Is it income and if so what kind?
Last year, I got a nasty case of food poisoning. I was so violently ill I literally couldn't think straight. The only thing open was the emergency room so that's where my family took me. They treated me and after a month I had recovered. The insurance said it wasn't an emergency (and they literally said I should've expected food poisoning when I go to a restaurant) so they refused to cover any of the 00 bill. I appealed, but insurance dragged their feet. Thinking they were going to play games and then deny the appeal, I made a claim against the retirement health savings account I have with ICMA-RC (it's like an HSA in that you can put in pre-tax earnings but otherwise it's apparently different according to them). I no longer work at the employer who sponsored the plan so I can make claims against the account. The claim was covered and I got reimbursed. A few weeks after that, insurance saw reason and paid also.
The issue now is, does the money from ICMA-RC count as regular income or is it something else? I have a tax professional prepare my taxes but they can't or won't commit one way or the other.
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Based on this page from a public employer, I believe that this is an HRA (Health Reimbursement Arrangement). HRAs are described in IRS Publication 969.
You can’t be reimbursed twice for a medical expense by tax-exempt money. Since insurance ultimately paid the expense, somehow this must be accounted for.
If it was an HSA, I would tell you to do a mistaken distribution reimbursement. I have no experience with HRAs. I do see the following in Pub 969:
If any distribution is, or can be, made for other than the reimbursement of qualified medical expenses, any distribution (including reimbursement of qualified medical expenses) made in the current tax year is included in gross income.
However, I don’t know what the mechanism for doing this is. This probably should have been straightened out immediately after the insurance issued their reimbursement and you still worked for the employer. I think you’ll need to talk to either ICMA-RC, your old employer, or a new tax professional.
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