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State taxes only 16. State taxes only   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. State taxes only Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. State taxes only Free help with your tax return. State taxes only   Free help in preparing your return is available nationwide from IRS-certified volunteers. State taxes only The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. State taxes only The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. State taxes only Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. State taxes only Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. State taxes only To find the nearest VITA or TCE site, visit IRS. State taxes only gov or call 1-800-906-9887. State taxes only   As part of the TCE program, AARP offers the Tax-Aide counseling program. State taxes only To find the nearest AARP Tax-Aide site, visit AARP's website at www. State taxes only aarp. State taxes only org/money/taxaide or call 1-888-227-7669. State taxes only   For more information on these programs, go to IRS. State taxes only gov and enter “VITA” in the search box. State taxes only Internet. State taxes only IRS. State taxes only gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. State taxes only Apply for an Employer Identification Number (EIN). State taxes only Go to IRS. State taxes only gov and enter Apply for an EIN in the search box. State taxes only Request an Electronic Filing PIN by going to IRS. State taxes only gov and entering Electronic Filing PIN in the search box. State taxes only Check the status of your 2013 refund with Where's My Refund? Go to IRS. State taxes only gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. State taxes only If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. State taxes only Checking the status of your amended return. State taxes only Go to IRS. State taxes only gov and enter Where's My Amended Return in the search box. State taxes only Download forms, instructions, and publications, including some accessible versions. State taxes only Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. State taxes only gov or IRS2Go. State taxes only Tax return and tax account transcripts are generally available for the current year and past three years. State taxes only Figure your income tax withholding with the IRS Withholding Calculator on IRS. State taxes only gov. State taxes only Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. State taxes only Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. State taxes only gov. State taxes only Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. State taxes only gov or IRS2Go. State taxes only Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. State taxes only An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. State taxes only Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. State taxes only If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. State taxes only Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. State taxes only Locate the nearest volunteer help site with the VITA Locator Tool on IRS. State taxes only gov. State taxes only Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. State taxes only The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. State taxes only Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. State taxes only AARP offers the Tax-Aide counseling program as part of the TCE program. State taxes only Visit AARP's website to find the nearest Tax-Aide location. State taxes only Research your tax questions. State taxes only Search publications and instructions by topic or keyword. State taxes only Read the Internal Revenue Code, regulations, or other official guidance. State taxes only Read Internal Revenue Bulletins. State taxes only Sign up to receive local and national tax news by email. State taxes only Phone. State taxes only You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. State taxes only Download the free IRS2Go mobile app from the iTunes app store or from Google Play. State taxes only Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. State taxes only Call to locate the nearest volunteer help site, 1-800-906-9887. State taxes only Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. State taxes only The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. State taxes only Most VITA and TCE sites offer free electronic filing. State taxes only Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. State taxes only Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. State taxes only Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. State taxes only The automated Where's My Refund? information is available 24 hours a day, 7 days a week. State taxes only If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. State taxes only Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. State taxes only Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. State taxes only Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. State taxes only Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. State taxes only Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). State taxes only You should receive your order within 10 business days. State taxes only Call to order transcripts of your tax returns or tax account, 1-800-908-9946. State taxes only Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. State taxes only Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. State taxes only Call to ask tax questions, 1-800-829-1040. State taxes only Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. State taxes only The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. State taxes only These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. State taxes only gsa. State taxes only gov/fedrelay. State taxes only Walk-in. State taxes only You can find a selection of forms, publications and services — in-person, face-to-face. State taxes only Products. State taxes only You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. State taxes only Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. State taxes only Services. State taxes only You can walk in to your local TAC most business days for personal, face-to-face tax help. State taxes only An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. State taxes only If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. State taxes only No appointment is necessary—just walk in. State taxes only Before visiting, check www. State taxes only irs. State taxes only gov/localcontacts for hours of operation and services provided. State taxes only Mail. State taxes only You can send your order for forms, instructions, and publications to the address below. State taxes only You should receive a response within 10 business days after your request is received. State taxes only  Internal Revenue Service 1201 N. State taxes only Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. State taxes only   The Taxpayer Advocate Service (TAS) is your voice at the IRS. State taxes only Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. State taxes only What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. State taxes only We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. State taxes only You face (or your business is facing) an immediate threat of adverse action. State taxes only You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. State taxes only   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. State taxes only Here's why we can help: TAS is an independent organization within the IRS. State taxes only Our advocates know how to work with the IRS. State taxes only Our services are free and tailored to meet your needs. State taxes only We have offices in every state, the District of Columbia, and Puerto Rico. State taxes only How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. State taxes only irs. State taxes only gov/advocate, or call us toll-free at 1-877-777-4778. State taxes only How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. State taxes only If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. State taxes only irs. State taxes only gov/sams. State taxes only Low Income Taxpayer Clinics. State taxes only   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. State taxes only Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. State taxes only Visit www. State taxes only TaxpayerAdvocate. State taxes only irs. State taxes only gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. State taxes only Prev  Up  Next   Home   More Online Publications
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The State Taxes Only

