Help understanding High Deductible Health Plan questions in turbotax

[RobertB4444]

If neither of you had an HSA you should be able to skip all of the HSA questions and ignore them completely.

@vukitstj 

[vukitstj]

I went through the HSA questions because TT said that are needed to be updated. Now that I have answered the HSA questions as best I could, with some answers being wrong, do I need to clear those selections somehow? I don't want to report erroneous info to the IRS or mess up TT based upon those answers. I cannot see how to clear those selections. First screen "Tell us about the health-related accounts you had in 2023" answers I select (which is "None of the above" for both me and my spouse) do not get saved when I go back into the question. When I answer "None of the above," TT still asks all of the HSA questions that I cannot answer truthfully due to the limited answer choices. 

[RobertB4444]

No, it doesn't matter.  You don't have any deductible contributions to an HSA to report and you don't have any withdrawals from an HSA to report.  So nothing about an HSA is getting reported to the IRS.  Leave those questions the way they are and move on.

@vukitstj 

[rwvo]

Both in 2022 and 2023, my wife and I both had an HDHP, each covering ourselves only. I had an HSA, my wife had not. I had a distribution, reported to me on a 1099-SA.

First question in TT: "Tell us about the health related accounts" with options HSA, MSA, Medicare Advantage MSA, and None. I chose HSA for myself, and None for my wife. Again: she had an HDHP, but without HSA.

On the question "Was (my name) covered by a HDHP in 2023", I filled out, "Yes" and "Self only".

On the question "What type of HDHP did (wife's name) have on December 1, 2022)", I filled out "Self only".

That results in the dreaded "Did (wife's name) HDHP coverage lapse in 2023 due to disability, with possible answers "yes, coverage ended due to disability" and "no, the coverage ended for other reasons".

Her coverage did not lapse: both of us had our own self-only HDHP in both 2022 and 2023. I don't think I answered any relevant question incorrectly, but still, TT thinks somehow her coverage ended in 2023. What's the best way to get past this issue?

[MonikaK1]

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, 2022?”.  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, 2022.  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

@Talon3  @rwvo 

[rwvo]

As I explicitly stated: my wife had her own HDHP, covering only herself. I did select "Self only" on the question about her plan prior to getting the message that her coverage had lapsed.

[KrisD15]

To clarify, is this when you entered a 1099-SA?

If you exit that section and go back to it, 

Personal Income or Wages and Income (depending on the program)

Less Common Income

1099-SA, HSA, MSA   START or UPDATE

On the first screen, is anything shown on the "Your HSA summary"  for your spouse?

On the next screen, is the HSA box checked for your spouse?

Are you listed first on the return? (the program asks about the reporting taxpayer first, then the spouse even if only one has an HSA)

[rwvo]

Yes, this is when entering a 1099-SA

I am listed first on the return.

On the first screen, the column for my spouse has all zeroes (as it should)

On the next screen, I originally did not check the HSA box for my spouse: she has an HDHP, but not an HSA.

That lead to the dreaded incorrect question about the reason for her cancelling her health plan.

Checking the HSA box for my spouse gets around that, but that leads to a form 8889 for her being included (there's an 8889-T for me and an 8889-S for her). Looking over her 8889-S, there seems no harm to including the form (all the numbers are correct).

But this seems a bug in TT: we both have a "self only" HDHP; only I have an HSA; but if I don't check the HSA box for my spouse in the 2nd screen, it leads TT to conclude that her coverage stopped.

[irritatedExpat]

I was also confused by this question. It is really infuriating that TurboTax fails to provide adequate guidance, especially because it is due to their extensive lobbying influence that the IRS has not provided its own tax preparation software.

[BillM223]

@Talon3 
 

Many of the issues in completing the HSA interview are due to two causes:

1. The opaqueness and obscureness of the IRS rules on the HSA (not to mention that of Congress), and

2. The huge amount of misinformation on the Internet on how HSAs work.

This causes large numbers of of taxpayers to misunderstand the questions that TurboTax poses. For example, "First, it asks: What type of High Deductible Health Plan did Lindsey have on December 1, 2022? The answer to this is Family. "

In many cases, this Lindsey would have had NO HDHP coverage (people read this as "what type of health coverage", but it specifically refers to HDHP coverage). So, in this first case, the answer would be NONE.

However, in other cases, Lindsey might have been covered by spouse's HDHP Family plan. But if Lindsey did not have her own HSA, Lindsey would never have been asked to go through the HSA interview, and therefore never had the chance to indicate Lindsey's own HDHP coverage. Therefore, TurboTax mistaken thinks that Lindsey had HDHP coverage in 2022 (because of the answer of Self or Family to the question), but had no such coverage in 2023 (because of the lack of HSA interview), so thinks that that Lindsey's coverage has "lapsed". 

Who cares if it lapsed? TurboTax is trying to determine if Lindsey used the last-month rule in 2022 to increase the annual HSA contribution limit. What is the last-month rule? You see, that's the problem. TurboTax used to ask people what the last-month rule was, but fewer people understood that question than the current set of questions. 

Despite @irritatedExpat 's comment, TurboTax is a DYI product - you are supposed to understand something about what you are doing. TurboTax provides some help (primarily through interview screen comments and Learn More links), but TurboTax cannot teach you everything you need to know about particular segments of taxation like HSAs. Indeed, even many tax professionals don't know what the last-month rule is.

TurboTax asks the questions it does for a reason; and if you can't make sense of them, then do what you are doing now - come to the Community and ask what the question means. But please don't assume that TurboTax doesn't know what it's doing.

Remember that TurboTax offers two additional layers of Live help which would get you through this process with reasonable ease.

[GVtaxes]

Turbotax should really clarify this in the software. It's confusing as it stands. Thanks.

[hzarzosa]

Hi, I have the exact same situation and I saw this was answered already but the way it was resolved to the person that made the initial question doesn't apply to my case. In my case my spouse is not insured under my insurance, she has her own, it's been like these for several years now. So, the correct answer to the question: "What type of HDHP did <spouse name> have on December 1, 2022?" in our case should be: "Self" because she has her own health plan. 

[DawnC]

Your situation is different, @hzarzosa.  Are you showing excess contributions in 2023?   Did you have an excess in 2022 that has carried over to this year's return?