Form 1099 SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

If you participate in a Health Savings Account (HSA), Archer Medical Savings Account (Archer MSA), or Medicare Advantage Medical Savings Account (MA MSA), you might encounter Form 1099-SA at tax time. This IRS document plays a crucial role in reporting distributions made from these accounts throughout the year.

What is Form 1099-SA?

It's an official IRS tax form used by financial institutions to report distributions made from HSAs, Archer MSAs, and MA MSAs. The form details the total amount withdrawn from your account during the tax year. This information is used by the IRS to verify your tax filings related to these accounts.

Who receives Form 1099-SA?

  • You will receive this form if you are the account holder of an HSA, Archer MSA, or MA MSA and had distributions from your account in the previous tax year.
  • The issuing institution (bank, custodian, etc.) will send you a copy of the form by January 31st of the following year.
  • The IRS will also receive a copy for their records.

What Information Does Form 1099-SA Contain?

A. Your Name and Taxpayer Identification Number (TIN): This ensures the information is linked to the correct taxpayer.

B. Account Number: Identifies your specific health savings account.

C. Total Distributions: This is the sum of all the money withdrawn from your account during the year.

D. Fair Market Value (FMV) of Distributed Assets: Applies only if any assets (like stocks or bonds) were held within the account and distributed.

E. Distribution Codes: These codes specify how the distributions were used. They are crucial for determining tax implications.

Understanding Distribution Codes

Form 1099-SA uses specific codes to categorize the purpose of your distributions. Here's a breakdown of some common codes:

  • Code 1: Qualified medical expenses (tax-free)
  • Code 3: Non-qualified expenses (taxable and may incur a penalty)
  • Code 5: Repayment of excess contributions (not taxable)

What are the Different Types of HSAs Reported on Form 1099-SA?

A. Health Savings Account (HSA): A tax-advantaged account paired with a high-deductible health plan (HDHP). Contributions are tax-deductible, and qualified medical expenses are reimbursed tax-free.

B. Archer Medical Savings Account (Archer MSA): Similar to an HSA, but available to individuals enrolled in specific Medicare plans. Contributions are not tax-deductible in most cases, but qualified medical expenses are reimbursed tax-free.

C. Medicare Advantage Medical Savings Account (MA MSA): Offered with some Medicare Advantage plans. Contributions are not tax-deductible, but qualified medical expenses are reimbursed tax-free.

How to Use Form 1099-SA When Filing Taxes?

  1. The information on Form 1099-SA helps you report your HSA, Archer MSA, or MA MSA activity on your tax return.
  2. You'll need to reconcile the total distributions (Box 1) with how you used the funds (QME vs. non-QME).
  3. Depending on your tax software or filing method, you might use either Form 8853 or Form 8889 to report these details.