What are "Qualified Medical Expenses"?

Generally, qualified medical expenses for Archer MSA purposes are unreimbursed medical expenses that could otherwise be deducted on Schedule A (Form 1040). However, you cannot treat insurance premiums as qualified medical expenses unless the premiums are for:

• Long-term care insurance
• Health care continuation coverage, or
• Health care coverage while receiving unemployment compensation under federal or state law.

Click here for an expanded list of what qualifies for Schedule A deduction.

What expenses are included in the entry for "unreimbursed qualified medical expenses"?

In general, your entry for "unreimbursed qualified medical expenses" should include distributions from all Archer MSAs or Medicare Advantage MSAs during the tax year that were used for the qualified medical expenses (see above) of:

• Yourself and your spouse
• All dependents you claim on your tax return
• Any person you could have claimed as a dependent on your return except that:
  • the person filed a joint return
  • the person had gross income of $3700 or more, or
  • you, or your spouse if filing jointly, could be claimed as a dependent on someone else's return. For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption.

However, if a contribution was made to an Archer MSA during the tax year (by you or your employer), do not include in your entry any withdrawals if the individual for whom the expenses were incurrred was not covered by an HDHP or was covered by a plan that was not an HDHP at the time the expenses were incurred.

Example: During the tax year, you were covered by an HDHP with self-only coverage and your spouse was covered by a health plan that was not a High Deductible Health Plan (HDHP). You made contributions to an Archer MSA during the year. You cannot include in your entry for "unreimbursed qualified medical expenses" any withdrawals made from the Archer MSA to pay your spouse's medical expenses (because your spouse was covered by a plan that was not an HDHP).

You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA.

For more information:

What is a Medical Savings Account
Who qualifies to have a Medical Savings Account