Allocating HSA income directly to categories

I have an HSA account that I'd like to track in YNAB, and I was wondering whether there are any drawbacks to allocating the HSA's income directly to an HSA category instead of using "To be budgeted" and then allocating it via the Budget area. The main reason behind this would be to ensure that I never forget and spend non-HSA authorized charges by allocating it to something else.

Thanks in advance!

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  • Allocating it directly won't prevent you from accidentally moving it elsewhere in your budget. It will also muddy the waters in terms of reporting of actual costs.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • Reported - view

      Rereading the OP, I'm not entirely sure what is being asked.

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  • I recently added my HSA as a tracking account so I don't have to try and match a category to an account. I don't think it's really necessary to track it in YNAB, but I like seeing it in my net worth report.

    The contributions to it are all taken out before I get my paycheck, so I manually adjust the balance every month or two, or before I know I will have an expense that I will have to use it for. I try to cover smaller expenses with an on-budget Health category so I can build up more funds in my HSA. Of course, I don't have very many transactions on that account. I might have chosen to do something different in a different situation.

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  • nolesrule I have an expense category called HSA, which I use to keep track of transactions that can be covered by the HSA. Whenever my employer contributes to that account, instead of setting the income "To be budgeted", I just assign it to the HSA category. Then it immediately assigns that income's "job" as "HSA". I figured it was just a shortcut to actually going into the Budget and selecting the income from "To be budgeted" and assigning it to the HSA category, but perhaps I'm wrong?

    Does that make any more sense?

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
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      Michael Harrison Yes, that makes sense. It's going to be a question of whether you want to be able to see how much your medical expenses actually are, because an inflow directly a category will appear as negative spending (i.e. it will offset spending) in reports.

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    • nolesrule Great, that answers my question! I definitely want to be able to see that in reporting, so I'll be sure to do it the correct way. Thanks!

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  • If you're just going to have a single category like "HSA", I'd suggest you'd either leave that account out of YNAB or just as a Tracking account if you want it in your Net Worth or easy reference.

    The budget is a tool to plan for future spending, helping you to make tradeoffs among the various categories that compete for your limited amount of money.

    At first glance, it might make a little sense to leave it on-budget if you were trying to plan various types of HSA-eligible expenses. However, a little further thought would show that you wouldn't be "controlling spending" or making tradeoffs like you would elsewhere in the budget (at least I wouldn't). If I'm sick, I'm going to the doctor, regardless of whether those HSA funds are reserved for Doctor Visits or Dental Visits or Prescriptions, etc.

    I have my HSA as an off-budget (Tracking) account solely because I like to be able to easily look things up. When was my last dentist visit? When did I get that tetanus shot? What was the name of that PT I used for my shoulder last year? Etc. I could track this elsewhere, but it's fairly easy to keep in YNAB.

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  • I have categories setup for medical, dental & vision.  When handling HSA reimbursements I just categorize the reimbursement "to be budgeted" then move the amounts to zero out my medical, dental or vision categories.

    In the past I would categorize the HSA reimbursement directly to the categories, however when I looked through my reports it always showed I didn't spend anything for medical, dental or vision.  

    Is this the way you all are handling the HSA reimbursement?

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    • Tan Yearling I've taken some of the advice from this thread into account, and right now, I do it very similarly to how you're doing it. When I get an HSA contribution, I set it "To be budgeted" and then immediately move it over to the HSA category in the Budget. When I spend money, either directly from my HSA account or from another account (to later be reimbursed), I categorize that outgoing money as "HSA". If it's reimbursable money, I flag it with the red color code and review later to ensure that I've reimbursed myself at the end of the month.

      So far, so good!

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    • Michael Harrison That sounds pretty good Michael.  After posting I went back and tried a different way because I felt like having the HSA reimbursement coming in as to be budgeted affected my report because it is now showing as income.

      So what I am trying is I created a new category called "clearing" as more of a place holder.  The HSA reimbursement goes into this clearing category and then I move that directly to the medical category to balance the spending.  That way 1. the reimbursement does not count towards "income" and 2. it does not zero out my medical categories.

      Has anyone else tried something similar?

