Department of the Treasury
Internal Revenue Service
Publication 969
Cat. No. 24216S
Health Savings
Accounts
and Other
Tax-Favored
Health Plans
For use in preparing
2018 Returns
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Contents
What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Health Savings Accounts (HSAs) . . . . . . . . . . . . . . 2
Medical Savings Accounts (MSAs) . . . . . . . . . . . 11
Archer MSAs . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Medicare Advantage MSAs . . . . . . . . . . . . . . . . 15
Flexible Spending Arrangements (FSAs) . . . . . . . 15
Health Reimbursement Arrangements
(HRAs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . 19
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Future Developments
For the latest information about developments related to
Publication 969, such as legislation enacted after it was
published, go to www.irs.gov/pub969.
What’s New
Health Flexible Spending Arrangements (FSAs) limi-
tation. Salary reduction contributions to your health FSA
for 2018 are limited to $2,650 a year. This inflation adjus-
ted amount is listed in Rev. Proc. 2017-58, sec. 3.16,
available at IRS.gov/irb/2017-45_IRB#RP-2017-58.
Reminders
Photographs of missing children. The Internal Reve-
nue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 800-THE-LOST (800-843-5678)
if you recognize a child.
Federal tax benefits for same-sex married couples.
For federal tax purposes, marriages of couples of the
same sex are treated the same as marriages of couples of
the opposite sex. The term “spouse” includes an individ-
ual married to a person of the same sex. However, individ-
uals who have entered into a registered domestic partner-
ship, civil union, or other similar relationship that isn’t
considered a marriage under state law aren’t considered
married for federal tax purposes.
Affordable Care Act guidance. Notice 2013-54,
2013-40 I.R.B. 287, available at IRS.gov/irb/2013-40_IRB/
ar11.html provides guidance for employers on the
Mar 04, 2019
application of the Affordable Care Act (ACA) to FSAs and
Health Reimbursement Arrangements (HRAs).
For more information on the Affordable Care Act, go to
IRS.gov/Affordable-Care-Act.
Health Flexible Spending Arrangements (FSAs) car-
ryover amount. Your employer may choose to change
your cafeteria plan to allow you to carry over up to $500 of
unused amounts remaining at the end of the plan year in a
health FSA to be paid or reimbursed for qualified medical
expenses incurred during the following plan year. For
more information, see Balance in an FSA under Flexible
Spending Arrangements (FSAs), later. The following rules
apply to health FSAs.
Introduction
Various programs are designed to give individuals tax ad-
vantages to offset health care costs. This publication ex-
plains the following programs.
• Health Savings Accounts (HSAs).
• Medical Savings Accounts (Archer MSAs and Medi-
care Advantage MSAs).
• Health Flexible Spending Arrangements (FSAs).
• Health Reimbursement Arrangements (HRAs).
An HSA may receive contributions from an eligible indi-
vidual or any other person, including an employer or a
family member, on behalf of an eligible individual. Contri-
butions, other than employer contributions, are deductible
on the eligible individual’s return whether or not the indi-
vidual itemizes deductions. Employer contributions aren’t
included in income. Distributions from an HSA that are
used to pay qualified medical expenses aren’t taxed.
An Archer MSA may receive contributions from an eligi-
ble individual and his or her employer, but not both in the
same year. Contributions by the individual are deductible
whether or not the individual itemizes deductions. Em-
ployer contributions aren’t included in income. Distribu-
tions from an Archer MSA that are used to pay qualified
medical expenses aren’t taxed.
A Medicare Advantage MSA is an Archer MSA desig-
nated by Medicare to be used solely to pay the qualified
medical expenses of the account holder who is enrolled in
Medicare. Contributions can be made only by Medicare.
The contributions aren’t included in your income. Distribu-
tions from a Medicare Advantage MSA that are used to
pay qualified medical expenses aren’t taxed.
A health FSA may receive contributions from an eligible
individual. Employers also may contribute. Contributions
aren’t includible in income. Reimbursements from an FSA
that are used to pay qualified medical expenses aren’t
taxed.
An HRA must receive contributions from the employer
only. Employees may not contribute. Contributions aren’t
includible in income. Reimbursements from an HRA that
are used to pay qualified medical expenses aren’t taxed.
Comments and suggestions. We welcome your com-
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ture editions.
You can send us comments through IRS.gov/
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wise, you can go to IRS.gov/OrderForms to order current
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arrive within 10 business days.
Tax questions. If you have a tax question not an-
swered by this publication, check IRS.gov and How To
Get Tax Help at the end of this publication.
Health Savings Accounts
(HSAs)
A Health Savings Account (HSA) is a tax-exempt trust or
custodial account you set up with a qualified HSA trustee
to pay or reimburse certain medical expenses you incur.
You must be an eligible individual to qualify for an HSA.
No permission or authorization from the IRS is neces-
sary to establish an HSA. You set up an HSA with a
trustee. A qualified HSA trustee can be a bank, an insur-
ance company, or anyone already approved by the IRS to
be a trustee of individual retirement arrangements (IRAs)
or Archer MSAs. The HSA can be established through a
trustee that is different from your health plan provider.
Your employer may already have some information on
HSA trustees in your area.
If you have an Archer MSA, you generally can roll
it over into an HSA tax free. See Rollovers, later.
What are the benefits of an HSA? You may enjoy sev-
eral benefits from having an HSA.
• You can claim a tax deduction for contributions you, or
someone other than your employer, make to your
HSA even if you don’t itemize your deductions on
Schedule A (Form 1040).
• Contributions to your HSA made by your employer (in-
cluding contributions made through a cafeteria plan)
may be excluded from your gross income.
• The contributions remain in your account until you use
them.TIP
Page 2 Publication 969 (2018)
• The interest or other earnings on the assets in the ac-
count are tax free.
• Distributions may be tax free if you pay qualified medi-
cal expenses. See Qualified medical expenses, later.
• An HSA is “portable.” It stays with you if you change
employers or leave the work force.
Qualifying for an HSA
To be an eligible individual and qualify for an HSA, you
must meet the following requirements.
