What Is an HSA and How Do I Report It? HSA Basics

A plain-English overview of Health Savings Accounts: limits, deadlines and the tax forms. Updated October 11, 2026.

A Health Savings Account (HSA) is a savings account for medical costs that goes with a high-deductible health insurance plan. It is the only account in the tax code that is tax-free three times: money goes in before tax, it grows tax-free, and it comes out tax-free when you spend it on medical care. The account is yours: it stays with you when you change jobs, and unused money rolls over from year to year — there is no "use it or lose it." This short guide is based only on official IRS sources.

Have an HSA on your tax return? Enter your W-2 and Form 1099-SA numbers in our free HSA Calculator and get every line of Form 8889.

Who Can Contribute to an HSA

You can put money into an HSA for any month in which, on the first day of the month:

you are covered by a high-deductible health plan (HDHP);
you have no other health coverage that pays before the deductible (dental, vision, accident, disability, long-term care and telehealth coverage are allowed);
you are not enrolled in Medicare (any part, including Part A);
nobody can claim you as a dependent.

A plan is an HDHP if its deductible and out-of-pocket maximum fall within the IRS limits:

HDHP requirement	2025	2026	2027
Minimum deductible (self-only / family)	$1,650 / $3,300	$1,700 / $3,400	$1,750 / $3,500
Maximum out-of-pocket (self-only / family)	$8,300 / $16,600	$8,500 / $17,000	$8,700 / $17,400

New for 2026: bronze and catastrophic plans count as HSA-compatible plans, and you can have a direct primary care arrangement (a flat monthly fee to your doctor of up to $150, or $300 for a family) and still contribute — you can even pay that fee from the HSA tax-free. Telehealth before the deductible no longer blocks HSA eligibility.

How Much You Can Put In

Annual contribution limit	2025	2026	2027
Self-only coverage	$4,300	$4,400	$4,500
Family coverage	$8,550	$8,750	$9,000
Extra "catch-up" if you are 55 or older	$1,000	$1,000	$1,000

The limit covers everything that goes in: your own deposits, your employer's contributions and your pre-tax payroll deductions together.
If you were eligible for only part of the year, the limit is prorated by month. Exception — the last-month rule: if you are eligible on December 1, you can contribute the full-year amount, but you must then stay eligible through December 31 of the next year.
Married couples with family coverage share one family limit, split 50/50 unless they agree otherwise. Each spouse needs his or her own HSA; there are no joint HSAs. The $1,000 catch-up goes into the account of the spouse who is 55+.
Once you enroll in Medicare, contributions must stop. Careful: if you sign up after 65, Medicare Part A usually starts retroactively (up to 6 months back), and contributions made for those months become excess.

Key Deadlines

Contributions for a year: until the tax filing deadline, April 15 of the next year (extensions don't extend it). Tell the HSA custodian which year the deposit is for.
Fixing an excess contribution: withdraw the excess plus its earnings by the due date of your return, including extensions. Otherwise there is a 6% excise tax every year the excess stays in the account.
Rollovers: if you take money out to move it to another HSA, you have 60 days, and only one such rollover per 12 months. Direct transfers between custodians have no limit.
Reimbursing yourself: there is no deadline. You can pay a medical bill out of pocket today and reimburse yourself from the HSA years later, tax-free, as long as the expense was incurred after the HSA was opened and you keep the receipt.

Spending the Money

Tax-free: qualified medical expenses for you, your spouse and your dependents — doctor visits, prescriptions, dental, vision, hearing aids, and insulin. Also COBRA premiums, coverage while on unemployment, Medicare premiums after 65 (not Medigap) and part of long-term care premiums. Expenses paid from the HSA can't also be deducted on Schedule A.
Not for medical expenses, under 65: the amount is taxable income plus a 20% additional tax.
Not for medical expenses, 65 or older (or disabled): taxable income only, no 20% tax — the HSA then works like a traditional IRA.
Keep the receipts. You don't send them with your return, but the IRS can ask for them.

The Tax Forms

Form	Who sends it	What it shows
W-2, box 12, code W	Your employer	Employer contributions and your own pre-tax payroll contributions. They are already left out of your wages.
1099-SA	HSA custodian	Money taken out of the HSA during the year (box 1). Code 1 in box 3 = normal distribution.
5498-SA	HSA custodian (often in May)	All contributions for the year. For your records — it is not entered on the return.
Form 8889	You, with your Form 1040	Required if anything went into or came out of the HSA, even if only your employer contributed.

Form 8889 has three parts. Part I checks your contributions against your limit and gives your HSA deduction for money you put in yourself (payroll contributions are already tax-free and are not deducted again). Part II compares what you took out (1099-SA) with your medical expenses; any difference is taxable and usually carries the 20% tax. Part III applies only if you broke the last-month rule.

Try Our Calculator

Our free HSA Calculator takes your W-2 code W, Form 1099-SA and medical expenses and shows every line of Form 8889 for 2025 or 2026, where each number goes on your Form 1040, how much room you have left to contribute, and whether you owe the 20% or 6% tax.

Bottom Line

An HSA is one of the best tax deals available if you have a high-deductible plan: contribute up to the limit by April 15, spend on medical costs tax-free, keep your receipts, and let the rest grow. At tax time, bring your W-2, every Form 1099-SA and your medical receipts to your tax preparer.

This article is general information, not tax advice for your specific situation.