HDHP

[jh50]

Turbo Tax says that they recognize that my wife had a lapse in coverage in 2019, however, there was never a lapse in coverage.  What do I do to fix this?

[DeanM15]

You should go back through the HSA screens and inspect or re-answer the questions. 

1. While signed in and working in TurboTax Online 2019, click on Federal in the black menu on left.
2. Click on Deduction and Credits in the upper portion of the page.
3. Scroll down and click on Medical, Show More.
4. Choose the HSA MSA Contributions by clicking on Start or Revisit.

The questions will go between you and your spouse. You will be asked if your spouse had a HDHP, answer yes and you will go through a series of screens. Make sure you answer the questions carefully. 

2/28/2020 Edited to point to HSA MSA Contributions. 

[xPRobIRV]

I got this same message, on TurboTax Deluxe desktop (not online). I have gone through the HSA forms repeatedly, and everything looks right (my job has the insurance and the HSA, I'm the only HSA and insurance, everyone is covered). Think you've got a bug or something here.

We've used turbotax for years, so we imported last year to start this year. Not sure if that changes things - in 2018 the HSA was only part of the year (the latter half).

(Frustrating how many more of these questions I'm having to answer for myself this year - looks like TurboTax has degraded its import powers. I shouldn't have to be looking at the output of last year's turbotax to answer a question.)

[BillM223]

@xPRobIRV

Did you get the lapse message or your spouse? As you will see from the discussion below, the message normally occurs on the spouse without an HSA.

Your issue is with the question that asks "What type of High Deductible Health Plan did [name] have on December 1, 2018?"

Unfortunately, the question does not clarify that it is only for a small group of taxpayers and that all other taxpayers should answer "NONE".

NOTE: each spouse can have an HSA. The use of "you" below refers to whichever spouse's name was in the question above.

This question is trying to determine if you utilized the "last-month" rule in 2018 (yes, 2018). The last-month rule lets you use the full annual HSA contribution limit if you had HDHP coverage on December 1, even if you were not covered by an HDHP for all of the year.

However, the catch is that if you used the last-month rule, the IRS requires that you stay under HDHP coverage for all of the following year (2019).

***NOTE*** This question occurs on the taxpayer who does not have an HSA, so never had a chance to tell TurboTax in the HSA interview what their HDHP coverage was for 2019.

So, the fix is this: go back to the question (at the end of the HSA interview), and:

• If you had HDHP coverage for all of 2018 , then enter NONE 
• If you had no HDHP coverage for all of 2018, then enter NONE.
• If you did not have an HSA in 2018, then enter NONE.
• If you had an HSA in 2018 but did not contribute to it in 2018, then enter NONE.

Only taxpayers who had their own HSA in 2018 AND who contributed to their own HSA in 2018 should answer “Family” or “Self” or “None” (which can be the right answer in some cases).