• You are covered under a high deductible health plan
(HDHP), described later, on the first day of the month.
• You have no other health coverage except what is
permitted under Other health coverage, later.
• You aren’t enrolled in Medicare.
• You can’t be claimed as a dependent on someone
else’s 2018 tax return.
Under the last-month rule, you are considered to
be an eligible individual for the entire year if you
are an eligible individual on the first day of the last
month of your tax year (December 1 for most taxpayers).
If you meet these requirements, you are an eligible indi-
vidual even if your spouse has non-HDHP family cover-
age, provided your spouse’s coverage doesn’t cover you.
Also, you may be an eligible individual even if you re-
ceive hospital care or medical services under any law ad-
ministered by the Secretary of Veterans Affairs for a serv-
ice-connected disability.
If another taxpayer is entitled to claim an exemp-
tion for you, you can’t claim a deduction for an
HSA contribution. This is true even if the other
person doesn’t receive an exemption deduction for you
because the exemption amount is zero for tax years 2018
through 2025.
Each spouse who is an eligible individual who
wants an HSA must open a separate HSA. You
can’t have a joint HSA.
High deductible health plan (HDHP). An HDHP has:
• A higher annual deductible than typical health plans,
and
• A maximum limit on the sum of the annual deductible
and out-of-pocket medical expenses that you must
pay for covered expenses. Out-of-pocket expenses
include copayments and other amounts, but don’t in-
clude premiums.TIPCAUTION
!TIP
An HDHP may provide preventive care benefits without
a deductible or with a deductible less than the minimum
annual deductible. Preventive care includes, but isn’t limi-
ted to, the following.
1. Periodic health evaluations, including tests and diag-
nostic procedures ordered in connection with routine
examinations, such as annual physicals.
2. Routine prenatal and well-child care.
3. Child and adult immunizations.
4. Tobacco cessation programs.
5. Obesity weight-loss programs.
6. Screening services. This includes screening services
for the following:
a. Cancer.
b. Heart and vascular diseases.
c. Infectious diseases.
d. Mental health conditions.
e. Substance abuse.
f. Metabolic, nutritional, and endocrine conditions.
g. Musculoskeletal disorders.
h. Obstetric and gynecological conditions.
i. Pediatric conditions.
j. Vision and hearing disorders.
For more information on screening services, see
Notice 2004-23, 2004-15 I.R.B. 725 available at
IRS.gov/irb/2004-15_IRB/ar10.html.
The following table shows the minimum annual deducti-
ble and maximum annual deductible and other
out-of-pocket expenses for HDHPs for 2018.
Self-only coverage Family coverage
Minimum annual
deductible $1,350 $2,700
Maximum annual
deductible and
other out-of-pocket
expenses* $6,650 $13,300
* This limit doesn’t apply to deductibles and expenses for out-of-network
services if the plan uses a network of providers. Instead, only deductibles
and out-of-pocket expenses for services within the network should be
used to figure whether the limit applies.
The following table shows the minimum annual
deductible and maximum annual deductible and
other out-of-pocket expenses for HDHPs for
2019.TIP
Publication 969 (2018) Page 3
Self-only coverage Family coverage
Minimum annual
deductible $1,350 $2,700
Maximum annual
deductible and
other out-of-pocket
expenses* $6,750 $13,500
* This limit doesn’t apply to deductibles and expenses for out-of-network
services if the plan uses a network of providers. Instead, only deductibles
and out-of-pocket expenses for services within the network should be
used to figure whether the limit applies.
Self-only HDHP coverage is HDHP coverage for only
an eligible individual. Family HDHP coverage is HDHP
coverage for an eligible individual and at least one other
individual (whether or not that individual is an eligible indi-
vidual).
Example. An eligible individual and his dependent
child are covered under an “employee plus one” HDHP of-
fered by the individual’s employer. This is family HDHP
coverage.
Family plans that don’t meet the high deductible
rules. There are some family plans that have deductibles
for both the family as a whole and for individual family
members. Under these plans, if you meet the individual
deductible for one family member, you don’t have to meet
the higher annual deductible amount for the family. If ei-
ther the deductible for the family as a whole or the deduc-
tible for an individual family member is less than the mini-
mum annual deductible for family coverage, the plan
doesn’t qualify as an HDHP.
Example. You have family health insurance coverage
in 2018. The annual deductible for the family plan is
$3,500. This plan also has an individual deductible of
$1,500 for each family member. The plan doesn’t qualify
as an HDHP because the deductible for an individual fam-
ily member is less than the minimum annual deductible
($2,700) for family coverage.
Other health coverage. If you (and your spouse, if
you have family coverage) have HDHP coverage, you
generally can’t have any other health coverage. However,
you can still be an eligible individual even if your spouse
has non-HDHP coverage provided you aren’t covered by
that plan.
You can have additional insurance that provides bene-
fits only for the following items.
• Liabilities incurred under workers’ compensation laws,
tort liabilities, or liabilities related to ownership or use
of property.
• A specific disease or illness.
• A fixed amount per day (or other period) of hospitali-
zation.
You also can have coverage (whether provided through
insurance or otherwise) for the following items.
• Accidents.
• Disability.
• Dental care.
• Vision care.
• Long-term care.
Plans in which substantially all of the coverage is
through the items listed earlier aren’t HDHPs. For
example, if your plan provides coverage substan-
tially all of which is for a specific disease or illness, the
plan isn’t an HDHP for purposes of establishing an HSA.
Prescription drug plans. You can have a prescrip-
tion drug plan, either as part of your HDHP or a separate
plan (or rider), and qualify as an eligible individual if the
plan doesn’t provide benefits until the minimum annual
deductible of the HDHP has been met. If you can receive
benefits before that deductible is met, you aren’t an eligi-
ble individual.
Other employee health plans. An employee cov-
ered by an HDHP and a health FSA or an HRA that pays
or reimburses qualified medical expenses generally can’t
make contributions to an HSA. FSAs and HRAs are dis-
cussed later.
However, an employee can make contributions to an
HSA while covered under an HDHP and one or more of
the following arrangements.
