IRS Form 8889 (Health Savings Accounts (HSAs)) and Instructions (2019); Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans (for use in preparing 2019 returns))
The IRS has released the 2019 version of Form 8889 (Health Savings Accounts (HSAs)) and its instructions, and has updated Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans) for 2019 tax returns. HSA holders (and beneficiaries of deceased HSA holders) must attach Form 8889 to their Forms 1040, 1040-SR, or 1040-NR to report tax-related events affecting their HSAs, including contributions and distributions. Form 8889 is also used to calculate HSA deductions and any reportable income and additional tax triggered by failing to remain HSA-eligible throughout the applicable testing period for qualified HSA funding distributions or the full-contribution rule (which the form and instructions refer to as the “last-month rule”). Publication 969 provides basic information about HSAs, HRAs, health FSAs, Archer MSAs, and Medicare Advantage MSAs, including brief descriptions of benefits, eligibility requirements, contribution limits, and distribution issues.
The 2019 versions of Form 8889 and its instructions are substantially similar to their 2018 counterparts. They have been updated to reflect the 2019 HSA contribution limits (see our Checkpoint article) and the deadline in 2020 for making HSA contributions for 2019. They also add references to new Form 1040-SR for seniors, and revise line and schedule numbers to reflect changes in the 1040-series forms. Revisions to Publication 969 for 2019 are also minimal. The revised publication reflects the 2019 contribution limits, deductible requirements, and out-of-pocket maximums for HSAs and Archer MSAs, and the limit on health FSA salary reduction contributions for plan years beginning in 2019. The limits and thresholds for HSAs and HDHPs for 2020 (but not the 2020 amounts for Archer MSAs or health FSAs) are also provided (see our Checkpoint article). Examples have been updated, and a new paragraph on preventive care has been added that highlights IRS Notice 2019-45 regarding the treatment of individuals with certain chronic conditions (see our Checkpoint article).
EBIA Comment: Form 8889 is filed by HSA holders with their income tax returns, but employers and advisors working with HSAs should have a basic understanding of its scope. Publication 969 provides a convenient overview of the basic features of various consumer-driven health care vehicles, but it is not intended to address the many design and administrative details that employers and their advisors need to know and should not be relied upon without reference to other sources. For more information about HSAs and HRAs, see EBIA’s Consumer-Driven Health Care manual at Sections XI.G (“Other Coverage That May or Will Prevent HSA Eligibility”), XII (“HSAs: Contributions”), XV (“HSAs: Distributions and Rollovers”), XVII.B (“HSA Holder Reporting Obligations”), and XXI (“Health Reimbursement Arrangements (HRAs): Introduction and Design Choices”). For more information about health FSAs, see EBIA’s Cafeteria Plans manual at Section XIX (“Overview of Legal Requirements for Health FSAs”).
Contributing Editors: EBIA Staff.