1. 1 Returning Counselor Training 2010 HEALTH SAVINGS ACCOUNT  Enables Taxpayers to pay for current medical expenses and save for future qualified medical expenses on a tax-free basis

2. 2 Returning Counselor Training 2010 Health Savings Account  Authorized by Congress in 2003  Tax favored medical savings similar to IRA  Created by enrolling in High- Deductible Health Plan (HDHP)  Then, establishing a HSA through qualified trustee

3. 3 Returning Counselor Training 2010 HSA Eligibility  Covered by HDHP first day of month  Not covered by other health insurance  Not enrolled in Medicare  Not eligible to be claimed as a dependent

4. 4 Returning Counselor Training 2010 HSA Documents  Form 5498-SA - current value of TP HSA  Form W-2, box 12 employers contribution  Form 1099-SA distribution from HSA  Form 8889 HSA Part I – report contributions  Form 8889 HSA Part II – report HSA distributions and qualified medical expenses  Form 8889 HSA Part III – OOS Additional tax for failure to maintain HDHP coverage

5. 5 Returning Counselor Training 2010 HSA Benefits  TP can claim a tax deduction for contributions made by the TP or someone other than the TP  Funds rollover from year to year  Interest or other earnings are tax-free  TP receives tax-free reimbursement for qualified medical expenses plus nonprescription medicines  Contribution by an employer may be excluded from gross income.

6. 6 Returning Counselor Training 2010 Tax-Aide Out of Scope  Excess contributions to HSA  Qualified HSA funding distribution from IRA  Qualified HSA distribution from Flexible Spending Arrangement (FSA) or Health Reimbursement Arrangement (HRA)  Death of HSA holder  Form 8889 Part III additional tax for failure to maintain HDHP coverage

7. 7 Returning Counselor Training 2010 Limits for annual HDHP deductible and out of pocket expenses

8. 8 Returning Counselor Training 2010 HSA Contributions Limits

9. 9 Returning Counselor Training 2010 How to tell that an HSA is in play  The Intake/Interview sheet has the Yes or Unsure box checked (Life Events #1)  The W-2 has a box 12 entry code W for employer contributions – triggers a form 8889 to be added to the tree.  The taxpayer has a Form 1099-SA –with an [X] in box 5 for [HSA] showing distributions from an HSA plan.

10. 10 Returning Counselor Training 2010 Things to know  If there is an HSA and the form 8889 is not added to the tree by the W-2, link to it from 1040 Line 25.  Form 5498-SA reports current value but TP may not have received yet. Ask about contributions made.  TP needs to know name on account & whether self-only or family plan.  If both TP and Spouse have HSA’s, two 8889 need to be filed.

11. 11 Returning Counselor Training 2010 Typical Scenario

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