Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

Posts: 1
Registered: ‎03-08-2018

High-Deductible Health Care and Military Tricare

Hi! My husband and I were covered under a high-deductible health plan up until mid-February, when he was activated and deployed with the military. His employer (through which we had obtained our insurance) suspended his employment for the duration of the deployment, and we went onto Tricare. In January (before his employment was suspended), we had contributed $1000 to our HSA.


I'm now working on our taxes using H&R Block's Deluxe software, and have come to this question. Any guidance on how I should answer it?

If you failed to maintain health coverage, special rules apply. This happens if your high-deductible health plan (HDHP) lapsed within 12 months after the end of the month when you did any of these:

  • Contributed 1 of these directly into your health savings account (HSA):
    • Health flexible spending arrangement
    • Health reimbursement arrangement distribution
  • Became covered under an HDHP after Jan. 1, 2016 and before Dec. 1, 2016. The 12-month test runs Dec. 1, 2016-Dec. 31, 2017
  • Transferred funds directly from Roth or traditional IRA into your HSA

In 2017, did your HDHP coverage laps within 12 months of any of these events?   YES    NO

Valued Neighbor
Posts: 149
Registered: ‎04-06-2016

Re: High-Deductible Health Care and Military Tricare

All of the situations listed have a testing period that has to be fulfilled to keep the those contributions from being taxable and suffering a penalty.

If you had HDHP insurance for all of last year (or didn't take advantage of the last month rule that allows you to contribute a full year's contribution for having a plan that starts before Dec 1 but wasn't for a full year of coverage).and didn't transfer funds into your HSA from an IRA or other healthcare-related savings plan usually offered through an employer:

  • Health flexible spending arrangement
  • Health reimbursement arrangement distribution

then your answer to this question would be NO.


Assuming you and your husband had a family HDHP, you would have been eligible to contribute 2/12ths (assuming you had HDHP coverage on the first day of the month for 2 months of the year, Jan 1- mid Feb) of the family amount of $6750 or $1125. So with $1000 of contributions, you didn't have any excess contributions that you'd have to remove and report as income on your tax return.


If one of the special conditions listed does apply, then things get more complicated and part or all of the contributions made would be taxable and subject to a penalty.