Question

What happens if I have an HSA and now find out I shouldn't have one because I have secondary insurance through my spouse?

Forum|Forum|7 years ago
June 3, 2019
1 reply
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I started a new job a year ago and in July of last year I open enrolled in their HDHP and opened an HSA. I am also still covered by my husband's insurance. I found out now that I am not supposed to have an HSA while having secondary coverage. I was not informed of this when I signed up for the HSA and now I am not sure what is going to happen. Also since I just found this out it is too late to be removed from my spouses health plan for this year since it is already past the open enrollment. I was really counting on that HSA money to cover medical expenses for my daughter with Autism. I had my husband not sign up for the FSA through his work, because I was going to contribute more to my HSA before I found out that I'm not supposed to even have that account. I am going to see if I can get myself off my husbands plan, but I am thinking they will not let me off the plan until next year. I wish I would have found this info before he signed me up on his insurance.

TurboTax Deluxe Online

D

dmertz

Employee

As you found out, your coverage under your husband's insurance in 2017 made you ineligible to make an HSA contribution for 2017. The contributions you made, or those made on your behalf, need to be removed from the HSA. Contact that HSA custodian, explain the situation to them, and they will guide you through the process of obtaining a return of excess contribution. The amount that they distribute to you will be adjusted for any gains or losses while the money was in the HSA.

If the amount contributed to the HSA was reported with code W in box 12 of your W-2 for your employer, when you indicate to TurboTax that you'll have the contribution returned, the amount of the returned contribution will be added to your income on Form 1040 line 21 since your employer excluded this amount from box 1 of your W-2. If the contribution was a person contribution not made through your employer, you simply won't get a deduction for the returned contribution. Any earnings distributed with your returned contribution will be subject to tax on your 2018 tax return when you enter the 2018 Form 1099-SA that you will receive next year for the return of excess contribution.