Program is making me file a 8889-T form for high deductible health plan (HDHP) because I have an HSA, but I did not have a HDHP

[Redsblues]

Hi All—

My health insurance (Anthem/Blue Cross PPO) offers a HSA that is also tax-free, and the W code in Box 12 would back that up. But since the PPO’s conditions don’t satisfy those of a HDHP (the out of pocket in-network expenses greatly exceed $7k) I couldn’t have had one.

I get that same error about HDHP coverage & it prevents me from e-filing. Any help is appreciated!

[BillM223]

Did Anthem/Blue Cross identify the policy that you have as an HDHP? A PPO can be an HDHP. Because of the complexity of the conditions to be an HDHP, I don't recommend taxpayers try to figure this out in their own, but instead to ask the insurance company, because they know if their plan qualifies as an HDHP or not.

Are you saying that you made contributions to an HSA through your employer such that there is an entry on your W-2 in box 12 with a code of W? And in the HSA interview, you said that you did not have HDHP coverage, so that the entire contribution (code W amount) was determined to be excess?

And I don't know why even having excess contributions would prevent you from e-filing. Was there an error message here when you tried?

[ljtt666666]

A question regarding line 3 of 8889. If None is selected for each month, line 3 of form 8889 is NOT filled with any number (e.g. 0). Is it correct?

[BillM223]

Yes, Line 3 on the 8889 is the starting point for calculating your annual HSA contribution limit. If None is selected for each month in the interview, then your annual HSA contribution limit would start as zero.

[ljtt666666]

Thanks. If it is 0, it is strange that turbotax does not put 0 on line 3 of 8889. 

[BillM223]

In this case, blank is the same as zero. There is no particular instruction in form 8889 to do it one way or the other.

@ljtt666666

[mytt987]

HSA contribution reported on W-2 12 code W. Due to ineligible, withdraw the contribution through reversal (kind of excess contribution withdraw) and returned to me. Company does NOT correct the W-2 (is it right?). Turbotax said that it is excess contribution and I selected "all are withdraw before deadline". Turbotax add it on line 8e (taxable HSA distribution) of schedule 1. Is there any problem? Thanks.

[TeresaM]

It depends. Because the income was pulled pre-tax for the high deductible health plan, it became taxable income when it was returned to you. If they did not withhold any taxes at the time of the return, which would need to be documented on your Form W-2, then you should not need to have a corrected form.

Excess or returned funds from your HSA should indeed appear on your Schedule 1, line 8e. To be sure that you were not accessed a penalty during this process when you complete your return and print or save a copy before filing, please check Schedule 2, lines c and d. This will show any penalties added to your tax liability, and the details will be in  Form 8889 Health Saving Accounts.

[mytt987]

There is no penalty in schedule 2 and 8889. The withdrawal was directly back to me. NO tax withhold by the company. Since the contribution is NOT included in wages, is there any concern related to payroll tax (social security and medicare)? Thanks.

[TeresaM]

No, because it is being treated as supplemental income, it will be subject to federal income taxes but not social security and medicare. It is essentially being handled as a bonus and appearing in Schedule 1.