• Limited-purpose health FSA or HRA. These arrange-
ments can pay or reimburse the items listed earlier un-
der Other health coverage except long-term care.
Also, these arrangements can pay or reimburse pre-
ventive care expenses because they can be paid with-
out having to satisfy the deductible.
• Suspended HRA. Before the beginning of an HRA
coverage period, you can elect to suspend the HRA.
The HRA doesn’t pay or reimburse, at any time, the
medical expenses incurred during the suspension pe-
riod except preventive care and items listed under
Other health coverage. When the suspension period
ends, you are no longer eligible to make contributions
to an HSA.
• Post-deductible health FSA or HRA. These arrange-
ments don’t pay or reimburse any medical expenses
incurred before the minimum annual deductible
amount is met. The deductible for these arrangements
doesn’t have to be the same as the deductible for the
HDHP, but benefits may not be provided before the
minimum annual deductible amount is met.
• Retirement HRA. This arrangement pays or reimbur-
ses only those medical expenses incurred after retire-
ment. After retirement you are no longer eligible to
make contributions to an HSA.
Health FSA – grace period. Coverage during a grace
period by a general purpose health FSA is allowed if the
balance in the health FSA at the end of its prior year plan
is zero. See Flexible Spending Arrangements (FSAs),
later.CAUTION
!
Page 4 Publication 969 (2018)
Contributions to an HSA
Any eligible individual can contribute to an HSA. For an
employee’s HSA, the employee, the employee’s em-
ployer, or both may contribute to the employee’s HSA in
the same year. For an HSA established by a self-em-
ployed (or unemployed) individual, the individual can con-
tribute. Family members or any other person also may
make contributions on behalf of an eligible individual.
Contributions to an HSA must be made in cash. Contri-
butions of stock or property aren’t allowed.
Limit on Contributions
The amount you or any other person can contribute to
your HSA depends on the type of HDHP coverage you
have, your age, the date you become an eligible individ-
ual, and the date you cease to be an eligible individual.
For 2018, if you have self-only HDHP coverage, you can
contribute up to $3,450. If you have family HDHP cover-
age, you can contribute up to $6,900.
For 2019, if you have self-only HDHP coverage,
you can contribute up to $3,500. If you have fam-
ily HDHP coverage, you can contribute up to
$7,000.
If you were, or were considered (under the last-month
rule, discussed later), an eligible individual for the entire
year and didn’t change your type of coverage, you can
contribute the full amount based on your type of coverage.
However, if you weren’t an eligible individual for the entire
year or changed your coverage during the year, your con-
tribution limit is the greater of:
1. The limitation shown on the Line 3 Limitation Chart
and Worksheet in the Instructions for Form 8889,
Health Savings Accounts (HSAs), or
2. The maximum annual HSA contribution based on
your HDHP coverage (self-only or family) on the first
day of the last month of your tax year.
If you had family HDHP coverage on the first day
of the last month of your tax year, your contribu-
tion limit for 2018 is $6,900 even if you changed
coverage during the year.
Last-month rule. Under the last-month rule, if you are an
eligible individual on the first day of the last month of your
tax year (December 1 for most taxpayers), you are consid-
ered an eligible individual for the entire year. You are trea-
ted as having the same HDHP coverage for the entire
year as you had on the first day of the last month, if you
didn’t otherwise have coverage.
Testing period. If contributions were made to your
HSA based on you being an eligible individual for the en-
tire year under the last-month rule, you must remain an eli-
gible individual during the testing period. For the
last-month rule, the testing period begins with the last
month of your tax year and ends on the last day of theTIPTIP
12th month following that month (for example, December
1, 2018, through December 31, 2019).
If you fail to remain an eligible individual during the test-
ing period, for reasons other than death or becoming disa-
bled, you will have to include in income the total contribu-
tions made to your HSA that wouldn’t have been made
except for the last-month rule. You include this amount in
your income in the year in which you fail to be an eligible
individual. This amount is also subject to a 10% additional
tax. The income and additional tax are calculated on Form
8889, Part III.
Example 1. Chris, age 53, becomes an eligible indi-
vidual on December 1, 2018. He has family HDHP cover-
age on that date. Under the last-month rule, he contrib-
utes $6,900 to his HSA.
Chris fails to be an eligible individual in June 2019. Be-
cause Chris didn’t remain an eligible individual during the
testing period (December 1, 2018, through December 31,
2019), he must include in his 2019 income the contribu-
tions made in 2018 that wouldn’t have been made except
for the last-month rule. Chris uses the worksheet in the
Form 8889 instructions to determine this amount.
January . . . . . . . . . . . . . . . . -0-
February . . . . . . . . . . . . . . . . -0-
March . . . . . . . . . . . . . . . . . . -0-
April . . . . . . . . . . . . . . . . . . . -0-
May . . . . . . . . . . . . . . . . . . . -0-
June . . . . . . . . . . . . . . . . . . -0-
July . . . . . . . . . . . . . . . . . . . -0-
August . . . . . . . . . . . . . . . . . -0-
September . . . . . . . . . . . . . . -0-
October . . . . . . . . . . . . . . . . -0-
November . . . . . . . . . . . . . . . -0-
December . . . . . . . . . . . . . . . $6,900.00
Total for all months . . . . . . . . $6,900.00
Limitation. Divide the total by 12 $575.00
Chris would include $6,325.00 ($6,900.00 – $575.00) in
his gross income on his 2019 tax return. Also, a 10% addi-
tional tax applies to this amount.
Example 2. Erika, age 39, has self-only HDHP cover-
age on January 1, 2018. Erika changes to family HDHP
coverage on November 1, 2018. Because Erika has family
HDHP coverage on December 1, 2018, she contributes
$6,900 for 2018.
Erika fails to be an eligible individual in March 2019.
Because she didn’t remain an eligible individual during the
testing period (December 1, 2018, through December 31,
2019), she must include in income the contribution made
that wouldn’t have been made except for the last-month
rule. Erika uses the worksheet in the Form 8889 instruc-
tions to determine this amount.
