MSA confusion


G

ge

I have an MSA account. If I have medical expenses (not
reimbursed by my insurance), it looks to me like I could

1. deduct the medical expenses on Sch A.
2. pay that same expense with a distribution from the MSA.
3. make a deductible contribution to the MSA for that same year.

Is that correct? I suspect that I'm misunderstanding the
rules, and that I can't do both (1) and (2).

If I can't do that, can I do (1) and (3); that is, deduct
medical expenses paid out-of-pocket, and make an MSA
contribution that same year? It seems like that would be
permitted, though it leaves me wondering what is the purpose
of the MSA.

Any enlightenment would be appreciated.

TIA,
George Eccles
 
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J

Jay

ge said:
... it leaves me wondering what is the purpose of the MSA.
On Schedule A, you can only deduct medical expenses that
exceed 7.5% of your AGI.

I always thought that the purpose of the MSA is to get rid
of the 7.5% threshold for certain taxpayers. Whether or not
that was the purpose, that's the effect for lots of folks.
 

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