State taxes only Publication 969 - Main Content Table of Contents Health Savings Accounts (HSAs)Qualifying for an HSA Contributions to an HSA Distributions From an HSA Balance in an HSA Death of HSA Holder Filing Form 8889 Employer Participation Medical Savings Accounts (MSAs)Archer MSAs Contributions to an MSA Distributions From an MSA Balance in an Archer MSA Death of the Archer MSA Holder Filing Form 8853 Employer Participation Medicare Advantage MSAs Flexible Spending Arrangements (FSAs)Qualifying for an FSA Contributions to an FSA Distributions From an FSA Balance in an FSA Employer Participation Health Reimbursement Arrangements (HRAs)Qualifying for an HRA Contributions to an HRA Distributions From an HRA Balance in an HRA Employer Participation How To Get Tax HelpLow Income Taxpayer Clinics Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. State taxes only You must be an eligible individual to qualify for an HSA. State taxes only No permission or authorization from the IRS is necessary to establish an HSA. State taxes only You set up an HSA with a trustee. State taxes only A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. State taxes only The HSA can be established through a trustee that is different from your health plan provider. State taxes only Your employer may already have some information on HSA trustees in your area. State taxes only If you have an Archer MSA, you can generally roll it over into an HSA tax free. State taxes only See Rollovers, later. State taxes only What are the benefits of an HSA?   You may enjoy several benefits from having an HSA. State taxes only You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040. State taxes only Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income. State taxes only The contributions remain in your account until you use them. State taxes only The interest or other earnings on the assets in the account are tax free. State taxes only Distributions may be tax free if you pay qualified medical expenses. State taxes only See Qualified medical expenses , later. State taxes only An HSA is “portable. State taxes only ” It stays with you if you change employers or leave the work force. State taxes only Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. State taxes only You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. State taxes only You have no other health coverage except what is permitted under Other health coverage , later. State taxes only You are not enrolled in Medicare. State taxes only You cannot be claimed as a dependent on someone else's 2013 tax return. State taxes only Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). State taxes only If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you. State taxes only If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. State taxes only This is true even if the other person does not actually claim your exemption. State taxes only Each spouse who is an eligible individual who wants an HSA must open a separate HSA. State taxes only You cannot have a joint HSA. State taxes only High deductible health plan (HDHP). State taxes only   An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. State taxes only Out-of-pocket expenses include copayments and other amounts, but do not include premiums. State taxes only   An HDHP may provide preventive care benefits without a deductible or with a deductible less than the minimum annual deductible. State taxes only Preventive care includes, but is not limited to, the following. State taxes only Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals. State taxes only Routine prenatal and well-child care. State taxes only Child and adult immunizations. State taxes only Tobacco cessation programs. State taxes only Obesity weight-loss programs. State taxes only Screening services. State taxes only This includes screening services for the following: Cancer. State taxes only Heart and vascular diseases. State taxes only Infectious diseases. State taxes only Mental health conditions. State taxes only Substance abuse. State taxes only Metabolic, nutritional, and endocrine conditions. State taxes only Musculoskeletal disorders. State taxes only Obstetric and gynecological conditions. State taxes only Pediatric conditions. State taxes only Vision and hearing disorders. State taxes only For more information on screening services, see Notice 2004-23, 2004-15 I. State taxes only R. State taxes only B. State taxes only 725 available at www. State taxes only irs. State taxes only gov/irb/2004-15_IRB/ar10. State taxes only html. State taxes only     The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2013. State taxes only      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,250 $12,500 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. State taxes only Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. State taxes only    The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014. State taxes only      Self-only coverage Family coverage Minimum annual deductible $1,250 $2,500 Maximum annual deductible and other out-of-pocket expenses* $6,350 $12,700 * This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. State taxes only Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. State taxes only   Self-only HDHP coverage is an HDHP covering only an eligible individual. State taxes only Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual). State taxes only Example. State taxes only An eligible individual and his dependent child are covered under an “employee plus one” HDHP offered by the individual's employer. State taxes only This is family HDHP coverage. State taxes only Family plans that do not meet the high deductible rules. State taxes only   There are some family plans that have deductibles for both the family as a whole and for individual family members. State taxes only Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. State taxes only If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. State taxes only Example. State taxes only You have family health insurance coverage in 2013. State taxes only The annual deductible for the family plan is $3,500. State taxes only This plan also has an individual deductible of $1,500 for each family member. State taxes only The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($2,500) for family coverage. State taxes only Other health coverage. State taxes only   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. State taxes only However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. State taxes only    You can have additional insurance that provides benefits only for the following items. State taxes only Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property. State taxes only A specific disease or illness. State taxes only A fixed amount per day (or other period) of hospitalization. State taxes only   You can also have coverage (whether provided through insurance or otherwise) for the following items. State taxes only Accidents. State taxes only Disability. State taxes only Dental care. State taxes only Vision care. State taxes only Long-term care. State taxes only    Plans in which substantially all of the coverage is through the items listed earlier are not HDHPs. State taxes only For example, if your plan provides coverage substantially all of which is for a specific disease or illness, the plan is not an HDHP for purposes of establishing an HSA. State taxes only Prescription drug plans. State taxes only   You can have a prescription drug plan, either as part of your HDHP or a separate plan (or rider), and qualify as an eligible individual if the plan does not provide benefits until the minimum annual deductible of the HDHP has been met. State taxes only If you can receive benefits before that deductible is met, you are not an eligible individual. State taxes only Other employee health plans. State taxes only   An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA. State taxes only Health FSAs and HRAs are discussed later. State taxes only   However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. State taxes only Limited-purpose health FSA or HRA. State taxes only These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. State taxes only Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. State taxes only Suspended HRA. State taxes only Before the beginning of an HRA coverage period, you can elect to suspend the HRA. State taxes only The HRA does not pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. State taxes only When the suspension period ends, you are no longer eligible to make contributions to an HSA. State taxes only Post-deductible health FSA or HRA. State taxes only These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. State taxes only The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. State taxes only Retirement HRA. State taxes only This arrangement pays or reimburses only those medical expenses incurred after retirement. State taxes only After retirement you are no longer eligible to make contributions to an HSA. State taxes only Health FSA – grace period. State taxes only   Coverage during a grace period by a general purpose health FSA is allowed if the balance in the health FSA at the end of its prior year plan is zero. State taxes only See Flexible Spending Arrangements (FSAs) , later. State taxes only Contributions to an HSA Any eligible individual can contribute to an HSA. State taxes only For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. State taxes only For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. State taxes only Family