Table of Contents
Use Form 8889 to:
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Report health savings account (HSA) contributions (including those made on your behalf and employer contributions),
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Figure your HSA deduction,
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Report distributions from HSAs, and
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Figure amounts you must include in income and additional tax you may owe if you fail to be an eligible individual.
You must file Form 8889 if any of the following applies.
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You (or someone on your behalf, including your employer) made contributions for 2007 to your HSA.
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You received HSA distributions in 2007.
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You must include certain amounts in income because you failed to be an eligible individual during the testing period.
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You acquired an interest in an HSA because of the death of the account beneficiary. See Death of Account Beneficiary on page 2.
To be eligible to have contributions made to your HSA, you must be covered under a high deductible health plan (HDHP) and have no other health coverage except permitted coverage. If you are an eligible individual, anyone can contribute to your HSA. However, you cannot be enrolled in Medicare or be claimed as a dependent on another person's tax return. You must be, or be considered, an eligible individual on the first day of a month to take an HSA deduction for that month (see Last-month rule next).
The account beneficiary is the individual on whose behalf the HSA was established.
Generally, an HSA is a health savings account set up exclusively for paying the qualified medical expenses of the account beneficiary or the account beneficiary's spouse or dependents.
Distributions from an HSA used exclusively to pay qualified medical expenses of the account beneficiary, spouse, or dependents are excludable from gross income. (See the line 15 instructions for information on medical expenses of dependents not claimed on your return.) You can receive distributions from an HSA even if you are not currently eligible to have contributions made to the HSA. However, any part of a distribution not used to pay qualified medical expenses is includible in gross income and is subject to an additional 10% tax unless an exception applies.
Generally, qualified medical expenses for HSA purposes are unreimbursed medical expenses that could otherwise be deducted on Schedule A (Form 1040). See the Instructions for Schedule A and Pub. 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit). However, you cannot treat insurance premiums as qualified medical expenses unless the premiums are for:
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Long-term care (LTC) insurance,
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Health care continuation coverage (such as coverage under COBRA),
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Health care coverage while receiving unemployment compensation under federal or state law, or
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Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).
An HDHP is a health plan that meets the following requirements.
| Self-only coverage | Family coverage | ||
| Minimum annual deductible | $1,100 | $2,200 | |
| Maximum annual out-of-pocket expenses* | $5,500 | $11,000 |
| * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses (such as copayments and other amounts, but not premiums) for services within the network should be used to figure whether the limit is reached. |
An HDHP can provide preventive care and certain other benefits with no deductible or a deductible below the minimum annual deductible. For more details, see Pub. 969. An HDHP does not include a plan if substantially all of the coverage is for accidents, disability, dental care, vision care, or long-term care. An HDHP also cannot be insurance that you are permitted to have in addition to an HDHP. See Other Health Coverage next.
If you have an HSA, you (and your spouse, if you have family coverage) generally cannot have any health coverage other than an HDHP. But your spouse can have health coverage other than an HDHP if you are not covered by that plan. If you have a health flexible spending arrangement or health reimbursement arrangement, see Pub. 969.
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Liabilities under workers' compensation laws, tort liabilities, or liabilities arising from the ownership or use of property,
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A specific disease or illness, or
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A fixed amount per day (or other period) of hospitalization.
An individual generally is considered disabled if he or she is unable to engage in any substantial gainful activity due to a physical or mental impairment which can be expected to result in death or to continue indefinitely.
If the account beneficiary's surviving spouse is the designated beneficiary, the HSA is treated as if the surviving spouse were the account beneficiary. The surviving spouse completes Form 8889 as though the HSA belonged to him or her.
If the designated beneficiary is not the account beneficiary's surviving spouse, or there is no designated beneficiary, the account ceases to be an HSA as of the date of death. The beneficiary completes Form 8889 as follows.
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Enter “Death of HSA account beneficiary” across the top of Form 8889.
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Enter the name(s) shown on your tax return and your SSN in the spaces provided at the top of the form and skip Part I.
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On line 14a, enter the fair market value of the HSA as of the date of death.
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On line 15, for a beneficiary other than the estate, enter qualified medical expenses incurred by the account beneficiary before the date of death that you paid within 1 year after the date of death.
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Complete the rest of Part II.
If the account beneficiary's estate is the beneficiary, the value of the HSA as of the date of death is included on the account beneficiary's final income tax return. Complete Form 8889 as described above, except you should complete Part I, if applicable.
The distribution is not subject to the additional 10% tax. Report any earnings on the account after the date of death as income on your tax return.
The following situations result in deemed distributions from your HSA.
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You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2007. Your account ceases to be an HSA as of January 1, 2007, and you must include the fair market value of all assets in the account as of January 1, 2007, on line 14a.
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You used any portion of any of your HSAs as security for a loan at any time in 2007. You must include the fair market value of the assets used as security for the loan as income on line 21 of Form 1040 or Form 1040NR.
Any deemed distribution will not be treated as used to pay qualified medical expenses. Generally, these distributions are subject to the additional 10% tax.
A rollover is a tax-free distribution (withdrawal) of assets from one HSA or Archer MSA that is reinvested in another HSA. Generally, you must complete the rollover within 60 days after you received the distribution. You can make only one rollover contribution to an HSA during a 1-year period. See Pub. 590, Individual Retirement Arrangements (IRAs), for more details and additional requirements regarding rollovers.
Note.
If you instruct the trustee of your HSA to transfer funds directly to the trustee of another HSA, the transfer is not considered
a rollover.
There is no limit on the number of these transfers. Do not include the amount transferred in income, deduct it as a contribution,
or include it as a
distribution on
line 14a.
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