HEALTH SAVINGS ACCOUNT
 Enables Taxpayers to pay for
current medical expenses and
save for future qualified medical
expenses on a tax-free basis
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Health Savings Account
 Authorized by Congress in 2003
 Tax favored medical savings similar
to IRA
 Created by enrolling in HighDeductible Health Plan (HDHP)
 Then, establishing a HSA through
qualified trustee
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HSA Eligibility
 Covered by HDHP first day of month
 Not covered by other health
insurance
 Not enrolled in Medicare
 Not eligible to be claimed as a
dependent
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HSA Documents
Form 5498-SA - current value of TP HSA
Form W-2, box 12 employers contribution
Form 1099-SA distribution from HSA
Form 8889 HSA Part I – report contributions
Form 8889 HSA Part II – report HSA
distributions and qualified medical expenses
 Form 8889 HSA Part III – OOS Additional tax
for failure to maintain HDHP coverage
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HSA Benefits
 TP can claim a tax deduction for
contributions made by the TP or someone
other than the TP
 Funds rollover from year to year
 Interest or other earnings are tax-free
 TP receives tax-free reimbursement for
qualified medical expenses plus
nonprescription medicines
 Contribution by an employer may be
excluded from gross income.
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Tax-Aide Out of Scope
 Excess contributions to HSA
 Qualified HSA funding distribution from IRA
 Qualified HSA distribution from Flexible
Spending Arrangement (FSA) or Health
Reimbursement Arrangement (HRA)
 Death of HSA holder
 Form 8889 Part III additional tax for failure
to maintain HDHP coverage
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Limits for annual HDHP deductible
and out of pocket expenses
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HSA Contributions Limits
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How to tell that an HSA is in play
 The Intake/Interview sheet has the Yes or
Unsure box checked (Life Events #1)
 The W-2 has a box 12 entry code W for
employer contributions – triggers a form
8889 to be added to the tree.
 The taxpayer has a Form 1099-SA –with
an [X] in box 5 for [HSA] showing
distributions from an HSA plan.
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Things to know
 If there is an HSA and the form 8889 is not
added to the tree by the W-2, link to it
from 1040 Line 25.
 Form 5498-SA reports current value but TP
may not have received yet. Ask about
contributions made .
 TP needs to know name on account &
whether self-only or family plan.
 If both TP and Spouse have HSA’s, two
8889 need to be filed.
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Typical Scenario
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