members or any other person may also make contributions on behalf of an eligible individual. State taxes only Contributions to an HSA must be made in cash. State taxes only Contributions of stock or property are not allowed. State taxes only Limit on Contributions The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. State taxes only For 2013, if you have self-only HDHP coverage, you can contribute up to $3,250. State taxes only If you have family HDHP coverage, you can contribute up to $6,450. State taxes only For 2014, if you have self-only HDHP coverage, you can contribute up to $3,300. State taxes only If you have family HDHP coverage you can contribute up to $6,550. State taxes only If you were, or were considered (under the last-month rule, discussed later), an eligible individual for the entire year and did not change your type of coverage, you can contribute the full amount based on your type of coverage. State taxes only However, if you were not an eligible individual for the entire year or changed your coverage during the year, your contribution limit is the greater of: The limitation shown on the Line 3 Limitation Chart and Worksheetin the Instructions for Form 8889, Health Savings Accounts (HSAs), or The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first day of the last month of your tax year. State taxes only If you had family HDHP coverage on the first day of the last month of your tax year, your contribution limit for 2013 is $6,450 even if you changed coverage during the year. State taxes only Last-month rule. State taxes only   Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year. State taxes only You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. State taxes only Testing period. State taxes only   If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. State taxes only For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month. State taxes only For example, December 1, 2013, through December 31, 2014. State taxes only   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. State taxes only You include this amount in your income in the year in which you fail to be an eligible individual. State taxes only This amount is also subject to a 10% additional tax. State taxes only The income and additional tax are shown on Form 8889, Part III. State taxes only Example 1. State taxes only Chris, age 53, becomes an eligible individual on December 1, 2013. State taxes only He has family HDHP coverage on that date. State taxes only Under the last-month rule, he contributes $6,450 to his HSA. State taxes only Chris fails to be an eligible individual in June 2014. State taxes only Because Chris did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), he must include in his 2014 income the contributions made in 2013 that would not have been made except for the last-month rule. State taxes only Chris uses the worksheet in the Form 8889 instructions to determine this amount. State taxes only January -0- February -0- March -0- April -0- May -0- June -0- July -0- August -0- September -0- October -0- November -0- December $6,450. State taxes only 00 Total for all months $6,450. State taxes only 00 Limitation. State taxes only Divide the total by 12 $537. State taxes only 50 Chris would include $5,912. State taxes only 50 ($6,450. State taxes only 00 – $537. State taxes only 50) in his gross income on his 2014 tax return. State taxes only Also, a 10% additional tax applies to this amount. State taxes only Example 2. State taxes only Erika, age 39, has self-only HDHP coverage on January 1, 2013. State taxes only Erika changes to family HDHP coverage on November 1, 2013. State taxes only Because Erika has family HDHP coverage on December 1, 2013, she contributes $6,450 for 2013. State taxes only Erika fails to be an eligible individual in March 2014. State taxes only Because she did not remain an eligible individual during the testing period (December 1, 2013, through December 31, 2014), she must include in income the contribution made that would not have been made except for the last-month rule. State taxes only Erika uses the worksheet in the Form 8889 instructions to determine this amount. State taxes only January $3,250. State taxes only 00 February $3,250. State taxes only 00 March $3,250. State taxes only 00 April $3,250. State taxes only 00 May $3,250. State taxes only 00 June $3,250. State taxes only 00 July $3,250. State taxes only 00 August $3,250. State taxes only 00 September $3,250. State taxes only 00 October $3,250. State taxes only 00 November $6,450. State taxes only 00 December $6,450. State taxes only 00 Total for all months $45,400. State taxes only 00 Limitation. State taxes only Divide the total by 12 $3,783. State taxes only 34 Erika would include $2,666. State taxes only 67 ($6,450 – $3,783. State taxes only 34) in her gross income on her 2014 tax return. State taxes only Also, a 10% additional tax applies to this amount. State taxes only Additional contribution. State taxes only   If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. State taxes only For example, if you have self-only coverage, you can contribute up to $4,250 (the contribution limit for self-only coverage ($3,250) plus the additional contribution of $1,000). State taxes only However, see Enrolled in Medicare , later. State taxes only If you have more than one HSA in 2013, your total contributions to all the HSAs cannot be more than the limits discussed earlier. State taxes only Reduction of contribution limit. State taxes only   You must reduce the amount that can be contributed (including any additional contribution) to your HSA by the amount of any contribution made to your Archer MSA (including employer contributions) for the year. State taxes only A special rule applies to married people, discussed next, if each spouse has family coverage under an HDHP. State taxes only Rules for married people. State taxes only   If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. State taxes only If each spouse has family coverage under a separate plan, the contribution limit for 2013 is $6,450. State taxes only You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. State taxes only After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. State taxes only The rules for married people apply only if both spouses are eligible individuals. State taxes only If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. State taxes only If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,450. State taxes only Each spouse must make the additional contribution to his or her own HSA. State taxes only Example. State taxes only For 2013, Mr. State taxes only Auburn and his wife are both eligible individuals. State taxes only They each have family coverage under separate HDHPs. State taxes only Mr. State taxes only Auburn is 58 years old and Mrs. State taxes only Auburn is 53. State taxes only Mr. State taxes only and Mrs. State taxes only Auburn can split the family contribution limit ($6,450) equally or they can agree on a different division. State taxes only If they split it equally, Mr. State taxes only Auburn can contribute $4,225 to an HSA (one-half the maximum contribution for family coverage ($3,225) + $1,000 additional contribution) and Mrs. State taxes only Auburn can contribute $3,225 to an HSA. State taxes only Employer contributions. State taxes only   You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. State taxes only This includes amounts contributed to your account by your employer through a cafeteria plan. State taxes only Enrolled in Medicare. State taxes only   Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. State taxes only Example. State taxes only You turned age 65 in July 2013 and enrolled in Medicare. State taxes only You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. State taxes only Your contribution limit is $2,125 ($4,250 × 6 ÷ 12). State taxes only Qualified HSA funding distribution. State taxes only   A qualified HSA funding distribution may be made from your traditional IRA or Roth IRA to your HSA. State taxes only This distribution cannot be made from an ongoing SEP IRA or SIMPLE IRA. State taxes only For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. State taxes only   The maximum qualified HSA funding distribution depends on the HDHP coverage (self-only or family) you have on the first day of the month in which the contribution is made and your age as of the end of the tax year. State taxes only The distribution must be made directly by the trustee of the IRA to the trustee of the HSA. State taxes only The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA. State taxes only The qualified HSA funding distribution is shown on Form 8889 for the year in which the distribution is made. State taxes only   You can make only one qualified HSA funding distribution during your lifetime. State taxes only However, if you make a distribution during a month when you have self-only HDHP coverage, you can make another qualified HSA funding distribution in a later month in that tax year if you change to family HDHP coverage. State taxes only The total