Publication 969 (2018) Page 5
January . . . . . . . . . . . . . . . . $3,450.00
February . . . . . . . . . . . . . . . . $3,450.00
March . . . . . . . . . . . . . . . . . . $3,450.00
April . . . . . . . . . . . . . . . . . . . $3,450.00
May . . . . . . . . . . . . . . . . . . . $3,450.00
June . . . . . . . . . . . . . . . . . . $3,450.00
July . . . . . . . . . . . . . . . . . . . $3,450.00
August . . . . . . . . . . . . . . . . . $3,450.00
September . . . . . . . . . . . . . . $3,450.00
October . . . . . . . . . . . . . . . . $3,450.00
November . . . . . . . . . . . . . . . $6,900.00
December . . . . . . . . . . . . . . . $6,900.00
Total for all months . . . . . . . . $48,300.00
Limitation. Divide the total by 12 $4,025.00
Erika would include $2,875.00 ($6,900.00 – $4,025.00) in
her gross income on her 2019 tax return. Also, a 10% ad-
ditional tax applies to this amount.
Additional contribution. If you are an eligible individual
who is age 55 or older at the end of your tax year, your
contribution limit is increased by $1,000. For example, if
you have self-only coverage, you can contribute up to
$4,450 (the contribution limit for self-only coverage
($3,450) plus the additional contribution of $1,000). How-
ever, see Enrolled in Medicare, later.
If you have more than one HSA in 2018, your total
contributions to all the HSAs can’t be more than
the limits discussed earlier.
Reduction of contribution limit. You must reduce the
amount that can be contributed (including any additional
contribution) to your HSA by the amount of any contribu-
tion made to your Archer MSA (including employer contri-
butions) for the year. A special rule applies to married
people, discussed next, if each spouse has family cover-
age under an HDHP.
Rules for married people. If either spouse has fam-
ily HDHP coverage, both spouses are treated as having
family HDHP coverage. If each spouse has family cover-
age under a separate plan, the contribution limit for 2018
is $6,900. You must reduce the limit on contributions, be-
fore taking into account any additional contributions, by
the amount contributed to both spouses’ Archer MSAs.
After that reduction, the contribution limit is split equally
between the spouses unless you agree on a different divi-
sion.
The rules for married people apply only if both
spouses are eligible individuals.
If both spouses are 55 or older and not enrolled in Med-
icare, each spouse’s contribution limit is increased by the
additional contribution. If both spouses meet the age re-
quirement, the total contributions under family coverage
can’t be more than $8,900. Each spouse must make the
additional contribution to his or her own HSA.
Example. For 2018, spouses Ginger and Lucy are
both eligible individuals. They each have family coverageCAUTION
!CAUTION
!
under separate HDHPs. Ginger is 58 years old and Lucy
is 53. Ginger and Lucy can split the family contribution
limit ($6,900) equally or they can agree on a different divi-
sion. If they split it equally, Ginger can contribute $4,450
to an HSA (one-half the maximum contribution for family
coverage ($3,450) + $1,000 additional contribution) and
Lucy can contribute $3,450 to an HSA.
Employer contributions. You must reduce the
amount you, or any other person, can contribute to your
HSA by the amount of any contributions made by your
employer that are excludable from your income. This in-
cludes amounts contributed to your account by your em-
ployer through a cafeteria plan.
Enrolled in Medicare. Beginning with the first month
you are enrolled in Medicare, your contribution limit is
zero. This rule applies to periods of retroactive Medicare
coverage. So, if you delayed applying for Medicare and
later your enrollment is back dated, any contributions to
your HSA made during the period of retroactive coverage
are considered excess. See Excess contributions, later.
Example. You turned age 65 in July 2018 and enrol-
led in Medicare. You had an HDHP with self-only cover-
age and are eligible for an additional contribution of
$1,000. Your contribution limit is $2,225 ($4,450 × 6 ÷ 12).
Qualified HSA funding distribution. A qualified HSA
funding distribution may be made from your traditional IRA
or Roth IRA to your HSA. This distribution can’t be made
from an ongoing SEP IRA or SIMPLE IRA. For this pur-
pose, a SEP IRA or SIMPLE IRA is ongoing if an employer
contribution is made for the plan year ending with or within
the tax year in which the distribution would be made.
The maximum qualified HSA funding distribution de-
pends on the HDHP coverage (self-only or family) you
have on the first day of the month in which the contribution
is made and your age as of the end of the tax year. The
distribution must be made directly by the trustee of the
IRA to the trustee of the HSA. The distribution isn’t inclu-
ded in your income, isn’t deductible, and reduces the
amount that can be contributed to your HSA. The qualified
HSA funding distribution is shown on Form 8889 for the
year in which the distribution is made.
You can make only one qualified HSA funding distribu-
tion during your lifetime. However, if you make a distribu-
tion during a month when you have self-only HDHP cover-
age, you can make another qualified HSA funding
distribution in a later month in that tax year if you change
to family HDHP coverage. The total qualified HSA funding
distribution can’t be more than the contribution limit for
family HDHP coverage plus any additional contribution to
which you are entitled.
Example. In 2018, you are an eligible individual, age
57, with self-only HDHP coverage. You can make a quali-
fied HSA funding distribution of $4,450 ($3,450 plus
$1,000 additional contribution).
Funding distribution – testing period. You must re-
main an eligible individual during the testing period. For a
qualified HSA funding distribution, the testing period
Page 6 Publication 969 (2018)
begins with the month in which the qualified HSA funding
distribution is contributed and ends on the last day of the
12th month following that month. For example, if a quali-
fied HSA funding distribution is contributed to your HSA
on August 10, 2018, your testing period begins in August
2018, and ends on August 31, 2019.
If you fail to remain an eligible individual during the test-
ing period, for reasons other than death or becoming disa-
bled, you will have to include in income the qualified HSA
funding distribution. You include this amount in income in
the year in which you fail to be an eligible individual. This
amount is also subject to a 10% additional tax. The in-
come and the additional tax are calculated on Form 8889,
Part III.
