Please confirm if you agree with this post which describes the exception in the state of New Jersey for HSA contribution/distributions: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/are-hsa-reimbursements-nonreimbu... which states:
"But in New Jersey, as we see, HSA contributions are not tax-deductible, so they are like ordinary after-tax dollars. This means that any HSA distributions made for qualified medical expenses are indeed "unreimbursed" medical expenses, because the HSA dollars are not tax-advantaged in New Jersey."
Therefore, if a person pays out of pocket for medical expenses and does not itemize them on their Federal return and does not "reimburse" himself/herself from an HSA (i.e., does not take an HSA distribution) in the year the medical expense was incurred, those expenses will be treated as unreimbursed medical expenses for state only (and NJ only) in the year the HSA distribution is taken.
Example: a person has $5000 in medical expenses in 2022 that he pays out of pocket and does not itemize on his Federal return. In a later year, say 2032, the person takes an HSA distribution to "reimburse" himself for these same medical expenses. These expenses will be unreimbursed medical expenses (in excess of the 2% of the person's income or whatever the limit is in the year 2032) on the NJ state tax return.