qualified HSA funding distribution cannot be more than the contribution limit for family HDHP coverage plus any additional contribution to which you are entitled. State taxes only Example. State taxes only In 2013, you are an eligible individual, age 57, with self-only HDHP coverage. State taxes only You can make a qualified HSA funding distribution of $4,250 ($3,250 plus $1,000 additional contribution). State taxes only Funding distribution – testing period. State taxes only   You must remain an eligible individual during the testing period. State taxes only For a qualified HSA funding distribution, the testing period begins with the month in which the qualified HSA funding distribution is contributed and ends on the last day of the 12th month following that month. State taxes only For example, if a qualified HSA funding distribution is contributed to your HSA on August 10, 2013, your testing period begins in August 2013, and ends on August 31, 2014. State taxes only   If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the qualified HSA funding distribution. State taxes only You include this amount in income in the year in which you fail to be an eligible individual. State taxes only This amount is also subject to a 10% additional tax. State taxes only The income and the additional tax are shown on Form 8889, Part III. State taxes only   Each qualified HSA funding distribution allowed has its own testing period. State taxes only For example, you are an eligible individual, age 45, with self-only HDHP coverage. State taxes only On June 18, 2013, you make a qualified HSA funding distribution of $3,250. State taxes only On July 27, 2013, you enroll in family HDHP coverage and on August 17, 2013, you make a qualified HSA funding distribution of $3,200. State taxes only Your testing period for the first distribution begins in June 2013 and ends on June 30, 2014. State taxes only Your testing period for the second distribution begins in August 2013 and ends on August 31, 2014. State taxes only   The testing period rule that applies under the last-month rule (discussed earlier) does not apply to amounts contributed to an HSA through a qualified HSA funding distribution. State taxes only If you remain an eligible individual during the entire funding distribution testing period, then no amount of that distribution is included in income and will not be subject to the additional tax for failing to meet the last-month rule testing period. State taxes only Rollovers A rollover contribution is not included in your income, is not deductible, and does not reduce your contribution limit. State taxes only Archer MSAs and other HSAs. State taxes only   You can roll over amounts from Archer MSAs and other HSAs into an HSA. State taxes only You do not have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. State taxes only Rollover contributions do not need to be in cash. State taxes only Rollovers are not subject to the annual contribution limits. State taxes only   You must roll over the amount within 60 days after the date of receipt. State taxes only You can make only one rollover contribution to an HSA during a 1-year period. State taxes only Note. State taxes only If you instruct the trustee of your HSA to transfer funds directly to the trustee of another of your HSAs, the transfer is not considered a rollover. State taxes only There is no limit on the number of these transfers. State taxes only Do not include the amount transferred in income, deduct it as a contribution, or include it as a distribution on Form 8889. State taxes only When To Contribute You can make contributions to your HSA for 2013 until April 15, 2014. State taxes only If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. State taxes only Your employer can make contributions to your HSA between January 1, 2014, and April 15, 2014, that are allocated to 2013. State taxes only Your employer must notify you and the trustee of your HSA that the contribution is for 2013. State taxes only The contribution will be reported on your 2014 Form W-2. State taxes only Reporting Contributions on Your Return Contributions made by your employer are not included in your income. State taxes only Contributions to an employee's account by an employer using the amount of an employee's salary reduction through a cafeteria plan are treated as employer contributions. State taxes only Generally, you can claim contributions you made and contributions made by any other person, other than your employer, on your behalf, as an adjustment to income. State taxes only Contributions by a partnership to a bona fide partner's HSA are not contributions by an employer. State taxes only The contributions are treated as a distribution of money and are not included in the partner's gross income. State taxes only Contributions by a partnership to a partner's HSA for services rendered are treated as guaranteed payments that are deductible by the partnership and includible in the partner's gross income. State taxes only In both situations, the partner can deduct the contribution made to the partner's HSA. State taxes only Contributions by an S corporation to a 2% shareholder-employee's HSA for services rendered are treated as guaranteed payments and are deductible by the S corporation and includible in the shareholder-employee's gross income. State taxes only The shareholder-employee can deduct the contribution made to the shareholder-employee's HSA. State taxes only Form 8889. State taxes only   Report all contributions to your HSA on Form 8889 and file it with your Form 1040 or Form 1040NR. State taxes only You should include all contributions made for 2013, including those made by April 15, 2014, that are designated for 2013. State taxes only Contributions made by your employer and qualified HSA funding distributions are also shown on the form. State taxes only   You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount contributed to your HSA during the year. State taxes only Your employer's contributions also will be shown in box 12 of Form W-2, Wage and Tax Statement, with code W. State taxes only Follow the instructions for Form 8889. State taxes only Report your HSA deduction on Form 1040 or Form 1040NR. State taxes only Excess contributions. State taxes only   You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. State taxes only Excess contributions are not deductible. State taxes only Excess contributions made by your employer are included in your gross income. State taxes only If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. State taxes only   Generally, you must pay a 6% excise tax on excess contributions. State taxes only See Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. State taxes only The excise tax applies to each tax year the excess contribution remains in the account. State taxes only   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. State taxes only You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. State taxes only You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. State taxes only If you fail to remain an eligible individual during any of the testing periods, discussed earlier, the amount you have to include in income is not an excess contribution. State taxes only If you withdraw any of those amounts, the amount is treated the same as any other distribution from an HSA, discussed later. State taxes only Deducting an excess contribution in a later year. State taxes only   You may be able to deduct excess contributions for previous years that are still in your HSA. State taxes only The excess contribution you can deduct for the current year is the lesser of the following two amounts. State taxes only Your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year. State taxes only The total excess contributions in your HSA at the beginning of the year. State taxes only   Amounts contributed for the year include contributions by you, your employer, and any other person. State taxes only They also include any qualified HSA funding distribution made to your HSA. State taxes only Any excess contribution remaining at the end of a tax year is subject to the excise tax. State taxes only See Form 5329. State taxes only Distributions From an HSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. State taxes only When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your HSA to send you a distribution from your HSA. State taxes only You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. State taxes only If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. State taxes only You do not have to make distributions from your HSA each year. State taxes only If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. State taxes only Generally, a distribution is money you get from your health savings account. State taxes only Your total distributions include amounts paid with a debit card that restricts payments to health care and amounts withdrawn from the HSA by other individuals that you have designated. State taxes only The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. State taxes only Qualified medical expenses. State