Each qualified HSA funding distribution allowed has its
own testing period. For example, you are an eligible indi-
vidual, age 45, with self-only HDHP coverage. On June
18, 2018, you make a qualified HSA funding distribution.
On July 27, 2018, you enroll in family HDHP coverage and
on August 17, 2018, you make a qualified HSA funding
distribution. Your testing period for the first distribution be-
gins in June 2018 and ends on June 30, 2019. Your test-
ing period for the second distribution begins in August
2018 and ends on August 31, 2019.
The testing period rule that applies under the
last-month rule (discussed earlier) doesn’t apply to
amounts contributed to an HSA through a qualified HSA
funding distribution. If you remain an eligible individual
during the entire funding distribution testing period, then
no amount of that distribution is included in income and
won’t be subject to the additional tax for failing to meet the
last-month rule testing period.
Rollovers
A rollover contribution isn’t included in your income, isn’t
deductible, and doesn’t reduce your contribution limit.
Archer MSAs and other HSAs. You can roll over
amounts from Archer MSAs and other HSAs into an HSA.
You don’t have to be an eligible individual to make a roll-
over contribution from your existing HSA to a new HSA.
Rollover contributions don’t need to be in cash. Rollovers
aren’t subject to the annual contribution limits.
You must roll over the amount within 60 days after the
date of receipt. You can make only one rollover contribu-
tion to an HSA during a 1-year period.
Note. If you instruct the trustee of your HSA to transfer
funds directly to the trustee of another of your HSAs, the
transfer isn’t considered a rollover. There is no limit on the
number of these transfers. Don’t include the amount trans-
ferred in income, deduct it as a contribution, nor include it
as a distribution on Form 8889.
When To Contribute
You can make contributions to your HSA for 2018 until
April 15, 2019. If you fail to be an eligible individual during
2018, you can still make contributions up until April 15,
2019, for the months you were an eligible individual.
Your employer can make contributions to your HSA
from January 1, 2019, through April 15, 2019, that are al-
located to 2018. Your employer must notify you and the
trustee of your HSA that the contribution is for 2018. The
contribution will be reported on your 2019 Form W-2,
Wage and Tax Statement.
Reporting Contributions on Your Return
Contributions made by your employer aren’t included in
your income. Contributions to an employee’s account by
an employer using the amount of an employee’s salary re-
duction through a cafeteria plan are treated as employer
contributions. Generally, you can claim contributions you
made and contributions made by any other person, other
than your employer, on your behalf, as an adjustment to
income.
Contributions by a partnership to a bona fide partner’s
HSA aren’t contributions by an employer. The contribu-
tions are treated as a distribution of money and aren’t in-
cluded in the partner’s gross income. Contributions by a
partnership to a partner’s HSA for services rendered are
treated as guaranteed payments that are deductible by
the partnership and includible in the partner’s gross in-
come. In both situations, the partner can deduct the con-
tribution made to the partner’s HSA.
Contributions by an S corporation to a 2% share-
holder-employee’s HSA for services rendered are treated
as guaranteed payments and are deductible by the S cor-
poration and includible in the shareholder-employee’s
gross income. The shareholder-employee can deduct the
contribution made to the shareholder-employee’s HSA.
Form 8889. Report all contributions to your HSA on
Form 8889 and file it with your Form 1040 or Form
1040NR. You should include all contributions made for
2018, including those made from January 1, 2019,
through April 15, 2019, that are designated for 2018. Con-
tributions made by your employer and qualified HSA fund-
ing distributions are also shown on the form.
You should receive Form 5498-SA, HSA, Archer MSA,
or Medicare Advantage MSA Information, from the trustee
showing the amount contributed to your HSA during the
year. Your employer’s contributions also will be shown in
box 12 of Form W-2, with code W. Follow the instructions
for Form 8889. Report your HSA deduction on Form 1040
or Form 1040NR.
Excess contributions. You will have excess contribu-
tions if the contributions to your HSA for the year are
greater than the limits discussed earlier. Excess contribu-
tions aren’t deductible. Excess contributions made by
your employer are included in your gross income. If the
excess contribution isn’t included in box 1 of Form W-2,
you must report the excess as “Other income” on your tax
return.
Generally, you must pay a 6% excise tax on excess
contributions. See Form 5329, Additional Taxes on Quali-
fied Plans (Including IRAs) and Other Tax-Favored Ac-
counts, to figure the excise tax. The excise tax applies to
Publication 969 (2018) Page 7
each tax year the excess contribution remains in the ac-
count.
You may withdraw some or all of the excess contribu-
tions and avoid paying the excise tax on the amount with-
drawn if you meet the following conditions.
• You withdraw the excess contributions by the due
date, including extensions, of your tax return for the
year the contributions were made.
• You withdraw any income earned on the withdrawn
contributions and include the earnings in “Other in-
come” on your tax return for the year you withdraw the
contributions and earnings.
Note. For tax year 2018, Rev. Proc. 2018-18 (dated
March 5, 2018) lowered the HSA contribution limit for indi-
viduals with family HDHP coverage to $6,850. Rev. Proc.
2018-27 (dated April 26, 2018) raised that limit back to
$6,900. If you received a distribution from an HSA of an
excess contribution (with earnings) based on the $6,850
deduction limit, you may repay the distribution to the HSA.
The portion of a distribution (including earnings) that you
repay by April 15, 2019, isn’t included in gross income,
isn’t subject to the 20% additional tax applicable to excess
contributions, and the repayment isn’t subject to the ex-
cise tax on excess contributions.
If you fail to remain an eligible individual during
any of the testing periods, discussed earlier, the
amount you have to include in income isn’t an ex-
cess contribution. If you withdraw any of those amounts,
the amount is treated the same as any other distribution
from an HSA, discussed later.
Deducting an excess contribution in a later year.
You may be able to deduct excess contributions for previ-
ous years that are still in your HSA. The excess contribu-
tion you can deduct for the current year is the lesser of the
following two amounts.
• Your maximum HSA contribution limit for the year mi-
nus any amounts contributed to your HSA for the year.
• The total excess contributions in your HSA at the be-
ginning of the year.
