Save on taxes with your HSA
An HSA provides triple tax savings — the money you contribute to your HSA goes in, grows and comes out income tax free when used for qualified medical expenses. Account earnings from interest and investments are also tax free.
With all the tax benefits of your HSA, it's like saving up to 30% when paying for qualified expenses.* The 30% savings compares using pretax income in your HSA to using after-tax income out of pocket for purchases.
You can use your pretax HSA dollars to cover thousands of qualified health expenses like doctor visits, cold medicine, first aid kits, sunscreen, prescription refills and more.
You can save even more by shopping at Optum Store. Use code OPTHSA5 with your HSA to receive a 5% discount.
The HSA contribution deadline is the same as the tax filing deadline for that plan year, typically April 15. Some states or areas of the country may have more time due to local holidays or natural disaster extensions. Contact the IRS or your tax advisor for information.
If you do make excess contributions, you can avoid being penalized by completing an Excess Contribution and Deposit Correction Request Form to have excess funds returned to you. This and other account forms are available after you sign in.
It’s up to you to maintain records to verify that funds were used for qualified medical expenses. Funds used for nonqualified expenses will be taxed as income and subject to a 20% penalty.
If you mistakenly use your HSA for a nonqualified expense, you can return the funds to your HSA to avoid the penalty. Sign in to your account and download the Withdrawal Correction Form. Optum Financial must receive it by the tax filing deadline.
If you're 65 or older or enrolled in Medicare, you can use your HSA for nonmedical expenses without incurring a tax penalty. Those distributions will be treated like retirement income and will be subject to normal income tax.
Tax time and forms
There are three IRS tax forms you need to be aware of:
- Form 1099-SA shows the amount of money you spent from your HSA during the tax year.
- Form 5498-SA shows the amount of money contributed to your HSA for the tax year.
- Form 8889 is the form you fill out and submit with your tax return.
To download your tax forms, simply sign in to your account online.
Form 1099-SA shows the amount of money you spent from your HSA during the tax year. It is typically available at the end of January. It will be posted to your account online and mailed, if you chose that option.
Additional information about IRS Form 1099-SA:
- Box 1 includes your total distributions for 2022.
- Box 2 shows any earnings on the excess while it was in the account.
- Box 3 shows the distribution code. Different codes will display depending on the situation. Code 1 summarizes all reportable distributions made in 2022. This does not include fees or investment losses as these are not reportable. Code 2 reports any excess contribution corrected that were processed against your account. For all other code descriptions, please contact a tax professional.
- Any corrections processed before 1/1/2023 are reflected on this form. However, any corrections processed in 2023 will cause a corrected tax document to be generated.
- If you had any contributions that apply to 2022, you’ll also get tax form 5498-SA.
Form 5498-SA shows the amount of money contributed to your HSA for the tax year. It is also typically available around the end of January. If you contribute in the new year for the previous tax year, you will get another 5498-SA form in May.
Additional information about IRS Form 5498-SA:
- Box 2 shows your total contributions made for 2022, including those made in 2022 for 2021, if applicable.
- You have until the tax filing deadline of this year to submit contributions for 2022. If you make any contributions in 2023 before the tax deadline for 2022, you will receive an updated 5498-SA in May.
- To get your total contributions for 2022, add Box 2 plus Box 3. Please note you if you made any contributions in 2022 for 2021, you need to review your updated 5498 for 2021 and subtract that Box 3.
- The Fair Market Value consists of your HSA cash balance and any investment balance as of 12/31/2022.
- If you had a reportable distribution for 2022, you’ll also get tax form 1099-SA. If you did not use (no distributions) your HSA in 2022, you will not get a 1099-SA.
You need to file IRS form 8889 with your income taxes to report contributions and distributions from your health savings account (HSA). Use your 1099-SA form for the distribution activity and your December bank statement for contributions. IRS form 5498-SA should be retained for your records, but is not required as part of your tax return.
Form 8889 can be downloaded from IRS.gov at any time.
If the contributions shown on your W-2 don’t match your Form 5498-SA, you probably made after-tax contributions or contributions between January 1 and tax day for the previous tax year.
In addition to Forms 1099-SA, 5498-SA and 8889, it's important to keep track of your spending in case you need to prove funds were used for qualified medical expenses. It’s up to you to do this and to report any funds used for nonqualified medical expenses.
State taxes and HSAs
Each state can decide to follow the federal tax guidelines for HSAs or establish its own. State law is subject to change. For up-to-date information, talk with a tax advisor regarding your state’s rules or visit your state’s department of revenue office.
The following states tax both HSA contributions and earnings (interest and capital gains):
- New Jersey
Consult your financial advisor or state department of revenue for more information.
The following states do not have state income tax, which means there are no income tax deductions for HSA contributions:
- New Hampshire
- South Dakota
However, New Hampshire and Tennessee tax HSA earnings (interest and dividends) if you make a taxable withdrawal from your account.
2022 HSA tax forms are available online or through the mobile app
To view your tax forms, sign in to your account and select the "Tax Center" tab from the main toolbar.
*Savings compares using pretax income in your health benefit account (HSA, FSA) to using after-tax income for purchases and assumes a 30% combined tax rate from all applicable federal, state and FICA taxes. Results and amount will vary depending on your circumstances.
Investments are not FDIC insured, are not bank issued or guaranteed by Optum Financial or its subsidiaries, including Optum Bank, and are subject to risk including fluctuations in value and the possible loss of the principal amount invested.