taxes only   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. State taxes only These are explained in Publication 502, Medical and Dental Expenses. State taxes only   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for HSA purposes. State taxes only A medicine or drug will be a qualified medical expense for HSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. State taxes only   For HSA purposes, expenses incurred before you establish your HSA are not qualified medical expenses. State taxes only State law determines when an HSA is established. State taxes only An HSA that is funded by amounts rolled over from an Archer MSA or another HSA is established on the date the prior account was established. State taxes only   If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified medical expenses. State taxes only   Qualified medical expenses are those incurred by the following persons. State taxes only You and your spouse. State taxes only All dependents you claim on your tax return. State taxes only Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. State taxes only    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. State taxes only You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your HSA. State taxes only Insurance premiums. State taxes only   You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. State taxes only Health care continuation coverage (such as coverage under COBRA). State taxes only Health care coverage while receiving unemployment compensation under federal or state law. State taxes only Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). State taxes only   The premiums for long-term care insurance (item (1)) that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. State taxes only See Limit on long-term care premiums you can deduct in the instructions for Schedule A (Form 1040). State taxes only   Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage. State taxes only For item (4), if you, the account beneficiary, are not 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) generally are not qualified medical expenses. State taxes only Health coverage tax credit. State taxes only   You cannot claim this credit for premiums that you pay with a tax-free distribution from your HSA. State taxes only See Publication 502 for more information on this credit. State taxes only Deemed distributions from HSAs. State taxes only   The following situations result in deemed taxable distributions from your HSA. State taxes only You engaged in any transaction prohibited by section 4975 with respect to any of your HSAs, at any time in 2013. State taxes only Your account ceases to be an HSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8889. State taxes only You used any portion of any of your HSAs as security for a loan at any time in 2013. State taxes only You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. State taxes only   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the HSA, Lending of money between you and the HSA, Furnishing goods, services, or facilities between you and the HSA, and Transfer to or use by you, or for your benefit, of any assets of the HSA. State taxes only   Any deemed distribution will not be treated as used to pay qualified medical expenses. State taxes only These distributions are included in your income and are subject to the additional 20% tax, discussed later. State taxes only Recordkeeping. State taxes only You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. State taxes only Do not send these records with your tax return. State taxes only Keep them with your tax records. State taxes only Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). State taxes only If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. State taxes only However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. State taxes only Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. State taxes only If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. State taxes only Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. State taxes only You may have to pay an additional 20% tax on your taxable distribution. State taxes only HSA administration and maintenance fees withdrawn by the trustee are not reported as distributions from the HSA. State taxes only Additional tax. State taxes only   There is an additional 20% tax on the part of your distributions not used for qualified medical expenses. State taxes only Figure the tax on Form 8889 and file it with your Form 1040 or Form 1040NR. State taxes only Exceptions. State taxes only   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. State taxes only Balance in an HSA An HSA is generally exempt from tax. State taxes only You are permitted to take a distribution from your HSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. State taxes only Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). State taxes only Earnings on amounts in an HSA are not included in your income while held in the HSA. State taxes only Death of HSA Holder You should choose a beneficiary when you set up your HSA. State taxes only What happens to that HSA when you die depends on whom you designate as the beneficiary. State taxes only Spouse is the designated beneficiary. State taxes only   If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death. State taxes only Spouse is not the designated beneficiary. State taxes only   If your spouse is not the designated beneficiary of your HSA: The account stops being an HSA, and The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. State taxes only If your estate is the beneficiary, the value is included on your final income tax return. State taxes only The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. State taxes only Filing Form 8889 You must file Form 8889 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your HSA during the year. State taxes only You must file the form even if only your employer or your spouse's employer made contributions to the HSA. State taxes only If, during the tax year, you are the beneficiary of two or more HSAs or you are a beneficiary of an HSA and you have your own HSA, you must complete a separate Form 8889 for each HSA. State taxes only Enter “statement” at the top of each Form 8889 and complete the form as instructed. State taxes only Next, complete a controlling Form 8889 combining the amounts shown on each of the statement Forms 8889. State taxes only Attach the statements to your tax return after the controlling Form 8889. State taxes only Employer Participation This section contains the rules that employers must follow if they decide to make HSAs available to their employees. State taxes only Unlike the previous discussions, “you” refers to the employer and not to the employee. State taxes only Health plan. State taxes only   If you want your employees to be able to have an HSA, they must have an HDHP. State taxes only You can provide no additional coverage other than those exceptions listed previously under Other health coverage . State taxes only Contributions. State taxes only   You can make contributions to your employees' HSAs. State taxes only You deduct the contributions on your business income tax return for the year in which you make the contributions. State taxes only If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. State taxes only   For more information on employer contributions, see Notice 2008-59, 2008-29 I. State taxes only R. State taxes only B. State taxes only 123, questions 23 through 27, available at www. State taxes only irs. State taxes only gov/irb/2008-29_IRB/ar11. State taxes only html. State taxes only Comparable contributions. State taxes only   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' HSAs. State taxes only Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. State taxes only The comparability rules do not apply to contributions made through a cafeteria plan. State taxes only Comparable participating employees. State taxes only   Comparable participating employees: Are covered by your HDHP and are eligible to establish an HSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (part-time, full-time, or former employees). State taxes only   To meet the comparability requirements for eligible employees who have not established an HSA by December 31 or have not notified you that they have an HSA, you must meet a notice requirement and a contribution requirement. State taxes only   You will meet the notice requirement if by January 15 of the following calendar year you provide a written notice to all such employees. State taxes only The notice must state that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year. State taxes only For a sample of the notice, see Regulation 54. State taxes only 4980G-4 A-14(c). State taxes only You will meet the contribution requirement for these employees if by April 15, 2014, you contribute comparable amounts plus reasonable interest to the employee's HSA for the prior year. State taxes only Note. State taxes only For purposes of making contributions to HSAs of non-highly compensated employees, highly compensated employees shall