Matilda works for a company with 1,000 employees.The company has a hospitalization insurance plan that covers all employees.However,the employee must pay the first $3,000 of his or her medical expenses each year.Each year,the employer contributes $1,500 to each employee's health savings account (HSA).Matilda's employer made the contributions in 2015 and 2016,and the account earned $100 interest in 2016.At the end of 2016,Matilda withdrew $3,100 from the account to pay the deductible portion of her medical expenses for the year and other medical expenses not covered by the hospitalization insurance policy.As a result,Matilda must include in her 2016 gross income:

Question

Quizplus · Accepted Answer

The contributions to the HSA and the interest earned are not included in gross income if used for qualified medical expenses. Since Matilda used the funds for medical expenses, she does not need to include any amount in her gross income.

Matilda Works for a Company with 1,000 Employees