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Help understanding High Deductible Health Plan questions in turbotax

Forum|Forum|2 years ago
March 7, 2024
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I am confused by the question I am getting in the HSA section. TurboTax is asking me questions about my High Deductible Health plan.

First, it asks: What type of High Deductible Health Plan did Lindsey have on December 1, 2022? The answer to this is Family.

Then it asks a question I don't understand. It asks: "Did <wife's name> High Deductible Health Plan coverage lapse in 2023 due to disability? We see that <wife's name> had a break in HDHP health plan coverage during 2023. Let us know if this was the results of a disability." Then it offers the answer of choices of:

Yes, the coverage ended due to disability
No the coverage ended for other reason.

I don't understand why we are getting this question. Lindsey's coverage did not lapse at all in 2023. Our 1095-C has 1a in all the boxes for each month.

What did I click or input wrong that it thinks this is the case? How do I fix? Does it matter? It doesn't seem to impact my taxes at all. I did by hand and got the same return that TurboTax is suggesting I am due.

Ask the Experts - MetLife III - Mar 2024

Best answer by MonikaK1

Just before you see the message stating that your spouse had a lapse in coverage, you should see the question, “What type of High Deductible Health Plan did [spouse] have on December 1, 2019?”. The choices are Family, Self only, or None.

If your spouse had been covered under your family plan, you might think you should answer Family to the question. However, the answer should be None.

It is referring to what type of plan your spouse held in their name on December 1. If your spouse had their own separate HDHP on that date, then choose the type of plan that they had. If instead your spouse was covered under the plan in your name, then you should choose None.

You can return to the beginning of the questionnaire to change your answer.

M

MonikaK1Answer

Just before you see the message stating that your spouse had a lapse in coverage, you should see the question, “What type of High Deductible Health Plan did [spouse] have on December 1, 2019?”. The choices are Family, Self only, or None.

If your spouse had been covered under your family plan, you might think you should answer Family to the question. However, the answer should be None.

It is referring to what type of plan your spouse held in their name on December 1. If your spouse had their own separate HDHP on that date, then choose the type of plan that they had. If instead your spouse was covered under the plan in your name, then you should choose None.

You can return to the beginning of the questionnaire to change your answer.

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T

Talon3Author

Thank you for clarifying!

C

cybeyak

I was confused by the same "coverage lapse" of spouse response, stemming from the same badly formulated "spouse coverage" question.

Googling I found same confusion come up from multiple people TT customers dating back a few years.

At what point does it occur to TT that they should reformulate the questionnaire to avoid this.

Unless this is some job security scheme to keep "experts" employed? if not, kindly, reformulate the question.

M

MonikaK1

Just before you see the message stating that your spouse had a lapse in coverage, you should see the question, “What type of High Deductible Health Plan did [spouse] have on December 1, 2022?”. The choices are Family, Self only, or None.

If your spouse had been covered under your family plan, you might think you should answer Family to the question. However, the answer should be None.

It is referring to what type of plan your spouse held in their name on December 1, 2022. If your spouse had their own separate HDHP on that date, then choose the type of plan that they had. If instead your spouse was covered under the plan in your name, then you should choose None.

To go back to the section of your return to answer the questions again, use the following steps:

On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
This opens a box where you can type in “hsa” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
The search results will give you an option to “Jump to hsa”
Click on the blue “Jump to hsa” link and edit your information

@Talon3 @rwvo

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R

rwvo

As I explicitly stated: my wife had her own HDHP, covering only herself. I did select "Self only" on the question about her plan prior to getting the message that her coverage had lapsed.

KrisD15

To clarify, is this when you entered a 1099-SA?

If you exit that section and go back to it,

Personal Income or Wages and Income (depending on the program)

Less Common Income

1099-SA, HSA, MSA START or UPDATE

On the first screen, is anything shown on the "Your HSA summary" for your spouse?

On the next screen, is the HSA box checked for your spouse?

Are you listed first on the return? (the program asks about the reporting taxpayer first, then the spouse even if only one has an HSA)

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I

irritatedExpat

I was also confused by this question. It is really infuriating that TurboTax fails to provide adequate guidance, especially because it is due to their extensive lobbying influence that the IRS has not provided its own tax preparation software.

B

BillM223

@Talon3

Many of the issues in completing the HSA interview are due to two causes:

1. The opaqueness and obscureness of the IRS rules on the HSA (not to mention that of Congress), and

2. The huge amount of misinformation on the Internet on how HSAs work.

This causes large numbers of of taxpayers to misunderstand the questions that TurboTax poses. For example, "First, it asks: What type of High Deductible Health Plan did Lindsey have on December 1, 2022? The answer to this is Family. "

In many cases, this Lindsey would have had NO HDHP coverage (people read this as "what type of health coverage", but it specifically refers to HDHP coverage). So, in this first case, the answer would be NONE.

However, in other cases, Lindsey might have been covered by spouse's HDHP Family plan. But if Lindsey did not have her own HSA, Lindsey would never have been asked to go through the HSA interview, and therefore never had the chance to indicate Lindsey's own HDHP coverage. Therefore, TurboTax mistaken thinks that Lindsey had HDHP coverage in 2022 (because of the answer of Self or Family to the question), but had no such coverage in 2023 (because of the lack of HSA interview), so thinks that that Lindsey's coverage has "lapsed".

Who cares if it lapsed? TurboTax is trying to determine if Lindsey used the last-month rule in 2022 to increase the annual HSA contribution limit. What is the last-month rule? You see, that's the problem. TurboTax used to ask people what the last-month rule was, but fewer people understood that question than the current set of questions.

Despite @irritatedExpat 's comment, TurboTax is a DYI product - you are supposed to understand something about what you are doing. TurboTax provides some help (primarily through interview screen comments and Learn More links), but TurboTax cannot teach you everything you need to know about particular segments of taxation like HSAs. Indeed, even many tax professionals don't know what the last-month rule is.

TurboTax asks the questions it does for a reason; and if you can't make sense of them, then do what you are doing now - come to the Community and ask what the question means. But please don't assume that TurboTax doesn't know what it's doing.

Remember that TurboTax offers two additional layers of Live help which would get you through this process with reasonable ease.

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D

dream_state_x

What do I do in the following situation:

1. The question of what type of HDHP did (wife) have on Dec 1, 2023? My wife had an individual plan through her job on that date (and all year) but she switched to my jobs provided coverage on January 2024.

We did not over pay into our HSA for 2023 or 2024. However, in 2024 I was the only one making contributions to the mentioned family plan.

So, to that question I answered "self" because she still had coverage from her job at that date. Then the next question:

2. Says she had a lapse in coverage. Which isn't true but the question gives two options for

Yes due to disability and

No, other reasons.

I answered no here and it proceeded to ask me about her coverage for all of 2023 and the contributions made. Then in the end it concludes that she doesn't apply to the "last month rule". It never asked about 2024 coverage for her even though she was on my family plan.

Did I fill it out correctly for our situation?