Amounts contributed for the year include contributions
by you, your employer, and any other person. They also
include any qualified HSA funding distribution made to
your HSA. Any excess contribution remaining at the end
of a tax year is subject to the excise tax. See Form 5329.
Distributions From an HSA
You generally will pay medical expenses during the year
without being reimbursed by your HDHP until you reach
the annual deductible for the plan. When you pay medical
expenses during the year that aren’t reimbursed by your
HDHP, you can ask the trustee of your HSA to send you a
distribution from your HSA.
You can receive tax-free distributions from your HSA to
pay or be reimbursed for qualified medical expenses you
incur after you establish the HSA. If you receiveCAUTION
!
distributions for other reasons, the amount you withdraw
will be subject to income tax and may be subject to an ad-
ditional 20% tax. You don’t have to make withdrawals
from your HSA each year.
If you are no longer an eligible individual, you can
still receive tax-free distributions to pay or reim-
burse your qualified medical expenses.
Generally, a distribution is money you get from your
HSA. Your total distributions include amounts paid with a
debit card and amounts withdrawn from the HSA by other
individuals that you have designated. The trustee will re-
port any distribution to you and the IRS on Form 1099-SA,
Distributions From an HSA, Archer MSA, or Medicare Ad-
vantage MSA.
Qualified medical expenses. Qualified medical expen-
ses are those expenses that generally would qualify for
the medical and dental expenses deduction. These are
explained in Pub. 502, Medical and Dental Expenses.
Also, non-prescription medicines (other than insulin)
aren’t considered qualified medical expenses for HSA
purposes. A medicine or drug will be a qualified medical
expense for HSA purposes only if the medicine or drug:
1. Requires a prescription,
2. Is available without a prescription (an over-the-coun-
ter medicine or drug) and you get a prescription for it,
or
3. Is insulin.
For HSA purposes, expenses incurred before you es-
tablish your HSA aren’t qualified medical expenses. State
law determines when an HSA is established. An HSA that
is funded by amounts rolled over from an Archer MSA or
another HSA is established on the date the prior account
was established.
If, under the last-month rule, you are considered to be
an eligible individual for the entire year for determining the
contribution amount, only those expenses incurred after
you actually establish your HSA are qualified medical ex-
penses.
Qualified medical expenses are those incurred by the
following persons.
1. You and your spouse.
2. All dependents you claim on your tax return.
3. Any person you could have claimed as a dependent
on your return except that:
a. The person filed a joint return,
b. The person had gross income of $4,150 or more,
or
c. You, or your spouse if filing jointly, could be
claimed as a dependent on someone else’s 2018
return.TIP
Page 8 Publication 969 (2018)
For this purpose, a child of parents that are di-
vorced, separated, or living apart for the last 6
months of the calendar year is treated as the de-
pendent of both parents whether or not the custodial pa-
rent releases the claim to the child’s exemption.
You can’t deduct qualified medical expenses as
an itemized deduction on Schedule A (Form
1040) that are equal to the tax-free distribution
from your HSA.
Insurance premiums. You can’t treat insurance pre-
miums as qualified medical expenses unless the premi-
ums are for:
1. Long-term care insurance.
2. Health care continuation coverage (such as coverage
under COBRA).
3. Health care coverage while receiving unemployment
compensation under federal or state law.
4. Medicare and other health care coverage if you were
65 or older (other than premiums for a Medicare sup-
plemental policy, such as Medigap).
The premiums for long-term care insurance (item (1))
that you can treat as qualified medical expenses are sub-
ject to limits based on age and are adjusted annually. See
Limit on long-term care premiums you can deduct in the
instructions for Schedule A (Form 1040).
Items (2) and (3) can be for your spouse or a depend-
ent meeting the requirement for that type of coverage. For
item (4), if you, the account beneficiary, aren’t 65 or older,
Medicare premiums for coverage of your spouse or a de-
pendent (who is 65 or older) generally aren’t qualified
medical expenses.
Health coverage tax credit. You can’t claim this
credit for premiums that you pay with a tax-free distribu-
tion from your HSA. See Pub. 502 for more information on
this credit.
Deemed distributions from HSAs. The following situa-
tions result in deemed taxable distributions from your
HSA.
• You engaged in any transaction prohibited by section
4975 with respect to any of your HSAs, at any time in
2018. Your account ceases to be an HSA as of Janu-
ary 1, 2018, and you must include the fair market
value of all assets in the account as of January 1,
2018, on Form 8889.
• You used any portion of any of your HSAs as security
for a loan at any time in 2018. You must include the
fair market value of the assets used as security for the
loan as income on Form 1040 or Form 1040NR.
Examples of prohibited transactions include the direct
or indirect:
• Sale, exchange, or leasing of property between you
and the HSA;
• Lending of money between you and the HSA;TIPCAUTION
!
• Furnishing goods, services, or facilities between you
and the HSA; and
• Transfer to or use by you, or for your benefit, of any
assets of the HSA.
Any deemed distributions won’t be treated as used to
pay qualified medical expenses. These distributions are
included in your income and are subject to the additional
20% tax, discussed later.
Recordkeeping. You must keep records suffi-
cient to show that:
• The distributions were exclusively to pay or reimburse
qualified medical expenses,
• The qualified medical expenses hadn’t been previ-
ously paid or reimbursed from another source, and
• The medical expenses hadn’t been taken as an item-
ized deduction in any year.
Don’t send these records with your tax return. Keep them
with your tax records.
Reporting Distributions on Your Return
How you report your distributions depends on whether or
not you use the distribution for qualified medical expenses
(defined earlier).
• If you use a distribution from your HSA for qualified
medical expenses, you don’t pay tax on the distribu-
tion but you have to report the distribution on Form
8889. However, the distribution of an excess contribu-
tion taken out after the due date, including extensions,
of your return is subject to tax even if used for quali-
fied medical expenses. Follow the instructions for the
form and file it with your Form 1040 or Form 1040NR.
