Why does TurboTax think my spouse had a break in health insurance coverage? This has never come up this way before.

[amyeneu]

We have a HD HSA family plan. No breaks in coverage.

[BillM223 · Accepted solution]

In all likelihood, one of you does not have an HSA, so you never went through the HSA interview to tell TurboTax that you had HDHP coverage, so TurboTax got confused and thought that maybe your coverage "lapsed". Sound familiar? If so, see the bulleted list.

• If you or your spouse [whoever is NAME above] did not have an HSA in 2024, then answer NONE.
• If you or your spouse had an HSA but did not contribute to an HSA in 2024, then answer NONE. (Remember that each of you can have an HSA).
• If you or your spouse was covered by an HDHP policy for each month of 2024, then answer NONE.

That is, answer NONE to the question "What type of High Deductible Health Plan did [name] have on December 1, 2023", because the question doesn't apply to you.

[Dan1234567]

Why is the answer "none" because the question doesn't apply to me.  The prompt specifically says that "none" indicates something else - that is, that I failed to be eligible for for some other reason.  But I didn't fail to be eligible for any reason primarily because I didn't fail to be eligible.

[BillM223]

What the question is really trying to ask is "Did you use the last-month rule in the previous year?" But, of course, almost no taxpayers know what this rule is (and not many tax professionals, either). 

So a while ago, the question was changed to "What type of High Deductible Health Plan did [name] have on December 1, 20XX?". The issue here was that everyone got this question, even those without an HSA. And too many taxpayers did not realize that a High Deductible Health Plan was a specialized form of health coverage that didn't apply to a lot of taxpayers. These are the people that the question doesn't apply to.

In addition, when this change was made, the TurboTax programmers did not realize that this question assumed that TurboTax knew the HDHP coverage status of the taxpayer for the current year. The issue there was that if one spouse did not have an HSA, then you never had a chance to tell TurboTax what that spouse's HDHP coverage was for the current year. So when you answer for the previous year, TurboTax incorrectly assumes that the coverage has lapsed.

We have asked the programmers to change this question, but NOT to go back to the previous wording, because that was worse. The problem is that we have to teach taxpayers a lot about HSAs in order to ask the question, and TurboTax is designed to be a DIY product, wherein the user understands taxation. If a taxpayer realizes that there is a lot they don't understand about taxation, then they are invited to use the TurboTax Live Full Service, wherein a tax professional who understands taxation issues would do your return and sign it for you.

[Dan1234567]

well, all the programmers need to do is add a line saying to answer "none" if the question doesn't apply to you (in addition to whatever else answering "none" might mean - in this case, the actual answer to the question.  And then you can have a ? to expand and explain why/how it might not apply to you.  Or you could just ask if you have an HSA and a High Deductible Plan that covered you for the full year - those are the controlling factors, right?  At least in my case.

Or, in addition to a "none" option, have a "this doesn't apply to me" option.  Or  "the premise of the question is wrong because there was no lapse in coverage with my spouse" (and perhaps then correct whatever it was that lead TT to believe there was one). 

I don't see how what was done could helps to prevent confusion or deal with a difficult tax topic.

[Dan1234567]

and I'm certainly not going to deal with this issue but paying more so a TT person can explain to me why the Q's asked in TT make no sense.

[Brian O]

Simply ask the writers to ask the question in steps then.  Use if/then statements and it will all be so simple if your spouse ..... then go to this question etc.   if not go here.  ugh  🙂