Re: How to account for expenses withdrawable from an HSA

[Matt Carter]

Thank you for the quick and helpful response, Martin!

You're right, my proposal had problems, e.g., it failed to represent 
withdrawal from the HSA to another asset account.

The tracking accounts solution you proposed in response is elegant.  The 
only thing I don't like about it is that it creates fictitious income and 
assets, so the balance sheet and income statement would be inaccurate.  
That problem could be solved by using a made-up currency (HSA-eligible 
dollars) instead of the real currency (USD) for the tracking accounts.

However, after studying your Beancount - Tracking Medical Claims 

 
document, I think that the clever trick of creating equal payable and 
receivable amounts you illustrated there would work well here.  Here's how 
it could look in my hypothetical scenario:

2023-11-29 * "Dr. Hu" "pain killers"
receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
Assets:Cash  -100.00 USD
Expenses:Health   100.00 USD
Liabilities:AccountsPayable:HSA  -100.00 USD ; Payable from HSA someday
Assets:AccountsReceivable:HSA 100.00 USD ; Receivable from HSA 
someday

2035-06-22 * "HSA withdrawal using eligible expenses"
; Part 1, Withdrawal from HSA:
Assets:HSA   -100.00 USD
Liabilities:AccountsPayable:HSA   100.00 USD
; Part 2, Deposit to checking:
Assets:Checking   100.00 USD
Assets:AccountsReceivable:HSA-100.00 USD

Thanks again, Martin, for the detailed response.  And thank you for 
Beancount!

On Wednesday, November 29, 2023 at 10:00:41 PM UTC-5 bl...@furius.ca wrote:

> I think the second transaction does not reflect the actual cash transfers.
> I would do it either this way:
>
> 2023-11-29 * "Dr. Hu" "pain killers"
> receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
> Assets:Cash   -100.00 USD
> Expenses:Health100.00 USD
>
> 2035-06-22 * "HSA withdrawal using eligible expenses"
> Assets:HSA-100.00 USD
> Assets:Cash100.00 USD
>
> But that doesn't track the amount you can withdraw.
> Another option is to use the tracking accounts; I would do it like this:
>
> 2023-11-29 * "Dr. Hu" "pain killers"
> receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
> Assets:Cash   -100.00 USD
> Expenses:Health100.00 USD
> Income:HSA-Eligible   -100.00 USD
> Assets:HSA-Eligible100.00 USD
>
> 2035-06-22 * "HSA withdrawal using eligible expenses"
> Assets:HSA-100.00 USD
> Assets:Cash100.00 USD
> Assets:HSA-Eligible   -100.00 USD
> Expenses:HSA-Eligible  100.00 USD
>
> Note that it's not super obvious that you can deduct the amounts you pay.
>
> I have an example out-of-network case whereby the amounts I pay get 
> reimbursed by insurance and it's only the portion that isn't reimbursed 
> that I end up able to claim from the HSA. Here, I turned it into a doc for 
> you:
>
> https://docs.google.com/document/d/1NyATal9CRrBDsII6sLdwCNNv0qcJmcPxYpNrlnjCjp8/edit
>
>
>
> On Wed, Nov 29, 2023 at 2:24 PM Matt Carter  
> wrote:
>
>> I've been managing my finances with spreadsheets for a few decades.  A 
>> couple weeks ago, a coworker introduced me to Beancount and double entry 
>> accounting and I've been pleased with how well it handles my accounts.
>>
>> One type of accounting that I haven't yet figured out how to do with 
>> Beancount (or double entry accounting in general) is tracking expenses that 
>> are eligible for withdrawal from a special purpose account like a Health 
>> Savings Account (HSA) or a 529 account.  (These are USA tax advantaged 
>> accounts which allow funds to be invested and withdrawals can only be made 
>> tax- and penalty-free for a specific purpose, like health or higher 
>> education.  Since funds are invested free of capital gains tax, withdrawals 
>> are often postponed till long after the eligible expense is incurred.)
>>
>> I can track my HSA in Beancount as an Assets:HSA account.  As I incur 
>> HSA-eligible expenses, what's the best way to track those so that I know I 
>> can later withdraw them from the HSA?  Suppose I pay $100 to a doctor for 
>> an office visit.  In Beancount, I'd add a transaction that decreases my 
>> Assets:Cash account and increases my Expenses:Health account, each by 
>> $100.  But what that fails to capture is that $100 became eligible for 
>> withdrawal from my Assets:HSA account.
>>
>> I suppose I could make it work by introducing 2 new accounts:
>>
>> 2023-11-29 * "Dr. Hu" "pain killers"
>> receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
>> Assets:Cash   -100.00 USD
>> Expenses:Health100.00 USD
>> Liabilities:HSA-Eligible  -100.00 USD
>> Expenses:HSA-Eligible  100.00 USD
>>
>> Then, later, I could 

