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03-08-2018 08:26 PM
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:
In 2017, did your HDHP coverage laps within 12 months of any of these events? YES NO
03-10-2018 12:46 AM
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:
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.