1 Returning Counselor Training 2010 HEALTH SAVINGS ACCOUNT Enables Taxpayers to pay for current medical expenses and save for future qualified medical

1Returning Counselor Training 2010

HEALTH SAVINGS ACCOUNT

Enables Taxpayers to pay for current medical expenses and save for future qualified medical expenses on a tax-free basis


Health Savings Account

Authorized by Congress in 2003 Tax favored medical savings similar

to IRA Created by enrolling in High-

Deductible Health Plan (HDHP) Then, establishing a HSA through

qualified trustee


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


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


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.


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


Limits for annual HDHP deductible and out of pocket expenses


HSA Contributions Limits


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.


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.


Typical Scenario






