Health Savings Accounts (HSA)

Out of Scope by [line number]:
  • 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  • Excess contributions to an HSA that are not withdrawn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)
Useful documents:

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.
  • There are three parts to the form:
    • Part I for contributions,
    • Part II for distributions.
    • Part III for adjustments:
      • Limitation – Adjust amount of limitation from worksheet
        • This entry applies if the taxpayer is not eligible for an HSA for the entire 12 months of the tax year. See Form 8889 instructions for details.
      • Adjust your share of high deductible health plan
        • This entry applies if the taxpayer and spouse had separate HSAs and family coverage. Tor example, if the contribution imit is $6750 for family coverage and the TP and SP each apply 50% of the limit, enter 3375 on each separate Form 8889. See below and Form 8889 instructions for details.
      • Age 55 or older
        • If the taxpayer is 55 or older, do not enter $1000 because TS already does it for you (but doesn’t show it).

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:

2015 2016 2017 2018 
Minimum annual deductible Individual $1,300 $1,300 $1,300 $1,350
Family $2,600 $2,600 $2,600 $2,700
Maximum annual expenses Individual $6,450 $6,550 $6,550 $6,550
Family $12,900 $13,100 $13,100 $13,300

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.

2015 2016 2017 2018 
Individual $3,350 $3,350 $3,400 $3,450
Family $6,650 $6,750 $6,750 $6,850
  • 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 2015 2016 2017 2018 
0 – 40 $380 $390 $410 $420
41 – 50 $710 $730 $770 $780
51 – 60 $1,430 $1,460 $1,530 $1,560
61 – 70 $3,800 $3,900 $4,090 $4,160
71 –  $4,750 $4,870 $5,110 $5,200