Form 8889: Health Savings Accounts (HSAs) – 2023 Guide
What Form 8889 Is For
Form 8889 is the IRS form you use to report everything related to your Health Savings Account for the tax year. Think of it as the official record that connects your HSA activity to your tax return. You'll use this form to report contributions made to your HSA (whether by you, your employer, or others on your behalf), calculate how much you can deduct from your taxes, report money you took out of your HSA, and figure out if you owe any additional taxes or penalties.
An HSA is a special savings account that lets you set aside pre-tax money to pay for qualified medical expenses when you have a high-deductible health plan (HDHP). The key benefit is the triple tax advantage: contributions reduce your taxable income, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. Form 8889 is how the IRS tracks these benefits and ensures you're following the rules.
You must file Form 8889 if you or anyone else contributed to your HSA during 2023, if you withdrew money from your HSA during 2023, or if you need to report income because you didn't maintain eligibility as required. Even if you have no taxable income otherwise, you still need to file this form with your tax return if you received HSA distributions during the year. IRS
When You’d Use Form 8889 (Including Late or Amended Filings)
You file Form 8889 with your regular tax return—typically by April 15, 2024, for the 2023 tax year. However, there's flexibility: you can make HSA contributions for 2023 all the way up until the tax filing deadline (April 15, 2024), and these still count toward your 2023 limit. If you get a filing extension, your contribution window extends too.
You might need to file a late or amended return with Form 8889 in several situations. If you discovered you made excess contributions after filing, you need to withdraw them and file an amended return. The IRS allows you to correct excess contributions up to six months after your filing deadline if you write ""Filed pursuant to section 301.9100-2"" at the top of your amended return and explain the withdrawal. You'd also amend if you forgot to report HSA contributions or distributions, if your employer corrected your W-2 showing different contribution amounts, or if you initially failed to claim the HSA deduction you were entitled to.
Another common reason for amended filings relates to the ""last-month rule."" If you qualified as an HSA-eligible individual on December 1, 2023, you could contribute the full annual amount, but you must remain eligible through December 31, 2024. If you lose eligibility during that testing period (say, by enrolling in Medicare or getting non-HDHP coverage), you'll need to file an amended 2023 return to report the excess contributions as taxable income plus a 10% penalty. IRS
Key Rules and Limits for 2023
To contribute to an HSA in 2023, you must meet specific eligibility requirements. You need to be covered by a qualified HDHP on the first day of the month, have no other disqualifying health coverage, not be enrolled in Medicare, and not be claimed as a dependent on someone else's tax return. An HDHP for 2023 must have a minimum deductible of $1,500 for self-only coverage or $3,000 for family coverage, with maximum out-of-pocket expenses of $7,500 (self-only) or $15,000 (family).
The 2023 contribution limits are $3,850 for self-only HDHP coverage and $7,750 for family coverage. If you're 55 or older by December 31, 2023, you can contribute an additional $1,000 ""catch-up"" contribution. These limits include contributions from all sources—you, your employer, family members, or anyone else contributing on your behalf. Employer contributions (including those made through a cafeteria plan) count toward your limit and reduce what you can personally contribute.
You're allowed to have certain types of coverage in addition to your HDHP without losing HSA eligibility. These include dental, vision, disability, accident, long-term care insurance, workers' compensation, specific disease insurance, and fixed hospitalization benefits. For 2023 and 2024, you can also have separate coverage for telehealth and other remote care services. However, having a general-purpose health FSA, HRA, or any health plan that provides benefits before your HDHP deductible is met will generally disqualify you from HSA contributions.
The IRS provided special COVID-19 relief through Notice 2023-37, which applies to plan years ending on or before December 31, 2024. Your HDHP can cover COVID-19 testing and treatment before you meet your deductible without disqualifying you from HSA eligibility. However, as of July 24, 2023, COVID-19 testing is no longer considered ""preventive care"" that can be provided with zero deductible under the general preventive care safe harbor. Additionally, insulin products can be covered with zero deductible for plan years beginning after 2022. IRS
Step-by-Step Guide to Completing the Form
Form 8889 has three main sections.
