Do HSA Reimbursements Generate a 1099?

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Health savings accounts are tax-preferred accounts that have many special rules associated with them and allow you to save for your medical expenses. Depending on the transactions you engage in during the year with your HSA, and due to the special tax rules, you may receive a Form 1099 that will assist you in reporting those HSA transactions and preparing your taxes.

What is a Health Savings Account?

A health savings account is a savings account is one of many types of employee benefit plans relating to health care. Contributions made by your employer to an HSA are not included in your gross income and any contributions you make to your HSA are deductible on your taxes. An HSA must be used in conjunction with a high deductible healthcare plan, which is a plan that has a higher deductible than typical health plans. This means that you must generally pay for your medical expenses until you have met your annual deductible for your high deductible health plan. The proceeds from your HSA may then be used to cover qualified medical expenses that have not been reimbursed by your high deductible health plan.

When Can You Receive HSA Reimbursements?

You can receive HSA reimbursements for qualified medical expenses. The Internal Revenue Code defines qualified medical expenses as those expenses, which are associated with diagnosis, curing, minimizing, treating or preventing disease and any expenses for treatments that affect any parts or functions of your body. When you receive HSA reimbursements for qualified medical expenses, the distributions will not be taxable; however, you may receive tax forms, such as a Form 1099.

Do Your HSA Reimbursements Generate a 1099?

HSA reimbursements will be reported on a Form 1099-SA, Distributions from an HSA, Archer MSA or Medicare Advantage MSA. The Form 1099-SA includes information about the payer, where your HSA is located, your contact information, the type of account, the amount of the distribution and the type of distribution received.

Taxation of HSA Reimbursements

Despite receiving a Form 1099-SA, distributions from your HSA will not be taxable if the proceeds from the distribution are used for qualified medical expenses or you rolled your HSA over to another HSA. You will receive a Form 1099-SA, even for the non-taxable distributions. Although you must report these non-taxable distributions on your tax return, you will not have to pay taxes on them.

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About the Author

Kay Lee began freelance writing for Answerbag and eHow in 2010. She is an attorney in Washington, DC, practicing since 2006. Lee specializes in employee benefits and executive compensation. She holds a Juris Doctor from the Columbus School of Law and a Master of Laws from Georgetown University Law Center.

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