I have supplemental accident insurance. This is paid for through a post tax deduction from my pay check. I pay the full cost of the supplemental accident insurance with post tax dollars. This supplemental accident insurance is optional and has nothing to do with my medical insurance. My understanding is that any pay outs from this supplemental insurance are therefore not taxable. Per the provider of the supplemental accident insurance, the pay outs can be used for any purpose including household bills. I get injured in a household accident. I go to the urgent care and receive medical treatment. I pay the urgent care with funds from my HSA account. I file a claim with my supplemental accident insurance and they pay me a few hundred dollars (less than the medical bills). Does a pay out from the supplemental accident insurance have any impact on what should be reported as distributions for qualified medical expenses that were paid by the HSA account?
