High Deductible Health Plan Coverage Lapse in 2020??

[MrBean]

For context, my wife is on my high deductible health plan (I'm the primary for our family).  I also contribute to an HSA that we use to pay medical expenses.  

This has been the case for years.

This year when I was completing my taxes with TurboTax 2020 I got to a question asking me:

"What type of High Deductible Health Plan did [Wife] have on December 1, 2019?"

The options are Family, Self Only, None.

Since she was on my family plan I select "Family".

I then get a message:

"Did [Wife]'s High Deductible Health Plan coverage lapse in 2020 due to disability? We see [Wife] had a break in HDHP health plan coverage during 2020. Let us know if this was the result of a disability"

The options are Yes, due to disability - or - No, coverage ended for other reasons.

My wife has always been on my HDHP and never had a lapse in coverage.

Is this a bug?  Never had an issue with Turbotax before.  Thanks.

[AnnetteB6 · Accepted solution]

Just before you see the message stating that your spouse had a lapse in coverage, you should see the question, “What type of High Deductible Health Plan did [spouse] have on December 1, 2019?”.  The choices are Family, Self only, or None. 

If your spouse had been covered under your family plan, you might think you should answer Family to the question.  However, the answer should be None. 

It is referring to what type of plan your spouse held in their name on December 1, 2019.  If your spouse had their own separate HDHP on that date, then choose the type of plan that they had.  If instead your spouse was covered under the plan in your name, then you should choose None.

To go back to the section of your return to answer the questions again, use the following steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “hsa” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to hsa”
• Click on the blue “Jump to hsa” link and edit your information

[sschiro2]

I'm having a similar problem.  The software is assuming that I had a lapse in HDHP coverage - but I didn't.   For the question "What type of HDHP did I have on December 1, 2019?"  I answered "self only" - since I had my own plan.  How do I get this problem resolved?

[BillM223]

Your issue is with the question that asks "What type of High Deductible Health Plan did [name] have on December 1, 2019?"

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 2019 (yes, 2019). 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 (2020).

***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 2020.

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 2019 , then enter NONE 
• If you had no HDHP coverage for all of 2019, then enter NONE.
• If you did not have an HSA in 2019, then enter NONE.
• If you had an HSA in 2019 but did not contribute to it in 2019, then enter NONE.

Only taxpayers who had their own HSA in 2019 AND who contributed to their own HSA in 2019 should answer “Family” or “Self” or “None” (which can be the right answer in some cases).

[snoqualmie7]

Thank you SO much for this explanation, @AnnetteB6 ! 🙌

 I was completely confused by the recurring error message about a lapse in coverage..your answer completely resolved it.

For all the helpful explanations TurboTax provides, they really missed some much needed clarification on that "What type of High Deductible Health Plan did [spouse] have" question.

[dekfreeze]

Thanks so much for sharing this, as it helped me in the same scenario. I will say that this question is phrased in a confusing way. I called turbotax support and also could not get a clear alignment on how to proceed. I performed a community search while on the call and stumbled upon this answer.

Perhaps verbiage should be added to this question to indicate it's asking what plan was held "in their name".

[badger97]

the question needs to be worded much better in Turbotax to avoid confusion as i had the same reaction and problem as MrBean until I saw this thread

[lmartinez100]

I agree this question still in 2022 is worded in a very confusing way and NEEDS to be fixed. If i didn't do a google search on this issue I never would have figured this out.

[Tax-Cleric]

YOU NEED TO FIX THIS AND AT A MINIMUM REWORD IT!!!

This is one of THE WORST, MOST CONFUSING things I've ever encounter in your software and I've been using TT for 20+ years.

[matt-lebel]

Yes it is very confusing. 
I am covered under my own plan through my own employer. I select Self. 

My wife has coverage for her and my son through her employer. I select Family. Then it thinks she had a lapse in coverage. 

[BillM223]

As noted above, when one spouse doesn't go through the HSA interview (because he/she doesn't have one), then TurboTax never asks for his/her coverage, and makes the mistake of thinking that the spouse does not have HDHP coverage in the current year. Then when TurboTax asks what type of High Deductible Health Plan on December 1, 2022), and you answer Family or Self, then TurboTax thinks that you had HDHP coverage in the prior year, using the last-month rule, but did not have HDHP coverage in the current year, so it thinks that the coverage "lapsed".

Simply put, if the spouse in question did not have an HSA in 2022, or did but did not contribute to it in 2022, or had health insurance coverage for every month in 2022, just answer NONE.

[larrypoz1]

If the application "It is referring to what type of plan your spouse held in their name " the application should state this!