Re: How to account for expenses withdrawable from an HSA

[Martin Blais]

I think the second transaction does not reflect the actual cash transfers.
I would do it either this way:

2023-11-29 * "Dr. Hu" "pain killers"
receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
Assets:Cash   -100.00 USD
Expenses:Health100.00 USD

2035-06-22 * "HSA withdrawal using eligible expenses"
Assets:HSA-100.00 USD
Assets:Cash100.00 USD

But that doesn't track the amount you can withdraw.
Another option is to use the tracking accounts; I would do it like this:

2023-11-29 * "Dr. Hu" "pain killers"
receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
Assets:Cash   -100.00 USD
Expenses:Health100.00 USD
Income:HSA-Eligible   -100.00 USD
Assets:HSA-Eligible100.00 USD

2035-06-22 * "HSA withdrawal using eligible expenses"
Assets:HSA-100.00 USD
Assets:Cash100.00 USD
Assets:HSA-Eligible   -100.00 USD
Expenses:HSA-Eligible  100.00 USD

Note that it's not super obvious that you can deduct the amounts you pay.

I have an example out-of-network case whereby the amounts I pay get
reimbursed by insurance and it's only the portion that isn't reimbursed
that I end up able to claim from the HSA. Here, I turned it into a doc for
you:
https://docs.google.com/document/d/1NyATal9CRrBDsII6sLdwCNNv0qcJmcPxYpNrlnjCjp8/edit



On Wed, Nov 29, 2023 at 2:24 PM Matt Carter 
wrote:

> I've been managing my finances with spreadsheets for a few decades.  A
> couple weeks ago, a coworker introduced me to Beancount and double entry
> accounting and I've been pleased with how well it handles my accounts.
>
> One type of accounting that I haven't yet figured out how to do with
> Beancount (or double entry accounting in general) is tracking expenses that
> are eligible for withdrawal from a special purpose account like a Health
> Savings Account (HSA) or a 529 account.  (These are USA tax advantaged
> accounts which allow funds to be invested and withdrawals can only be made
> tax- and penalty-free for a specific purpose, like health or higher
> education.  Since funds are invested free of capital gains tax, withdrawals
> are often postponed till long after the eligible expense is incurred.)
>
> I can track my HSA in Beancount as an Assets:HSA account.  As I incur
> HSA-eligible expenses, what's the best way to track those so that I know I
> can later withdraw them from the HSA?  Suppose I pay $100 to a doctor for
> an office visit.  In Beancount, I'd add a transaction that decreases my
> Assets:Cash account and increases my Expenses:Health account, each by
> $100.  But what that fails to capture is that $100 became eligible for
> withdrawal from my Assets:HSA account.
>
> I suppose I could make it work by introducing 2 new accounts:
>
> 2023-11-29 * "Dr. Hu" "pain killers"
> receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
> Assets:Cash   -100.00 USD
> Expenses:Health100.00 USD
> Liabilities:HSA-Eligible  -100.00 USD
> Expenses:HSA-Eligible  100.00 USD
>
> Then, later, I could withdraw it from the HSA:
>
> 2035-06-22 * "HSA withdrawal using eligible expenses"
> Liabilities:HSA-Eligible   100.00 USD
> Assets:HSA-100.00 USD
>
> But the duplicate Expenses account makes me feel like the model doesn't
> fit reality well.
>
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> 
> .
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Re: How to account for expenses withdrawable from an HSA

[Ben Blount]

Those are two distinct operations and many people deliberately delay
reimbursement to give the money more time to grow tax free, so that two
transaction method looks ideal to me.

