Question of the Week - HSA Tax Forms

Q.- We offer an HSA as part of our medical plan. An employee asked for a copy of her HSA tax form. What is she referencing?

A.- She is most likely referring to IRS Form 1099-SA or Form 5498-SA, both of which are issued by the HSA bank or custodian, not the employer.

• Form 1099-SA reports distributions taken from the HSA during the year. It shows the total amount withdrawn and the type of distribution. It does not determine whether the withdrawal is taxable. The employee must report how the funds were used when filing taxes.
• Form 5498-SA reports contributions made to the HSA, including employee deposits, employer contributions, and payroll deductions. This form is typically issued after the tax filing deadline because contributions for the prior tax year can be made up to the tax filing due date. It is informational and usually not required to file the tax return but helps confirm total contributions.

Employees then use these forms, along with the HSA contribution amount shown on their Form W-2 (Box 12, Code W), to complete IRS Form 8889, which is filed with their individual tax return. Form 8889 determines HSA eligibility, calculates allowable contribution limits, and identifies whether any distributions are taxable or subject to penalties.

Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).

This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.