Solved: Keeps asking if my wife's HDHP coverage lapsed in 2017 due to disability, but her coverage never lapsed. She was covered by her employers plan. How do I fix this?
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shabob2
New Member

Keeps asking if my wife's HDHP coverage lapsed in 2017 due to disability, but her coverage never lapsed. She was covered by her employers plan. How do I fix this?

 
1 Best answer

Accepted Solutions
BMcCalpin
Level 13

Keeps asking if my wife's HDHP coverage lapsed in 2017 due to disability, but her coverage never lapsed. She was covered by her employers plan. How do I fix this?

This situation happens when you or your spouse answer the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2016?" with "Family" or "Self", but did not show HDHP coverage for all of 2017 (see screenshot below).

There are three ways to not show HDHP coverage for all of 2017 -

(1) you or your spouse answered "I had different types of coverage at different times of the year" to the earlier question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2017?" and indicated no coverage at all in some months (See second screenshot below)

(2) you or your spouse indicated that you were on Medicare in 2017

(3) you or your spouse don't have an HSA so you never went through the HSA interview and so never answered the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2017?"

TurboTax is asking the first question because it needs to know if you took advantage of the "last-month rule" in 2016. Under this rule, if you had HDHP coverage on December 1, 2016, you were able to take the full annual HSA contribution limit as your limit, without regard to how few months you were under the HDHP in 2016. The catch is that if you do this, you have to stay in the HDHP for the entire "testing period", that is, all of 2017 (by this point, for one of the three reasons above TurboTax already thinks that you left HDHP coverage in 2017).

In this case, if you did leave HDHP coverage in 2017, then you will have a "failure to maintain HDHP coverage", and TurboTax has to calculate the income adjustments and penalties for this situation.

What to do:

1. If you were in HDHP coverage for ALL of 2016, then you can answer "none" to the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2016?" This will skip the lapse in coverage message.

2. If you were not under HDHP coverage at all in 2016, then you can answer "none" to the same question above. This will skip the lapse in coverage message.

3. If you were in HDHP coverage for ALL of 2107, then you can answer "none" to the question above. This will skip the lapse in coverage message.

4. If you did not make any contributions to your HSA in 2016 (perhaps because you did not have one), then you can answer "none" to the question above. This will skip the lapse in coverage message.

5. Only if you started HDHP sometime after January 1, 2016 and ended HDHP coverage sometime before December 1, 2017 and made contributions to your HSA in 2016 should you answer "Family" or "Self" - since you are in the very last-month rule situation that the original question is looking for.

For #5, there will be several screens to follow which try to determine if you owe any penalty for taking advantage of the last-month rule in 2016 yet did not stay in the HDHP for all of 2017. Please do answer these questions as they are necessary to complete a correct return.

View solution in original post

2 Replies
BMcCalpin
Level 13

Keeps asking if my wife's HDHP coverage lapsed in 2017 due to disability, but her coverage never lapsed. She was covered by her employers plan. How do I fix this?

This situation happens when you or your spouse answer the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2016?" with "Family" or "Self", but did not show HDHP coverage for all of 2017 (see screenshot below).

There are three ways to not show HDHP coverage for all of 2017 -

(1) you or your spouse answered "I had different types of coverage at different times of the year" to the earlier question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2017?" and indicated no coverage at all in some months (See second screenshot below)

(2) you or your spouse indicated that you were on Medicare in 2017

(3) you or your spouse don't have an HSA so you never went through the HSA interview and so never answered the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2017?"

TurboTax is asking the first question because it needs to know if you took advantage of the "last-month rule" in 2016. Under this rule, if you had HDHP coverage on December 1, 2016, you were able to take the full annual HSA contribution limit as your limit, without regard to how few months you were under the HDHP in 2016. The catch is that if you do this, you have to stay in the HDHP for the entire "testing period", that is, all of 2017 (by this point, for one of the three reasons above TurboTax already thinks that you left HDHP coverage in 2017).

In this case, if you did leave HDHP coverage in 2017, then you will have a "failure to maintain HDHP coverage", and TurboTax has to calculate the income adjustments and penalties for this situation.

What to do:

1. If you were in HDHP coverage for ALL of 2016, then you can answer "none" to the question "Was [name] covered by a High Deductible Health Plan (HDHP) in 2016?" This will skip the lapse in coverage message.

2. If you were not under HDHP coverage at all in 2016, then you can answer "none" to the same question above. This will skip the lapse in coverage message.

3. If you were in HDHP coverage for ALL of 2107, then you can answer "none" to the question above. This will skip the lapse in coverage message.

4. If you did not make any contributions to your HSA in 2016 (perhaps because you did not have one), then you can answer "none" to the question above. This will skip the lapse in coverage message.

5. Only if you started HDHP sometime after January 1, 2016 and ended HDHP coverage sometime before December 1, 2017 and made contributions to your HSA in 2016 should you answer "Family" or "Self" - since you are in the very last-month rule situation that the original question is looking for.

For #5, there will be several screens to follow which try to determine if you owe any penalty for taking advantage of the last-month rule in 2016 yet did not stay in the HDHP for all of 2017. Please do answer these questions as they are necessary to complete a correct return.

View solution in original post

mike-hartlieb
New Member

Keeps asking if my wife's HDHP coverage lapsed in 2017 due to disability, but her coverage never lapsed. She was covered by her employers plan. How do I fix this?

This entire section needs a total redesign. The questions are confusing which causes people to search the forums for answers about why TurboTax says they didn’t have a HDHP in 2018, when, in fact they did.
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