HEALTH SAVINGS ACCOUNT

1. HEALTH SAVINGS ACCOUNT • Enables Taxpayers to pay for current medical expenses and save for future qualified medical expenses on a tax-free basis

2. 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

3. 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

4. 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

5. 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.

6. 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

7. Limits for annual HDHP deductible and out of pocket expenses

8. HSA Contributions Limits

9. 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.

10. 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.

11. Typical Scenario