Form 8889: Health Savings Accounts (HSAs) – Your Complete Guide for 2024
Health Savings Accounts offer one of the best tax deals around—but only if you file the right paperwork. Form 8889 is your key to claiming HSA tax benefits, and understanding it can save you hundreds or even thousands of dollars. Here's everything you need to know in plain English.
What Form 8889 Is For
Form 8889 is the IRS document you attach to your tax return (Form 1040, 1040-SR, or 1040-NR) to report all activity related to your Health Savings Account. Think of it as your HSA's report card for the year.
The form serves four main purposes: it reports contributions made to your HSA (whether by you, your employer, or anyone else), calculates your HSA deduction, reports any money you withdrew from your HSA, and determines if you owe any taxes or penalties for improper use. An HSA allows you to set aside pre-tax money specifically for medical expenses when you're enrolled in a high deductible health plan (HDHP).
The real power of an HSA lies in its triple tax advantage—contributions reduce your taxable income, the money grows tax-free, and withdrawals for qualified medical expenses are never taxed. Form 8889 is how you prove to the IRS that you're playing by the rules and claim these valuable benefits.
When You'd Use Form 8889 (Including Late and Amended Returns)
You must file Form 8889 if any of the following situations apply to you in 2024: anyone (including you, your employer, or family members) contributed to your HSA; you took any distributions from your HSA; you failed to maintain HDHP coverage during a required ""testing period"" after using special contribution rules; or you inherited an HSA because the original account holder died.
Here's an important detail many people miss—even if you had no taxable income and wouldn't normally file a tax return, you still need to file if you received HSA distributions. The form is mandatory in that situation.
For regular filing, Form 8889 is due when your tax return is due—typically April 15, 2025, for your 2024 tax year (or October 15, 2025, if you file an extension). You can make HSA contributions for 2024 all the way up until the April deadline, which gives you extra time to maximize your tax savings.
If you discover errors after filing, you'll need to file an amended return using Form 1040-X and include a corrected Form 8889. Common reasons for amending include discovering you contributed more than allowed, failing to report distributions, or incorrectly calculating your deduction. It's worth fixing these mistakes because HSA errors can trigger penalties ranging from 6% annually on excess contributions to a 20% additional tax on non-qualified distributions.
Key Rules and Limits for the 2024 Tax Year
To contribute to an HSA in 2024, you must be covered by a high deductible health plan with a minimum deductible of $1,600 for self-only coverage or $3,200 for family coverage. Your plan must also cap your annual out-of-pocket expenses at $8,050 (self-only) or $16,100 (family).
The contribution limits for 2024 are $4,150 if you have self-only HDHP coverage and $8,300 for family coverage. If you're age 55 or older by December 31, 2024, you can contribute an extra $1,000 as a ""catch-up"" contribution. These limits include everyone's contributions—yours, your employer's, and contributions from family members.
You can't contribute to an HSA if you're enrolled in Medicare, claimed as a dependent on someone else's tax return, or have other disqualifying health coverage (like a general-purpose health FSA or spouse's non-HDHP that covers you). However, you can have certain types of additional coverage without losing HSA eligibility: accident, disability, dental, vision, and long-term care insurance all qualify, as does coverage for specific diseases and telehealth services.
One powerful rule to understand is the ""last-month rule."" If you're HSA-eligible on December 1, 2024, you can contribute the full annual amount even if you weren't eligible for the entire year. The catch? You must remain eligible throughout 2025 (the ""testing period""), or you'll owe income tax plus a 10% penalty on the prorated contributions.
Withdrawals are tax-free when used for qualified medical expenses—essentially anything that could be deducted as a medical expense on Schedule A, including most over-the-counter medications, menstrual care products, and even condoms (thanks to recent IRS guidance). Take money out for non-medical purposes, and you'll pay income tax plus a 20% penalty unless you're over 65, disabled, or deceased.
Step-by-Step (High Level)
How to Complete Form 8889 (High Level)
Form 8889 has three main parts, and you'll complete only the sections that apply to you.
Part I handles contributions and deductions. Start by indicating your HDHP coverage type (self-only or family). Enter the total contributions you or others made on your behalf on line 2—don't include employer contributions here. Line 3 calculates your contribution limit based on when you had coverage (use the IRS worksheet if you weren't eligible all year). If you're 55 or older with family coverage, line 7 is where you claim your $1,000 catch-up contribution. Line 9 captures employer contributions, which should match the amount in Box 12 (code W) of your W-2. The form automatically calculates your deduction on line 13, which flows to Schedule 1 of your Form 1040.
Part II reports distributions. Line 14a shows total distributions from your HSA (you'll receive Form 1099-SA from your HSA trustee showing this amount). Line 15 is critical—this is where you enter the amount you spent on qualified medical expenses. The difference between what you withdrew and what you spent on qualified expenses becomes taxable income on line 16. If you took money out for non-medical purposes and you're under 65 and not disabled, you'll calculate a 20% additional tax on line 17b.
Part III applies only in special circumstances. You'll complete this section if you used the last-month rule to maximize contributions but failed to remain HSA-eligible throughout the testing period. This section calculates the income and additional tax you'll owe for that failure.
The key to getting this form right is keeping good records. Save all medical receipts, know your employer contribution amounts, and track when your HDHP coverage started and stopped.