• If you don’t use a distribution from your HSA for quali-
fied medical expenses, you must pay tax on the distri-
bution. Report the amount on Form 8889 and file it
with your Form 1040 or Form 1040NR. You may have
to pay an additional 20% tax on your taxable distribu-
tion.
HSA administration and maintenance fees with-
drawn by the trustee aren’t reported as distribu-
tions from the HSA.
Additional tax. There is an additional 20% tax on the
part of your distributions not used for qualified medical ex-
penses. Figure the tax on Form 8889 and file it with your
Form 1040 or Form 1040NR.
Exceptions. There is no additional tax on distributions
made after the date you are disabled, reach age 65, or
die.
Balance in an HSA
An HSA is generally exempt from tax. You are permitted
to take a distribution from your HSA at any time; however,
only those amounts used exclusively to pay for qualifiedRECORDSTIP
Publication 969 (2018) Page 9
medical expenses are tax free. Amounts that remain at
the end of the year are generally carried over to the next
year (see Excess contributions, earlier). Earnings on
amounts in an HSA aren’t included in your income while
held in the HSA.
Death of HSA Holder
You should choose a beneficiary when you set up your
HSA. What happens to that HSA when you die depends
on whom you designate as the beneficiary.
Spouse is the designated beneficiary. If your spouse
is the designated beneficiary of your HSA, it will be treated
as your spouse’s HSA after your death.
Spouse isn’t the designated beneficiary. If your
spouse isn’t the designated beneficiary of your HSA:
• The account stops being an HSA, and
• The fair market value of the HSA becomes taxable to
the beneficiary in the year in which you die.
If your estate is the beneficiary, the value is included on
your final income tax return.
The amount taxable to a beneficiary other than
the estate is reduced by any qualified medical ex-
penses for the decedent that are paid by the ben-
eficiary within 1 year after the date of death.
Filing Form 8889
You must file Form 8889 with your Form 1040 or Form
1040NR if you (or your spouse, if married filing jointly) had
any activity in your HSA during the year. You must file the
form even if only your employer or your spouse’s em-
ployer made contributions to the HSA.
If, during the tax year, you are the beneficiary of two or
more HSAs or you are a beneficiary of an HSA and you
have your own HSA, you must complete a separate Form
8889 for each HSA. Enter “statement” at the top of each
Form 8889 and complete the form as instructed. Next,
complete a controlling Form 8889 combining the amounts
shown on each of the statement Forms 8889. Attach the
statements to your tax return after the controlling Form
8889.
Employer Participation
This section contains the rules that employers must follow
if they decide to make HSAs available to their employees.
Unlike the previous discussions, “you” refers to the em-
ployer and not to the employee.
Health plan. If you want your employees to be able to
have HSAs, they must have an HDHP. You can provide
no additional coverage other than those exceptions listed
previously under Other health coverage.
Contributions. You can make contributions to your em-
ployees’ HSAs. You deduct the contributions on yourTIP
business income tax return for the year in which you make
the contributions. If the contribution is allocated to the
prior year, you still deduct it in the year in which you made
the contribution.
For more information on employer contributions, see
Notice 2008-59, 2008-29 I.R.B. 123, questions 23 through
27, available at IRS.gov/irb/2008-29_IRB/ar11.html.
Comparable contributions. If you decide to make con-
tributions, you must make comparable contributions to all
comparable participating employees’ HSAs. Your contri-
butions are comparable if they are either:
• The same amount, or
• The same percentage of the annual deductible limit
under the HDHP covering the employees.
The comparability rules don’t apply to contributions made
through a cafeteria plan.
Comparable participating employees. Comparable
participating employees:
• Are covered by your HDHP and are eligible to estab-
lish an HSA,
• Have the same category of coverage (either self-only
or family coverage), and
• Have the same category of employment (part-time,
full-time, or former employees).
To meet the comparability requirements for eligible em-
ployees who have neither established an HSA by Decem-
ber 31 nor notified you that they have an HSA, you must
meet a notice requirement and a contribution requirement.
You will meet the notice requirement if by January 15 of
the following calendar year you provide a written notice to
all such employees. The notice must state that each eligi-
ble employee who, by the last day of February, estab-
lishes an HSA and notifies you that he or she has estab-
lished an HSA will receive a comparable contribution to
the HSA for the prior year. For a sample of the notice, see
Regulations section 54.4980G-4 A-14(c). You will meet
the contribution requirement for these employees if by
April 15, 2019, you contribute comparable amounts plus
reasonable interest to the employees’ HSAs for the prior
year.
Note. For purposes of making contributions to HSAs of
non-highly compensated employees, highly compensated
employees shall not be treated as comparable participat-
ing employees.
Excise tax. If you made contributions to your employees’
HSAs that weren’t comparable, you must pay an excise
tax of 35% of the amount you contributed.
Employment taxes. Amounts you contribute to your em-
ployees’ HSAs generally aren’t subject to employment
taxes. You must report the contributions in box 12 of the
Form W-2 you file for each employee. This includes the
amounts the employee elected to contribute through a
cafeteria plan. Enter code W in box 12.
Page 10 Publication 969 (2018)
Medical Savings Accounts
(MSAs)
Archer MSAs were created to help self-employed individ-
uals and employees of certain small employers meet the
medical care costs of the account holder, the account
holder’s spouse, or the account holder’s dependent(s).
After 2007, you can’t be treated as an eligible indi-
vidual for Archer MSA purposes unless:
1. You were an active participant for any tax year ending
before 2008, or
2. You became an active participant for a tax year end-
ing after 2007, by reason of coverage under a high
deductible health plan (HDHP) of an Archer MSA par-
ticipating employer.
A Medicare Advantage MSA is an Archer MSA desig-
nated by Medicare to be used solely to pay the qualified
medical expenses of the account holder who is eligible for
Medicare.
Archer MSAs
An Archer MSA is a tax-exempt trust or custodial account
that you set up with a U.S. financial institution (such as a
bank or an insurance company) in which you can save
money exclusively for future medical expenses.
What are the benefits of an Archer MSA? You may
enjoy several benefits from having an Archer MSA.