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    • Tan Yearling I didn't realize the implications on income reporting. This is an interesting fix. I might rearrange things to make this work, but I'm starting to wonder if the best solution (read as: easiest day-to-day solution) is what dakinemaui recommended.

      dakinemaui said:
      The budget is a tool to plan for future spending, helping you to make tradeoffs among the various categories that compete for your limited amount of money. .. you wouldn't be "controlling spending" or making tradeoffs like you would elsewhere in the budget (at least I wouldn't). If I'm sick, I'm going to the doctor, regardless of whether those HSA funds are reserved for Doctor Visits or Dental Visits or Prescriptions, etc.
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  • I have some old medical debts, for which I'm on a payment plan. I have them set up as credit cards in my budget. I tried setting up my HSA as a tracking account, but when I transfer money from my HSA to my old debts, it asks for a category. But if I categorize it, YNAB thinks I have had income and shows it in the relevant category (e.g. Medical or TBB). I don't know what to do with this... Should my old debts not be credit cards? Should they also be tracking accounts? Or should my HSA be a budget account - but then how would I stop myself from giving those dollars other jobs by mistakes? I have really thought myself in circles here. Any advice? Thanks.

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      • Ceeses
      • Ceeses
      • 9 mths ago
      • Reported - view

      Descriptor Noun Hi, if you don't spend more from these old debt accounts, there is no need to have them in an on budget account. I would keep those as other liability accounts in tracking (or completely outside of YNAB). Then you transfer from your HSA account (outside your budget, in a tracking account) to your debt account without a category. If you also send money to your medical debts from other accounts (your checking for example) which are on budget, create a category for each debt and budget to it. Then when you send the money, categorise to your debt category.

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    • Ceeses I think I actually have to move my HSA account on -budget, because I also use it to pay for new medical expenses as they occur. I think I need to just put the dollars on that card in my "Medical" category, which will prevent me from spending them elsewhere. Then whether I pay down an old debt or pay for a new expense, it will all be medical spending, which is also useful for tracking. What you said would be good if I didn't use the HSA account for anything else - but since it gets deposits and withdrawals all the time, it's really a budget account. I think....

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    • Descriptor Noun No wait, that didn't work.... because when I transfer $ from my on-budget HSA to my on-budget medical debt, it doesn't ask for a category, so it looks like I still have $ in the Medical budget line which is not there. I am confused and stuck at this point.

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      • Ceeses
      • Ceeses
      • 9 mths ago
      • Reported - view

      Descriptor Noun If you keep the debts as on-budget credit cards, you have to budget to the credit card category directly. That's the way to pay off credit card debt. Why don't you want the debts off budget? Are you spending from these debt accounts?

      I know a lot of people keep their HSA outside the budget. But I can't comment, I'm not in the US.

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      • Ceeses
      • Ceeses
      • 9 mths ago
      • 2
      • Reported - view

      Descriptor Noun the way I understand HSA they can only be used to pay for medical bills. So they are a category and a budget by themselves. It's a typical example of budgeting by account. I believe that's why people leave it off budget: the spending and income only affect 1 category. So the account register and balance already give you the info a category in YNAB would give you.

      I guess you may still need a medical category in YNAB for the additional expenses you can't pay from your HSA.

      Like 2
    • Ceeses That is Exactly why we recommend keeping HSA's as Tracking accounts. Some YNABers choose to add them to the budget, but it becomes a "make sure this account matches this category and never move that money to a different category" situation.

      Descriptor Noun We have a Help Doc on handling Health Savings Accounts. We recommend adding debts as tracking accounts, too. If you set it up that way, you can track the balance and make payments from your HSA without needing a category. If you choose to keep the debt on-budget and the HSA off-budget, you can still make those transfers and you'll categorize the payment as Inflow: To Be Budgeted. That will adjust the balance on the medical debt account without affecting your other categories.

      Like 1
  • Thank you everyone for all the ideas. Ceeses - I think I do need to set up the debts as tracking accounts, and also create a budget category for each one (so that I can budget for the regular monthly payments). The HSA will have to be on-budget, so that I can assign dollars from it to the medical debt categories. There will have to be a separate HSA category, which all HSA dollars will be assigned to, until I assign them elsewhere. That money will never go into TBB, so I'll never assign it elsewhere, but it will be available to use to pay other medical expenses.

     

    Faness - The system you described doesn't give me a way to budget for payments, only to track them. But I think by doing what you described, and adding categories for the debt payments, I should be able to make it work.

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