Instructions for Form 8889 Checklist — 2013 Tax Year
Form 8889 serves as the official reporting document for Health Savings Account contributions,
distributions, and account status during the 2013 tax year. The Internal Revenue Service requires taxpayers to complete this form when they or their employers make HSA contributions or when they receive distributions from their accounts.
Eligibility Requirements for HSA Contributions
You must verify coverage under a qualifying high-deductible health plan for each month you claim HSA contribution eligibility in 2013. Lines 1 through 3 of Form 8889 require month-by-month verification of HDHP coverage to accurately calculate your contribution limit.
Your health plan must meet minimum annual deductible thresholds and maximum out-of-pocket expense limits established by the Internal Revenue Service for 2013. You cannot maintain other health coverage during the months you claim HSA eligibility, except for permitted coverage, including preventive care, accidents, disability, dental care, vision care, and long-term care insurance.
Taxpayers who change coverage types during the year must complete a pro-rata calculation using the worksheet provided in the form instructions. The 2013 contribution limits differ between self-only coverage and family coverage under your high-deductible health plan.
Reporting Employer and Personal HSA Contributions
Employer contributions to your Health Savings Account appear on line 9 of Form 8889 and should match the amount reported in Box 12 of your Form W-2 with code W. These contributions include amounts deposited directly by your employer and contributions made through a Section 125 cafeteria plan election.
Your personal HSA contributions for 2013 appear on line 2 and include contributions made during the calendar year plus any contributions made from January 1, 2014, through April 15,
2014, that you designate as 2013 contributions to your HSA trustee or custodian. Line 13 calculates your allowable HSA deduction after accounting for both employer and personal contributions against your coverage-based limit.
Excess Contributions and Tax Penalties
Excess contributions beyond your annual limit trigger a 6% excise tax reported on Form 5329,
Part VII—Additional Tax on Excess Contributions to Health Savings Accounts. You must withdraw excess contributions by your tax filing deadline to avoid ongoing excise tax liability in subsequent years.
HSA Distribution Reporting and Qualified Medical
Expenses
Line 14a requires you to report all distributions received from your Health Savings Account during 2013, regardless of whether you used the funds for qualified medical expenses. Your
HSA trustee issues Form 1099-SA showing total distributions, which you must attach to your federal income tax return.
Line 15 captures the portion of distributions you used exclusively for qualified medical expenses as defined under IRC Section 223(d)(2) and IRC Section 213(d). Expenses must occur after you establish your HSA to qualify for tax-free treatment under federal income tax rules.
Qualified medical expenses include
- Medical care costs for yourself, your spouse, and your dependents may qualify if they
would otherwise be deductible on Schedule A.
- Costs that are not reimbursed by insurance or any other health coverage you maintain
may qualify.
- Prescription medications and insulin may qualify, and over-the-counter medicines may
qualify when prescribed by a physician.
- Long-term care insurance premiums, COBRA continuation coverage, health coverage
while receiving unemployment compensation, and Medicare premiums may qualify once you reach age 65 or older.
Tax Treatment of Non-Qualified Distributions
Line 16 calculates your taxable distribution amount by subtracting qualified medical expenses from total distributions. The Internal Revenue Service includes this amount in your gross income on Form 1040.
Taxpayers under age 65 who are not disabled face an additional 20% penalty tax on non-qualified distributions, which they report on Form 5329, Part II. The 20% additional tax does not apply to distributions made after you turn 65, after you become disabled, or after your death, though the distribution amount remains taxable as ordinary income.
You must maintain receipts, invoices, and explanatory statements documenting your qualified medical expenses, though you do not attach this documentation to your tax return. The Internal
Revenue Service may request substantiation during an audit, and you bear the burden of proving that distributions qualified for tax-free treatment.
Medicare Enrollment and HSA Contribution Eligibility
Medicare Part A or Part B enrollment terminates your eligibility to make HSA contributions.
When you enroll in Medicare after age 65, Part A coverage becomes retroactive for up to six months or back to the month you first became eligible for Medicare, whichever period is shorter.
All HSA contributions you make during this six-month retroactive period become excess contributions subject to the 6% excise tax under IRC Section 4973. To avoid tax penalties, you should stop HSA contributions up to six months before your planned Medicare enrollment date if you enroll after reaching age 65.
The 2013 Form 8889 instructions clarify that Medicare enrollment, not simply turning 65, triggers
HSA ineligibility. You can continue using your existing HSA balance for qualified medical expenses after Medicare enrollment without penalty, including using HSA funds to pay Medicare premiums and health care costs.
Form Attachment and Filing Requirements
You must attach Form 8889 to Form 1040 or Form 1040-NR when filing your federal income tax return for 2013. If you have excess contributions or non-qualified distributions subject to additional tax, you must also file Form 5329, Part VII, to calculate the excise tax on excess HSA contributions.
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