Part I – HSA Contributions and Deduction
Part I calculates your HSA contributions and deduction. You'll start by checking whether you had self-only or family coverage, then enter the total contributions you and others made on your behalf (line 2), but not employer contributions. The form walks you through calculating your contribution limit based on how many months you were eligible. If you were eligible all year with no coverage changes, simply enter $3,850 or $7,750 on line 3. If your eligibility or coverage changed during the year, you'll use the Line 3 Limitation Chart and Worksheet to prorate your limit month by month.
After calculating your limit, you'll subtract any Archer MSA contributions, enter your employer's HSA contributions (from box 12 of your W-2 with code W), and report any IRA-to-HSA transfers called ""qualified HSA funding distributions."" The form then calculates your actual HSA deduction by taking the lesser of your contributions or your limit. For married couples where both spouses have HSAs and family coverage, you'll need to divide the family contribution limit between you (equally or by agreement) and complete separate forms.
Part II – HSA Distributions
Part II reports distributions from your HSA. You'll enter total distributions received (from Form 1099-SA), subtract any rollovers or withdrawn excess contributions, and enter qualified medical expenses you paid with HSA funds. Qualified medical expenses include unreimbursed costs for medical, dental, and vision care for you, your spouse, and dependents, plus over-the-counter medicines and menstrual care products. The form calculates whether any distributions are taxable—if you used HSA money for non-qualified expenses, that amount becomes taxable income.
Part III – Additional Income and Tax for Testing Period Failures
Part III applies only if you failed to remain HSA-eligible during a testing period after using the last-month rule or making an IRA-to-HSA transfer. You'll calculate additional income and a 10% penalty tax that must be reported on your tax return. Most filers won't need to complete this section. Once completed, you'll transfer your HSA deduction to Schedule 1 (Form 1040), line 13, and any additional taxes to Schedule 2. IRS
Common Mistakes and How to Avoid Them
Mistake #1: Over-contributing to your HSA
One of the most frequent errors is over-contributing to your HSA. Many people don't realize that employer contributions count toward the annual limit. If your employer contributes $2,000 and you have self-only coverage ($3,850 limit), you can only contribute $1,850 yourself. Over-contributions trigger a 6% excise tax for every year the excess remains in your account. To avoid this penalty, withdraw excess contributions plus any earnings before your tax filing deadline (including extensions).
Mistake #2: Misusing the last-month rule
Another mistake involves the last-month rule. This rule lets you contribute the full annual amount if you're HSA-eligible on December 1, but many people don't understand they must remain eligible through December 31 of the following year. If you enroll in Medicare, change to non-HDHP coverage, or become someone's dependent during that testing period, you'll owe taxes and penalties on contributions that wouldn't have been allowed. Before using the last-month rule to make larger contributions, make sure you'll maintain eligibility for the entire testing period.
Mistake #3: Misunderstanding qualified medical expenses
People often confuse what counts as ""qualified medical expenses."" While HSA funds can cover a broad range of healthcare costs, they can't cover insurance premiums except for COBRA, health insurance while receiving unemployment benefits, long-term care insurance, and Medicare premiums if you're 65 or older. Also, you can only use HSA funds for expenses incurred after you established your HSA—you can't reimburse yourself for medical bills from before the account was opened, even if you're using the last-month rule for contributions.
Mistake #4: Incorrectly reporting distributions
Many filers incorrectly report distributions on their tax returns. If you used HSA money for qualified medical expenses, those distributions aren't taxable and shouldn't be included in your income—but you must still report them on Form 8889. Some people also forget that they can use HSA funds tax-free for qualified medical expenses of their spouse and dependents, even if those family members aren't covered by their HDHP. Keep detailed records and receipts for all HSA spending, as the IRS can request documentation. IRS
What Happens After You File
After filing Form 8889, your HSA deduction reduces your adjusted gross income, potentially lowering your overall tax liability and possibly qualifying you for other tax benefits. The IRS receives matching information from your HSA trustee (Form 5498-SA showing contributions) and from your employer (Form W-2 showing employer contributions), which they use to verify the information on your Form 8889.
