|Health Savings Account
This worksheet is used to report information and make calculations concerning the taxpayer's Health Savings Account, including the following:
- Report health savings account (HSA) contributions including those made on the taxpayer's behalf and employer contributions,
- Calculate the taxpayer's HSA deduction,
- Report distributions from the taxpayer's HSA, and
- Calculate the amount of contribution or distributions that is taxable and subject to an additional tax.
Who Must File
The taxpayer must file Form 8889 if any of the following situations are applicable, even if the taxpayer does not have any taxable income or other reason to file a return:
The taxpayer or someone on the taxpayer's behalf made contributions during the tax year to the taxpayer's HSA,
The taxpayer received a distribution from his or her HSA during the tax year,
The taxpayer failed to be an eligible individual during the testing period, or
The taxpayer acquired an interest in an HSA because of the death of an account holder.
Eligibility to Make Contributions to HSA
In order to be eligible to make contributions to an HSA, an individual must meet the following requirements:
- He or she must be covered under a high deductible health plan (HDHP defined below),
- He or she cannot have any other health coverage except as permitted (see below),
- He or she cannot be claimed as a dependent on another person's tax return, and
- He or she must be an eligible on the first day of the month to take an HSA deduction for that month.
This is a health insurance plan that meets the following limits in 2012:
|Minimum Annual Deductible
|Maximum Annual Out-Of-Pocket Expenses (Other Than For Premiums)
Other Health Coverage Permitted
The taxpayer cannot have other health coverage except as follows
- Disability or accident coverage
- Dental care coverage
- Vision care coverage
- Long-term care coverage
- Specific illness or disease coverage
- Workers' compensation coverage
- Liability insurance
- Coverage for a fixed amount per day of hospitalization
Contributions to an HSA
For 2012, the annual contribution and deduction limit is $3,100 if the taxpayer has a high deductible health plan with self-only coverage, or $6,250 if the taxpayer has family coverage. If the taxpayer is age 55 or older at the end of 2012, their additional allowable contribution amount is $1,000. A taxpayer cannot deduct any contributions to an HSA that were made in the same month in which the taxpayer was enrolled in Medicare.
Distributions from an HSA
If distributions from an HSA are used for qualified medical expenses for the account beneficiary, spouse, or dependents, the distributions are excludable from gross income. Any amounts not used for qualified medical expenses are includible in gross income and are subject to an additional 20% tax unless an exception applies.
Qualified Medical Expenses
Qualified medical expenses for HSA purposes are unreimbursed medical expenses that could otherwise be deducted on the Schedule A worksheet with the exception of the list below. See the Schedule A Medical and Dental Expenses worksheet article and IRS Pub. 502, Medical and Dental Expenses for more details.
The taxpayer may not deduct the costs of any non-prescription medicines with the exception of insulin.
The taxpayer may not treat insurance premiums as qualified medical expenses unless the premiums are for one of the following:
- Long-term care (LTC) insurance,
- Health care continuation coverage, or
- Health care coverage while receiving unemployment compensation under Federal or state law.
- Medicare and other health care coverage if the taxpayer was 65 or older, however, this does not apply to amounts paid for a Medicare supplemental policy.
See IRS Pub. 969, Health Savings Accounts and Other Tax-Favored Health Plans, for more details or the IRS 2012 Instructions for Form 8889.