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 2016 and 2017, and the account earned $100 interest in 2017. At the end of 2017, 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 2017 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. Matilda used the funds for medical expenses, so she does not need to include any amount in her gross income.

Matilda Works for a Company with 1,000 Employees