not be treated as comparable participating employees. State taxes only Excise tax. State taxes only   If you made contributions to your employees' HSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. State taxes only Employment taxes. State taxes only   Amounts you contribute to your employees' HSAs are generally not subject to employment taxes. State taxes only You must report the contributions in box 12 of the Form W-2 you file for each employee. State taxes only This includes the amounts the employee elected to contribute through a cafeteria plan. State taxes only Enter code “W” in box 12. State taxes only Medical Savings Accounts (MSAs) Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder's spouse, or the account holder's dependent(s). State taxes only After December 31, 2007, you cannot be treated as an eligible individual for Archer MSA purposes unless: You were an active participant for any tax year ending before January 1, 2008, or You became an active participant for a tax year ending after December 31, 2007, by reason of coverage under a high deductible health plan (HDHP) of an Archer MSA participating employer. State taxes only A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare. State taxes only Archer MSAs An Archer MSA is a tax-exempt trust or custodial account that you set up with a U. State taxes only S. State taxes only financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses. State taxes only What are the benefits of an Archer MSA?   You may enjoy several benefits from having an Archer MSA. State taxes only You can claim a tax deduction for contributions you make even if you do not itemize your deductions on Form 1040 or Form 1040NR. State taxes only The interest or other earnings on the assets in your Archer MSA are tax free. State taxes only Distributions may be tax free if you pay qualified medical expenses. State taxes only See Qualified medical expenses , later. State taxes only The contributions remain in your Archer MSA from year to year until you use them. State taxes only An Archer MSA is “portable” so it stays with you if you change employers or leave the work force. State taxes only Qualifying for an Archer MSA To qualify for an Archer MSA, you must be either of the following. State taxes only An employee (or the spouse of an employee) of a small employer (defined later) that maintains a self-only or family HDHP for you (or your spouse). State taxes only A self-employed person (or the spouse of a self-employed person) who maintains a self-only or family HDHP. State taxes only You can have no other health or Medicare coverage except what is permitted under Other health coverage , later. State taxes only You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month. State taxes only If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. State taxes only This is true even if the other person does not actually claim your exemption. State taxes only Small employer. State taxes only   A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. State taxes only The definition of small employer is modified for new employers and growing employers. State taxes only Growing employer. State taxes only   A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. State taxes only The employer will continue to meet the requirement for small employers if he or she: Had 50 or fewer employees when the Archer MSAs began, Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and Had an average of 200 or fewer employees each year after 1996. State taxes only Changing employers. State taxes only   If you change employers, your Archer MSA moves with you. State taxes only However, you may not make additional contributions unless you are otherwise eligible. State taxes only High deductible health plan (HDHP). State taxes only   To be eligible for an Archer MSA, you must be covered under an HDHP. State taxes only An HDHP has: A higher annual deductible than typical health plans, and A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses. State taxes only Limits. State taxes only   The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2013. State taxes only   Self-only coverage Family coverage Minimum annual deductible $2,150 $4,300 Maximum annual deductible $3,200 $6,450 Maximum annual out-of-pocket expenses $4,300 $7,850 Family plans that do not meet the high deductible rules. State taxes only   There are some family plans that have deductibles for both the family as a whole and for individual family members. State taxes only Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. State taxes only If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan does not qualify as an HDHP. State taxes only Example. State taxes only You have family health insurance coverage in 2013. State taxes only The annual deductible for the family plan is $5,500. State taxes only This plan also has an individual deductible of $2,000 for each family member. State taxes only The plan does not qualify as an HDHP because the deductible for an individual family member is less than the minimum annual deductible ($4,300) for family coverage. State taxes only Other health coverage. State taxes only   You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. State taxes only However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. State taxes only However, you can have additional insurance that provides benefits only for the following items. State taxes only Liabilities incurred under workers' compensation laws, torts, or ownership or use of property. State taxes only A specific disease or illness. State taxes only A fixed amount per day (or other period) of hospitalization. State taxes only You can also have coverage (whether provided through insurance or otherwise) for the following items. State taxes only Accidents. State taxes only Disability. State taxes only Dental care. State taxes only Vision care. State taxes only Long-term care. State taxes only Contributions to an MSA Contributions to an Archer MSA must be made in cash. State taxes only You cannot contribute stock or other property to an Archer MSA. State taxes only Who can contribute to my Archer MSA?   If you are an employee, your employer may make contributions to your Archer MSA. State taxes only (You do not pay tax on these contributions. State taxes only ) If your employer does not make contributions to your Archer MSA, or you are self-employed, you can make your own contributions to your Archer MSA. State taxes only Both you and your employer cannot make contributions to your Archer MSA in the same year. State taxes only You do not have to make contributions to your Archer MSA every year. State taxes only    If your spouse is covered by your HDHP and an excludable amount is contributed by your spouse's employer to an Archer MSA belonging to your spouse, you cannot make contributions to your own Archer MSA that year. State taxes only Limits There are two limits on the amount you or your employer can contribute to your Archer MSA: The annual deductible limit. State taxes only An income limit. State taxes only Annual deductible limit. State taxes only   You (or your employer) can contribute up to 75% of the annual deductible of your HDHP (65% if you have a self-only plan) to your Archer MSA. State taxes only You must have the HDHP all year to contribute the full amount. State taxes only If you do not qualify to contribute the full amount for the year, determine your annual deductible limit by using the worksheet in the Instructions for Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. State taxes only Example 1. State taxes only You have an HDHP for your family all year in 2013. State taxes only The annual deductible is $5,000. State taxes only You can contribute up to $3,750 ($5,000 × 75%) to your Archer MSA for the year. State taxes only Example 2. State taxes only You have an HDHP for your family for the entire months of July through December 2013 (6 months). State taxes only The annual deductible is $5,000. State taxes only You can contribute up to $1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for the year. State taxes only If you and your spouse each have a family plan, you are treated as having family coverage with the lower annual deductible of the two health plans. State taxes only The contribution limit is split equally between you unless you agree on a different division. State taxes only Income limit. State taxes only   You cannot contribute more than you earned for the year from the employer through whom you have your HDHP. State taxes only   If you are self-employed, you cannot contribute more than your net self-employment income. State taxes only This is your income from self-employment minus expenses (including the deductible part of self-employment tax). State taxes only Example 1. State taxes only Noah Paul earned $25,000 from ABC Company in 2013. State taxes only Through ABC, he had an HDHP for his family for the entire year. State taxes only The annual deductible was $5,000. State taxes only He can contribute up to $3,750 to his Archer MSA (75% × $5,000). State taxes only He can contribute the full amount because