arrangement
>
> Transactions:
>
> Medical appointment:
> Debit -> Liabilities:Credit Card
> Credit -> Assets:Receivable:Health Reimbursement Arrangement
>
> Reimbursement:
> Credit -> Assets:Checking
> Debit -> Assets:Receivable:Health Reimbursement Arrangement
>
> What I'd like to do, though, is figure out a way to track how much is left
> for each person in the family.
>
> The fiscal year for this HRA begins on July 1, so theoretically I'd like to
> be able to post an "employer contribution" on July 1 and then have these
> sorts of expenses debit away that amount. If I ever fail to totally use up
> my allowance in a year, I guess I'd just make a write-off expense account
> or something.
>
> But I can't figure out where to create an account for tracking the unspent
> money in the HRA.
>
> Thanks for any suggestions!
>
> Duncan
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