Deductions & credits

You can still own an HSA (funded from prior years) if you are no longer HSA-eligible. You can still withdraw the money tax-free if the funds are used for qualified medical expenses. If you only have qualified withdrawals for the year, you only need to enter the information from Form 1099-SA. Be sure to indicate that you did not make contributions. Your W2 would have code W in box 12 for any employment-related contributions.

However, you cannot make additional contributions to an HSA without an HDHP. 

Qualifying for an HSA

To be an eligible individual and qualify for an HSA, you must meet the following requirements.

• You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.

• You have no other health coverage except what is permitted under Other health coverage , later.

• You aren’t enrolled in Medicare.

• You can’t be claimed as a dependent on someone else’s 2018 tax return.

If you do not meet these qualifications, your contributions are disallowed and treated as excess contributions. 

Excess contributions.

You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Excess contributions aren’t deductible. Excess contributions made by your employer are included in your gross income. If the excess contribution isn’t included in box 1 of Form W-2, you must report the excess as "Other income" on your tax return.

Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.

You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions.

• You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.

• You withdraw any income earned on the withdrawn contributions and include the earnings in "Other income" on your tax return for the year you withdraw the contributions and earnings.

Publication 969

Form 8889