he earned more than $3,750 at ABC. State taxes only Example 2. State taxes only Westley Lawrence is self-employed. State taxes only He had an HDHP for his family for the entire year in 2013. State taxes only The annual deductible was $5,000. State taxes only Based on the annual deductible, the maximum contribution to his Archer MSA would have been $3,750 (75% × $5,000). State taxes only However, after deducting his business expenses, Joe's net self-employment income is $2,500 for the year. State taxes only Therefore, he is limited to a contribution of $2,500. State taxes only Individuals enrolled in Medicare. State taxes only   Beginning with the first month you are enrolled in Medicare, you cannot contribute to an Archer MSA. State taxes only However, you may be eligible for a Medicare Advantage MSA, discussed later. State taxes only When To Contribute You can make contributions to your Archer MSA for 2013 until April 15, 2014. State taxes only Reporting Contributions on Your Return Report all contributions to your Archer MSA on Form 8853 and file it with your Form 1040 or Form 1040NR. State taxes only You should include all contributions you, or your employer, made for 2013, including those made by April 15, 2014, that are designated for 2013. State taxes only You should receive Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, from the trustee showing the amount you (or your employer) contributed during the year. State taxes only Your employer's contributions should be shown in box 12 of Form W-2, Wage and Tax Statement, with code R. State taxes only Follow the instructions for Form 8853 and complete the worksheet in the instructions. State taxes only Report your Archer MSA deduction on Form 1040 or Form 1040NR. State taxes only Excess contributions. State taxes only   You will have excess contributions if the contributions to your Archer MSA for the year are greater than the limits discussed earlier. State taxes only Excess contributions are not deductible. State taxes only Excess contributions made by your employer are included in your gross income. State taxes only If the excess contribution is not included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. State taxes only   Generally, you must pay a 6% excise tax on excess contributions. State taxes only See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. State taxes only The excise tax applies to each tax year the excess contribution remains in the account. State taxes only   You may withdraw some or all of the excess contributions and not pay the excise tax on the amount withdrawn if you meet the following conditions. State taxes only You withdraw the excess contributions by the due date, including extensions, of your tax return. State taxes only You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. State taxes only Deducting an excess contribution in a later year. State taxes only   You may be able to deduct excess contributions for previous years that are still in your Archer MSA. State taxes only The excess contribution you can deduct in the current year is the lesser of the following two amounts. State taxes only Your maximum Archer MSA contribution limit for the year minus any amounts contributed to your Archer MSA for the year. State taxes only The total excess contributions in your Archer MSA at the beginning of the year. State taxes only   Any excess contributions remaining at the end of a tax year are subject to the excise tax. State taxes only See Form 5329. State taxes only Distributions From an MSA You will generally pay medical expenses during the year without being reimbursed by your HDHP until you reach the annual deductible for the plan. State taxes only When you pay medical expenses during the year that are not reimbursed by your HDHP, you can ask the trustee of your Archer MSA to send you a distribution from your Archer MSA. State taxes only You can receive tax-free distributions from your Archer MSA to pay for qualified medical expenses (discussed later). State taxes only If you receive distributions for other reasons, the amount will be subject to income tax and may be subject to an additional 20% tax as well. State taxes only You do not have to make withdrawals from your Archer MSA each year. State taxes only If you no longer qualify to make contributions, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. State taxes only A distribution is money you get from your Archer MSA. State taxes only The trustee will report any distribution to you and the IRS on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. State taxes only Qualified medical expenses. State taxes only   Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. State taxes only These are explained in Publication 502. State taxes only   Also, non-prescription medicines (other than insulin) are not considered qualified medical expenses for MSA purposes. State taxes only A medicine or drug will be a qualified medical expense for MSA purposes only if the medicine or drug: Requires a prescription, Is available without a prescription (an over-the-counter medicine or drug) and you get a prescription for it, or Is insulin. State taxes only   Qualified medical expenses are those incurred by the following persons. State taxes only You and your spouse. State taxes only All dependents you claim on your tax return. State taxes only Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,900 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. State taxes only    For this purpose, a child of parents that are divorced, separated, or living apart for the last 6 months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child's exemption. State taxes only    You cannot deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040) that are equal to the tax-free distribution from your Archer MSA. State taxes only Special rules for insurance premiums. State taxes only   Generally, you cannot treat insurance premiums as qualified medical expenses for Archer MSAs. State taxes only You can, however, treat premiums for long-term care coverage, health care coverage while you receive unemployment benefits, or health care continuation coverage required under any federal law as qualified medical expenses for Archer MSAs. State taxes only Health coverage tax credit. State taxes only   You cannot claim this credit for premiums that you pay with a tax-free distribution from your Archer MSA. State taxes only See Publication 502 for information on this credit. State taxes only Deemed distributions from Archer MSAs. State taxes only   The following situations result in deemed taxable distributions from your Archer MSA. State taxes only You engaged in any transaction prohibited by section 4975 with respect to any of your Archer MSAs at any time in 2013. State taxes only Your account ceases to be an Archer MSA as of January 1, 2013, and you must include the fair market value of all assets in the account as of January 1, 2013, on Form 8853. State taxes only You used any portion of any of your Archer MSAs as security for a loan at any time in 2013. State taxes only You must include the fair market value of the assets used as security for the loan as income on Form 1040 or Form 1040NR. State taxes only   Examples of prohibited transactions include the direct or indirect: Sale, exchange, or leasing of property between you and the Archer MSA, Lending of money between you and the Archer MSA, Furnishing goods, services, or facilities between you and the Archer MSA, and Transfer to or use by you, or for your benefit, of any assets of the Archer MSA. State taxes only   Any deemed distribution will not be treated as used to pay qualified medical expenses. State taxes only These distributions are included in your income and are subject to the additional 20% tax, discussed later. State taxes only Recordkeeping. State taxes only You must keep records sufficient to show that: The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses had not been previously paid or reimbursed from another source, and The medical expenses had not been taken as an itemized deduction in any year. State taxes only Do not send these records with your tax return. State taxes only Keep them with your tax records. State taxes only Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). State taxes only If you use a distribution from your Archer MSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8853. State taxes only Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. State taxes only If you do not use a distribution from your Archer MSA for qualified medical expenses, you must pay tax on the distribution. State taxes only Report the amount on Form 8853 and file it with your Form 1040 or Form 1040NR. State taxes only You may have to pay an additional 20% tax, discussed later, on your taxable distribution. State taxes only If an amount (other than a rollover) is contributed to your Archer MSA this year (by you or your employer), you also must report and pay tax on a distribution you receive from your Archer MSA this year that is used to pay medical expenses of someone who is not covered by an HDHP, or is also covered