Common Mistakes and How to Avoid Them
Over-contributing is the most frequent error. Many people don't realize that employer contributions count toward the annual limit. If you contribute the maximum but your employer also contributes, you've exceeded the limit and face a 6% excise tax on the excess. Solution: Check your W-2 Box 12 (code W) early in the year and adjust your personal contributions accordingly.
Failing to report employer contributions trips up many filers. Your employer's HSA contributions must be reported on line 9 even though they're already excluded from your income. Leaving this line blank means you'll claim a larger deduction than you're entitled to, inviting an IRS audit. Solution: Always check Box 12 (code W) on your W-2 before filing.
Misunderstanding the last-month rule creates unexpected tax bills. People contribute the full annual amount thinking they're covered, but then change to a non-HDHP plan before the testing period ends. Solution: Only use the last-month rule if you're certain you'll maintain HDHP coverage through December 31 of the following year.
Not keeping adequate records for qualified medical expenses is dangerous. The IRS doesn't require you to submit receipts with your return, but you must have them if audited. Many people withdraw money without keeping receipts, then can't prove the expenses were qualified years later. Solution: Create a dedicated folder (physical or digital) for HSA-related medical receipts and keep them for at least six years.
Withdrawing from the wrong account happens when people have both an HSA and a retirement account. Some accidentally take a distribution from their IRA thinking it's their HSA, creating a taxable event. Solution: Clearly label your accounts and double-check before making any withdrawal.
Treating insurance premiums as qualified expenses is another trap. Generally, you can't use HSA funds tax-free for premiums except for very specific types: long-term care insurance, COBRA continuation coverage, health insurance while receiving unemployment compensation, and Medicare premiums if you're 65 or older. Solution: When in doubt about whether an expense qualifies, check IRS Publication 502 or consult a tax professional.
What Happens After You File
Once you submit Form 8889 with your tax return, the HSA deduction from line 13 reduces your adjusted gross income, potentially lowering your overall tax bill and affecting eligibility for other tax benefits. The IRS will process your return and either approve it, flag it for additional review, or send you a notice if they spot errors.
Your HSA account itself continues year-round. Unlike Flexible Spending Accounts, HSA money never expires—it rolls over indefinitely and remains yours even if you change jobs, retire, or switch to a non-HDHP plan. After you stop being HSA-eligible, you can't make new contributions, but you can still use existing funds tax-free for qualified medical expenses.
If you over-contributed, you have until your tax filing deadline (including extensions) to withdraw the excess plus any earnings to avoid the 6% penalty. Your HSA trustee can help calculate the earnings portion that must also come out.
Around January or February following the tax year, you'll receive Form 1099-SA from your HSA trustee showing your distributions, and Form 5498-SA showing contributions made. Keep these forms—you'll need them for next year's Form 8889 and they're essential if the IRS has questions.
If you made non-qualified withdrawals, that income is reported on Schedule 1 of Form 1040, and any 20% additional tax is calculated on Form 8889 and also flows to Schedule 1. This increases your tax liability dollar-for-dollar.
The long-term benefit of properly managing your HSA can't be overstated. Many people treat HSAs as ""health IRAs,"" paying medical expenses out of pocket during their working years while keeping receipts, then reimbursing themselves decades later in retirement, allowing maximum tax-free growth. Form 8889 is simply the annual checkpoint ensuring you're following the rules on this powerful wealth-building tool.
FAQs
Can I contribute to my HSA if I only had HDHP coverage for part of 2024?
Yes, but your contribution limit is prorated based on the number of months you were eligible, unless you qualify under the last-month rule (eligible on December 1), which allows the full annual contribution if you remain eligible through December 31, 2025.
What happens if both spouses have HSAs and family HDHP coverage?
The family contribution limit ($8,300 for 2024) is shared between both spouses—you decide how to divide it. Each spouse completes a separate Form 8889, and if you're both 55 or older, you can each contribute an additional $1,000, but only to your own separate HSA.
Do I need Form 8889 if I only received employer HSA contributions and took no distributions?
Yes, you must file the form to report the employer contributions and claim your deduction, even if you never touched the money.
Can I use my HSA to pay for my spouse's or children's medical expenses even if they're not covered by my HDHP?
Absolutely—HSA funds can pay for qualified medical expenses for you, your spouse, and your tax dependents regardless of whether they're covered under your HDHP.
What if I don't have receipts for HSA distributions I took years ago and now I'm being audited?
This is problematic because the burden of proof is on you. Reconstruct documentation if possible (credit card statements, pharmacy records, medical provider billing statements) or face the possibility that distributions will be treated as taxable income plus the 20% penalty.
If I turn 65 mid-year, how does that affect my HSA?
You can continue contributing to your HSA until the month you enroll in Medicare (not automatically when you turn 65). After enrolling in Medicare, you cannot make new contributions but can still use existing funds tax-free for qualified expenses. Additionally, after 65, withdrawals for non-medical purposes are taxed as ordinary income but not subject to the 20% penalty.
Can I reimburse myself for medical expenses I paid years ago if I have the receipts?
Yes—there's no time limit on HSA reimbursements as long as the expenses were incurred after your HSA was established and you have proper documentation. This strategy allows your HSA to grow tax-free for years or even decades before withdrawal.
For More Information: Visit IRS.gov/Form8889 for the current form, instructions, and Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans) for comprehensive guidance.