On Wed, Nov 29, 2023, 11:24 Matt Carter 
wrote:

> I've been managing my finances with spreadsheets for a few decades.  A
> couple weeks ago, a coworker introduced me to Beancount and double entry
> accounting and I've been pleased with how well it handles my accounts.
>
> One type of accounting that I haven't yet figured out how to do with
> Beancount (or double entry accounting in general) is tracking expenses that
> are eligible for withdrawal from a special purpose account like a Health
> Savings Account (HSA) or a 529 account.  (These are USA tax advantaged
> accounts which allow funds to be invested and withdrawals can only be made
> tax- and penalty-free for a specific purpose, like health or higher
> education.  Since funds are invested free of capital gains tax, withdrawals
> are often postponed till long after the eligible expense is incurred.)
>
> I can track my HSA in Beancount as an Assets:HSA account.  As I incur
> HSA-eligible expenses, what's the best way to track those so that I know I
> can later withdraw them from the HSA?  Suppose I pay $100 to a doctor for
> an office visit.  In Beancount, I'd add a transaction that decreases my
> Assets:Cash account and increases my Expenses:Health account, each by
> $100.  But what that fails to capture is that $100 became eligible for
> withdrawal from my Assets:HSA account.
>
> I suppose I could make it work by introducing 2 new accounts:
>
> 2023-11-29 * "Dr. Hu" "pain killers"
> receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
> Assets:Cash   -100.00 USD
> Expenses:Health100.00 USD
> Liabilities:HSA-Eligible  -100.00 USD
> Expenses:HSA-Eligible  100.00 USD
>
> Then, later, I could withdraw it from the HSA:
>
> 2035-06-22 * "HSA withdrawal using eligible expenses"
> Liabilities:HSA-Eligible   100.00 USD
> Assets:HSA-100.00 USD
>
> But the duplicate Expenses account makes me feel like the model doesn't
> fit reality well.
>
> --
> You received this message because you are subscribed to the Google Groups
> "Beancount" group.
> To unsubscribe from this group and stop receiving emails from it, send an
> email to beancount+unsubscr...@googlegroups.com.
> To view this discussion on the web visit
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> 
> .
>

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How to account for expenses withdrawable from an HSA

[Matt Carter]

I've been managing my finances with spreadsheets for a few decades.  A 
couple weeks ago, a coworker introduced me to Beancount and double entry 
accounting and I've been pleased with how well it handles my accounts.

One type of accounting that I haven't yet figured out how to do with 
Beancount (or double entry accounting in general) is tracking expenses that 
are eligible for withdrawal from a special purpose account like a Health 
Savings Account (HSA) or a 529 account.  (These are USA tax advantaged 
accounts which allow funds to be invested and withdrawals can only be made 
tax- and penalty-free for a specific purpose, like health or higher 
education.  Since funds are invested free of capital gains tax, withdrawals 
are often postponed till long after the eligible expense is incurred.)

I can track my HSA in Beancount as an Assets:HSA account.  As I incur 
HSA-eligible expenses, what's the best way to track those so that I know I 
can later withdraw them from the HSA?  Suppose I pay $100 to a doctor for 
an office visit.  In Beancount, I'd add a transaction that decreases my 
Assets:Cash account and increases my Expenses:Health account, each by 
$100.  But what that fails to capture is that $100 became eligible for 
withdrawal from my Assets:HSA account.

I suppose I could make it work by introducing 2 new accounts:

2023-11-29 * "Dr. Hu" "pain killers"
receipt: "http://example.com/2023-11-29_Dr.Hu_meds.pdf;
Assets:Cash   -100.00 USD
Expenses:Health100.00 USD
Liabilities:HSA-Eligible  -100.00 USD
Expenses:HSA-Eligible  100.00 USD

Then, later, I could withdraw it from the HSA:

2035-06-22 * "HSA withdrawal using eligible expenses"
Liabilities:HSA-Eligible   100.00 USD
Assets:HSA-100.00 USD

But the duplicate Expenses account makes me feel like the model doesn't fit 
reality well.

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