by another health plan that is not an HDHP, at the time the expenses are incurred. State taxes only Rollovers. State taxes only   Generally, any distribution from an Archer MSA that you roll over into another Archer MSA or an HSA is not taxable if you complete the rollover within 60 days. State taxes only An Archer MSA and an HSA can only receive one rollover contribution during a 1-year period. State taxes only See the Form 8853 instructions for more information. State taxes only Additional tax. State taxes only   There is a 20% additional tax on the part of your distributions not used for qualified medical expenses. State taxes only Figure the tax on Form 8853 and file it with your Form 1040 or Form 1040NR. State taxes only Report the additional tax in the total on Form 1040 or Form 1040NR. State taxes only Exceptions. State taxes only   There is no additional tax on distributions made after the date you are disabled, reach age 65, or die. State taxes only Balance in an Archer MSA An Archer MSA is generally exempt from tax. State taxes only You are permitted to take a distribution from your Archer MSA at any time; however, only those amounts used exclusively to pay for qualified medical expenses are tax free. State taxes only Amounts that remain at the end of the year are generally carried over to the next year (see Excess contributions , earlier). State taxes only Earnings on amounts in an Archer MSA are not included in your income while held in the Archer MSA. State taxes only Death of the Archer MSA Holder You should choose a beneficiary when you set up your Archer MSA. State taxes only What happens to that Archer MSA when you die depends on whom you designate as the beneficiary. State taxes only Spouse is the designated beneficiary. State taxes only   If your spouse is the designated beneficiary of your Archer MSA, it will be treated as your spouse's Archer MSA after your death. State taxes only Spouse is not the designated beneficiary. State taxes only   If your spouse is not the designated beneficiary of your Archer MSA: The account stops being an Archer MSA, and The fair market value of the Archer MSA becomes taxable to the beneficiary in the year in which you die. State taxes only   If your estate is the beneficiary, the fair market value of the Archer MSA will be included on your final income tax return. State taxes only The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death. State taxes only Filing Form 8853 You must file Form 8853 with your Form 1040 or Form 1040NR if you (or your spouse, if married filing a joint return) had any activity in your Archer MSA during the year. State taxes only You must file the form even if only your employer or your spouse's employer made contributions to the Archer MSA. State taxes only If, during the tax year, you are the beneficiary of two or more Archer MSAs or you are a beneficiary of an Archer MSA and you have your own Archer MSA, you must complete a separate Form 8853 for each MSA. State taxes only Enter “statement” at the top of each Form 8853 and complete the form as instructed. State taxes only Next, complete a controlling Form 8853 combining the amounts shown on each of the statement Forms 8853. State taxes only Attach the statements to your tax return after the controlling Form 8853. State taxes only Employer Participation This section contains the rules that employers must follow if they decide to make Archer MSAs available to their employees. State taxes only Unlike the previous discussions, “you” refers to the employer and not to the employee. State taxes only Health plan. State taxes only   If you want your employees to be able to have an Archer MSA, you must make an HDHP available to them. State taxes only You can provide no additional coverage other than those exceptions listed previously under Other health coverage . State taxes only Contributions. State taxes only   You can make contributions to your employees' Archer MSAs. State taxes only You deduct the contributions on the “Employee benefit programs” line of your business income tax return for the year in which you make the contributions. State taxes only If you are filing Form 1040, Schedule C, this is Part II, line 14. State taxes only Comparable contributions. State taxes only   If you decide to make contributions, you must make comparable contributions to all comparable participating employees' Archer MSAs. State taxes only Your contributions are comparable if they are either: The same amount, or The same percentage of the annual deductible limit under the HDHP covering the employees. State taxes only Comparable participating employees. State taxes only   Comparable participating employees: Are covered by your HDHP and are eligible to establish an Archer MSA, Have the same category of coverage (either self-only or family coverage), and Have the same category of employment (either part-time or full-time). State taxes only Excise tax. State taxes only   If you made contributions to your employees' Archer MSAs that were not comparable, you must pay an excise tax of 35% of the amount you contributed. State taxes only Employment taxes. State taxes only   Amounts you contribute to your employees' Archer MSAs are generally not subject to employment taxes. State taxes only You must report the contributions in box 12 of the Form W-2 you file for each employee. State taxes only Enter code “R” in box 12. State taxes only Medicare Advantage MSAs A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. State taxes only To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare and have a high deductible health plan (HDHP) that meets the Medicare guidelines. State taxes only A Medicare Advantage MSA is a tax-exempt trust or custodial savings account that you set up with a financial institution (such as a bank or an insurance company) in which the Medicare program can deposit money for qualified medical expenses. State taxes only The money in your account is not taxed if it is used for qualified medical expenses, and it may earn interest or dividends. State taxes only An HDHP is a special health insurance policy that has a high deductible. State taxes only You choose the policy you want to use as part of your Medicare Advantage MSA plan. State taxes only However, the policy must be approved by the Medicare program. State taxes only Medicare Advantage MSAs are administered through the federal Medicare program. State taxes only You can get information by calling 1-800-Medicare (1-800-633-4227) or through the Internet at www. State taxes only medicare. State taxes only gov. State taxes only Note. State taxes only You must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your tax return if you have a Medicare Advantage MSA. State taxes only Flexible Spending Arrangements (FSAs) A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. State taxes only FSAs are usually funded through voluntary salary reduction agreements with your employer. State taxes only No employment or federal income taxes are deducted from your contribution. State taxes only The employer may also contribute. State taxes only Note. State taxes only Unlike HSAs or Archer MSAs which must be reported on Form 1040 or Form 1040NR, there are no reporting requirements for FSAs on your income tax return. State taxes only For information on the interaction between a health FSA and an HSA, see Other employee health plans under Qualifying for an HSA, earlier. State taxes only What are the benefits of an FSA?   You may enjoy several benefits from having an FSA. State taxes only Contributions made by your employer can be excluded from your gross income. State taxes only No employment or federal income taxes are deducted from the contributions. State taxes only Withdrawals may be tax free if you pay qualified medical expenses. State taxes only See Qualified medical expenses , later. State taxes only You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. State taxes only Qualifying for an FSA Health FSAs are employer-established benefit plans. State taxes only These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. State taxes only Employers have complete flexibility to offer various combinations of benefits in designing their plan. State taxes only You do not have to be covered under any other health care plan to participate. State taxes only Self-employed persons are not eligible for an FSA. State taxes only Certain limitations may apply if you are a highly compensated participant or a key employee. State taxes only Contributions to an FSA You contribute to your FSA by electing an amount to be voluntarily withheld from your pay by your employer. State taxes only This is sometimes called a salary reduction agreement. State taxes only The employer may also contribute to your FSA if specified in the plan. State taxes only You do not pay federal income tax or employment taxes on the salary you contribute or the amounts your employer contributes to the FSA. State taxes only However, contributions made by your employer to provide coverage for long-term care insurance must be included in income. State taxes only When To Contribute At the