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New Member

HSA with PPO and excess

My health insurance is a PPO plan with a Health Savings Account (HSA). Typically only High Deductible Health Plans (HDHP) are qualified for an HSA. 

When doing my taxes, I have to file a 1099-sa form for my HSA. When filing this form, I am prompted with the option to select whether I had a PPO or HDHP in 2018. I have a PPO plan with an HSA. When I select PPO, I receive a message that says you have "an excess contribution of $1,200. This amount is being taxed an extra 6%. But, anything withdrawn between January 1 and April 15, 2019 avoids the additional tax."

This excess contribution of $1,200 in my HSA is from my employer in 2018, they contribute $100 monthly to my HSA, I have contributed zero dollars in 2018. Any money in the HSA account is supposed to rollover yearly, not be treated as an excess. When I select the option to not withdraw the $1,200 from the account, I am told I will be taxed an extra 6%. 

My questions are, Is there anyway to avoid the tax? I was told the money would rollover no matter what. Could this just be a TurboTax error? Is it the money in the HSA account that my employer contributed that will be taxed? I don't think withdrawing $1,200 is the way to go, because this money is supposed to accumulate over time in the HSA if it is not being used.

Any help is appreciated, thanks.

2 Replies
Level 15

HSA with PPO and excess

On what page does TurboTax make any reference to a PPO?  PPO and HDHP are not mutually exclusive, so I can't imagine anywhere in TurboTax that would ask you to pick one or the other.
Level 15

HSA with PPO and excess

Excess contributions result from contributions.  Forms 1099-SA report distributions, not contributions, so entering a Form 1099-SA cannot cause TurboTax to generate a penalty for an excess HSA contribution.  However, the same HSA section also asks about HSA contributions, so you have probably moved beyond the entry of the From 1099-SA before causing TurboTax to indicate an excess contribution.

Until you properly complete the HSA section of TurboTax to establish your eligibility to make the HSA contribution, TurboTax will treat any HSA contribution entered, either with code W in box 12 of TurboTax's W-2 form or as a personal HSA contribution, as an excess contribution.  You can also have an excess contribution that carried in from the previous year.  Eligibility for an HSA contribution is established by indicating what months you were covered by an HDHP and no other, disqualifying coverage such as Medicare, and that you cannot be claimed as a dependent on someone else's tax return.

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