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October 24, 2024
Question

Can a class-action settlement check from my CPAP recall be deposited back in my HSA?

  • October 24, 2024
  • 1 reply
  • 0 views
re Phillips Recalled CPAP, Bi-Level PAP, and Mechanical Ventilator Products Litigation

1 reply

Employee
October 24, 2024

Possibly.  However, the HSA bank may not accept it if it was from a previous year.

 

I assume you already know that you paid for the CPAP machine with HSA funds, therefore, the settlement is a reimbursement of previous tax-free money.  You have 3 options.

1. Return the money to the HSA bank as a mistaken withdrawal (if they will accept it).

2. Use the money for medical expenses in the year you got the settlement without asking for HSA reimbursement on the same medical expenses.  ("Use up" the settlement on current year expenses.)

3. Report the settlement as taxable income in the miscellaneous  or other income interview.  There is an item there for a "taxable recovery" (reimbursement of a previous tax-free item). 

 

If you did not pay for the CPAP with HSA funds, then it gets more complicated, depending on whether you paid with after-tax dollars, did or did not take a tax deduction on schedule A, and whether part or all of the CPAP was covered by insurance.  

Employee
October 24, 2024

By the way, when did you get paid?  I got my check for my Dreamstation 1 months ago, but I am still waiting for a check for my Dreamstation Go (portable).