Your HSA remains active and continues growing tax-free. Unlike flexible spending accounts, HSA funds never expire—they roll over year after year. You can take distributions anytime to reimburse yourself for qualified medical expenses, even expenses from previous years, as long as they were incurred after you established the HSA. Many people strategically pay medical expenses out-of-pocket while letting their HSA grow, then reimburse themselves years later when they need the money.
If the IRS identifies discrepancies between your Form 8889 and information from trustees or employers, you may receive a notice requesting clarification or proposing changes to your return. Common notices include CP2000 for unreported HSA distributions or questions about excess contributions. Respond promptly with documentation like receipts for qualified medical expenses or explanations of how you calculated your contribution limit. If you discover errors after filing, you can file an amended return using Form 1040-X along with a corrected Form 8889.
Your HSA remains portable—it stays with you regardless of job changes, retirement, or changes in health coverage. Even if you're no longer eligible to contribute (say, because you enrolled in Medicare), you can still use existing HSA funds tax-free for qualified medical expenses. Many people use HSAs as supplemental retirement accounts, letting them grow throughout their working years and using them to pay Medicare premiums, long-term care insurance, and out-of-pocket medical costs in retirement. IRS
FAQs
What if both my spouse and I have separate HSAs?
Each spouse must file their own Form 8889, even on a joint return. If both of you have family HDHP coverage, you're both treated as having family coverage, and the $7,750 limit applies to your combined contributions. You can divide this limit however you agree (or split it equally by default). If you're both 55+, each can make an additional $1,000 catch-up contribution to your own HSA, for a potential combined total of $9,750.
Can I contribute to an HSA if I'm covered by Medicare?
No. Starting with the first month you're enrolled in Medicare, your contribution limit becomes zero. This creates a trap for people who delay Medicare enrollment—if your enrollment is backdated, any HSA contributions during the retroactive coverage period become excess contributions subject to penalties. If you're approaching 65, carefully coordinate your Medicare enrollment timing with your HSA contributions.
What happens if I use HSA money for non-medical expenses?
The distribution becomes taxable income, and if you're under 65, you'll pay an additional 20% penalty tax on top of regular income taxes. After age 65, you can withdraw HSA funds for any purpose—they're taxable as ordinary income but without the 20% penalty. This makes HSAs function like traditional IRAs after 65, except with the added benefit of tax-free withdrawals for medical expenses.
Do I need to submit receipts with Form 8889?
No, you don't attach receipts to your tax return, but you must keep detailed records of all qualified medical expenses. The IRS can request documentation during an audit. Many people keep receipts, explanation of benefits statements, and a spreadsheet tracking HSA spending. Some HSA providers offer tools to store receipts digitally and categorize expenses.
Can I reimburse myself years later for old medical expenses?
Yes, as long as the expenses were incurred after you established your HSA and you haven't already reimbursed yourself or deducted them. You could pay medical bills out-of-pocket in 2023, keep the receipts, and reimburse yourself from your HSA in 2030 or later. There's no time limit. This strategy lets your HSA grow tax-free while maintaining flexibility for future withdrawals.
What if I made excess contributions accidentally?
Withdraw the excess contributions and any earnings on them before your tax filing deadline (including extensions) to avoid the 6% annual penalty. Your HSA trustee should track this and report it properly. If you already filed your return, you have up to six months after the filing deadline to correct it by filing an amended return. Don't ignore excess contributions—the 6% penalty applies every year until you fix the problem.
Are Health Savings Account contributions reported on my W-2?
Yes, employer contributions to your HSA appear in box 12 of your W-2 with code W. Contributions you made through payroll deduction (a cafeteria plan) are treated as employer contributions and also appear in box 12 with code W. These contributions are already excluded from the wages shown in box 1 of your W-2. Contributions you made directly to your HSA trustee (outside payroll) won't appear on your W-2—you'll track and report those separately on Form 8889.
Sources: All information sourced from official IRS publications including Form 8889 Instructions (2023), Publication 969 (2023), and IRS.gov Form 8889 information page.
