Health Savings Accounts (HSA)

Out of Scope:

  • You must be certified for HSA
  • Excess contributions to an HSA that are not withdrawn
  • Funding distributions to an HSA from an IRA, FSA, or HRA
  • Distributions from an FSA or HRA (HSA box not checked on 1099-SA)
  • Death of an HSA holder
  • Failure to Maintain HDHP Coverage (Form 8889, Part III)
  • Distributions due to prohibited transactions
  • Using an HSA as security for a loan
  • Archer Medical Savings Accounts
  • Medicare Advantage MSAs
  • Health coverage Tax Credit (Form 8885)

Tax Slayer entry:

Federal Section > Deductions > Adjustments > Health Savings Account (Form 8889)

  • If both taxpayers of a joint return contribute or receive distributions, add the TP form first, the SP form second.
  • Part I is used for contributions, Part II is used for distributions.

Software error – The HSA Adjustment section asks for you to enter $1000 if over age 65. Do not enter $1000 because TS already does it for you (but doesn’t show it).

Software error – Checking the exception box does not currently remove the 20% penalty. Change the medical expenses to cover the full amount.

HSA-Related forms:

  • W-2 with “W” in box 12: Company contribution to HSA. Automatically carries from W2 to Form 8889.
  • Form 5498-SA: TP’s after-tax contribution to HSA. Enter it on line 2 of Form 8889 and it will carry across to Form 1040 as an adjustment.
  • Form 1099-SA: TP’s distribution from their HSA. Enter amount on line 14a of Form 8889. If distribution is more than expenses, the difference will be shown as income on Form 1040 line 21 and a 20% penalty will be shown as an additional tax. The penalty can be waived if:
    • The owner is deceased (OUT OF SCOPE)
    • The owner is disabled
    • The owner is 65 or older

High deductible health plan (HDHP) definition:

2013 2014 2015 2016
Minimum annual deductible Individual $1,250 $1,250 $1,300 $1,300
Family $2,500 $2,500 $2,600 $2,600
Maximum annual expenses Individual $6,250 $6,350 $6,450 $6,650
Family $12,500 $12,700 $12,900 $13,100

Joint HSA?:

  • There is no such thing as a joint HSA.
  • For married couples, each spouse may have their own HSA and either may be associated with individual or family policies.
  • Distributions from either can cover the other spouse and qualified family members if they are family policies.

Contribution limits:

Taxpayers can contribute up to the following amount per year to an HSA if not covered by another health plan.

2013 2014 2015 2016
Individual $3.250 $3,300 $3,350 $3,350
Family $6,450 $6,550 $6,650 $6,750
  • If TP and SP both have policies, their total can be no more than the Family limit amount, and each is limited by the policy type.
  • Form 8889 line 6 is the “allocation” of contributions. If both TP and SP have family policies, the total family allocation amount (see below) can be split between the two as desired.
  • If 55 or over, each of TP and SP can contribute an extra $1,000 to their own account. This cannot be “allocated” to the other person.

Long Term Care limits:

An HSA account can pay up to the following amount for LTC premiums (same as Schedule A medical deduction amounts):

Age 2013 2014 2015 2016
0 – 40 $360 $370 $380 $390
41 – 50 $680 $700 $710 $730
51 – 60 $1,360 $1,400 $1,430 $1,460
61 – 70 $3,640 $3,720 $3,800 $3,900
71 – $4,550 $4,660  $4,750 $4,870