My retirement plan changed health insurance to an hsa plan that they put $1,400 towards insurance. Do I claim this as income?

[ghost]

The only way it would be treated as income is if you are not eligible for HSA contribution. This means that your medical insurance must be a HDHP (high deductible health plan), you cannot be enrolled in Medicare or any other secondary medical coverage, and you must not be another taxpayer's dependent.

[ghost]

When did this change become effective and is your HDHP insurance a family plan or only for yourself?

[jczarnik7878]

My husband died in 1998 and I get his retirement plan and insurance plans.  In 2013, instead of providing retirees with heath plan coverage they changed it to an HSA and fund $1,400 towards a health plan that I choose.  It does not cover the total expense of the insurance plan, though.  I also receive medicare Parts B & D.  This is for myself only.

[ghost]

Are you absolutely sure this is a HSA? The fact that you are enrolled in Medicare prohibits you from HSA contribution. Is this the first year you are enrolled in Medicare? If not, how was this $1400 handled in prior years? When you are not eligible for HSA contribution, you would have to withdraw the contribution or pay a penalty. The money is taxable as ordinary income if you are not eligible.

[ghost]

Also, I past years, you would have a Form 8889 included in your tax return. This form reports the HSA contributions and distributions. Can you see if you filed a Form 8889 before?

[jczarnik7878]

I am so sorry.  It is an HRA (Health Reimbursement Arrangement).  They put in $1,400 towards insurance and I use that towards my health plan coverage which is $2,274.  Do I have to claim the $1,400?  Can I deduct the full premium coverage of $2,274 on medical expenses?

[ghost · Accepted solution]

The $1400 is not taxable.

Here are the benefits of an HRA:
Contributions made by your employer are not included in your gross income.
Reimbursements may be tax-free if you pay qualified medical expenses.
Any unused amounts in the HRA can be carried forward to reimbursements in later years.
Employers have complete flexibility in this area and therefore when designing their plan can offer various benefits.
Reimbursements under an HRA can be made to the following persons except in certain situations as outlined in IRS Publication 969:
Current and former employees.
Spouses and dependents of those employees.
Your child under the age of 27 at the end of the tax year.
Spouses and dependents of deceased employees.

You would be able to deduct amount of your insurance cost in excess of the $1400 paid from your HRA. You do not deduct the $1400 because it is already untaxed money.

[jczarnik7878]

That helps me - thank you so much for your help!

[ghost]

You're welcome.