• You can claim a tax deduction for contributions you
make even if you don’t itemize your deductions on
Schedule A (Form 1040) or Schedule A (Form
1040NR).
• The interest or other earnings on the assets in your
Archer MSA are tax free.
• Distributions may be tax free if you pay qualified medi-
cal expenses. See Qualified medical expenses, later.
• The contributions remain in your Archer MSA from
year to year until you use them.
• An Archer MSA is “portable” so it stays with you if you
change employers or leave the work force.
Qualifying for an Archer MSA
To qualify for an Archer MSA, you must be either of the
following.
• An employee (or the spouse of an employee) of a
small employer (defined later) that maintains a
self-only or family HDHP for you (or your spouse).
• A self-employed person (or the spouse of a self-em-
ployed person) who maintains a self-only or family
HDHP.CAUTION
!
You can have no other health or Medicare coverage ex-
cept what is permitted under Other health coverage, later.
You must be an eligible individual on the first day of a
given month to get an Archer MSA deduction for that
month.
If another taxpayer is entitled to claim an exemp-
tion for you, you can’t claim a deduction for an
Archer MSA contribution. This is true even if the
other person doesn’t receive an exemption deduction for
you because the exemption amount is zero for tax years
2018 through 2025.
Small employer. A small employer is generally an em-
ployer who had an average of 50 or fewer employees dur-
ing either of the last 2 calendar years. The definition of
small employer is modified for new employers and grow-
ing employers.
Growing employer. A small employer may begin
HDHPs and Archer MSAs for his or her employees and
then grow beyond 50 employees. The employer will con-
tinue to meet the requirement for small employers if he or
she:
• Had 50 or fewer employees when the Archer MSAs
began,
• Made a contribution that was excludable or deductible
as an Archer MSA for the last year he or she had 50 or
fewer employees, and
• Had an average of 200 or fewer employees each year
after 1996.
Changing employers. If you change employers, your
Archer MSA moves with you. However, you may not make
additional contributions unless you are otherwise eligible.
High deductible health plan (HDHP). To be eligible for
an Archer MSA, you must be covered under an HDHP. An
HDHP has:
• A higher annual deductible than typical health plans,
and
• A maximum limit on the annual out-of-pocket medical
expenses that you must pay for covered expenses.
Limits. The following table shows the limits for annual
deductibles and the maximum out-of-pocket expenses for
HDHPs for 2018.
Self-only coverage Family coverage
Minimum annual
deductible $2,300 $4,550
Maximum annual
deductible $3,450 $6,850
Maximum annual
out-of-pocket
expenses $4,550 $8,400
Family plans that don’t meet the high deductible
rules. There are some family plans that have deductibles
for both the family as a whole and for individual familyCAUTION
!
Publication 969 (2018) Page 11
members. Under these plans, if you meet the individual
deductible for one family member, you don’t have to meet
the higher annual deductible amount for the family. If ei-
ther the deductible for the family as a whole or the deduc-
tible for an individual family member is less than the mini-
mum annual deductible for family coverage, the plan
doesn’t qualify as an HDHP.
Example. You have family health insurance coverage
in 2018. The annual deductible for the family plan is
$5,500. This plan also has an individual deductible of
$2,000 for each family member. The plan doesn’t qualify
as an HDHP because the deductible for an individual fam-
ily member is less than the minimum annual deductible
($4,550) for family coverage.
Other health coverage. If you (and your spouse, if you
have family coverage) have HDHP coverage, you gener-
ally can’t have any other health coverage. However, you
can still be an eligible individual even if your spouse has
non-HDHP coverage provided you aren’t covered by that
plan. However, you can have additional insurance that
provides benefits only for the following items.
• Liabilities incurred under workers’ compensation laws,
torts, or ownership or use of property.
• A specific disease or illness.
• A fixed amount per day (or other period) of hospitali-
zation.
You also can have coverage (whether provided through
insurance or otherwise) for the following items.
• Accidents.
• Disability.
• Dental care.
• Vision care.
• Long-term care.
Contributions to an MSA
Contributions to an Archer MSA must be made in cash.
You can’t contribute stock or other property to an Archer
MSA.
Who can contribute to my Archer MSA? If you are an
employee, your employer may make contributions to your
Archer MSA. (You don’t pay tax on these contributions.) If
your employer doesn’t make contributions to your Archer
MSA, or you are self-employed, you can make your own
contributions to your Archer MSA. You and your employer
can’t make contributions to your Archer MSA in the same
year. You don’t have to make contributions to your Archer
MSA every year.
If your spouse is covered by your HDHP and an
excludable amount is contributed by your spou-
se’s employer to an Archer MSA belonging to
your spouse, you can’t make contributions to your own
Archer MSA that year.CAUTION
!
Limits
There are two limits on the amount you or your employer
can contribute to your Archer MSA:
• The annual deductible limit.
• An income limit.
Annual deductible limit. You or your employer can con-
tribute up to 75% of the annual deductible of your HDHP
(65% if you have a self-only plan) to your Archer MSA.
You must have the HDHP all year to contribute the full
amount. If you don’t qualify to contribute the full amount
for the year, determine your annual deductible limit by us-
ing the Line 3 Limitation Chart and Worksheet in the In-
structions for Form 8853, Archer MSAs and Long-Term
Care Insurance Contracts.
Example 1. You have an HDHP for your family all year
in 2018. The annual deductible is $5,000. You can con-
tribute up to $3,750 ($5,000 × 75%) to your Archer MSA
for the year.
Example 2. You have an HDHP for your family for the
entire period of July through December 2018 (6 months).
The annual deductible is $5,000. You can contribute up to
$1,875 ($5,000 × 75% ÷ 12 × 6) to your Archer MSA for
the year.
If you and your spouse each have a family plan,
you are treated as having family coverage with
the lower annual deductible of the two health
plans. The contribution limit is split equally between the
two of you unless you agree on a different division.
Income limit. You can’t contribute more than you earned
for the year from the employer through whom you have
your HDHP.
If you are self-employed, you can’t contribute more
than your net self-employment income. This is your in-
come from self-employment minus expenses (including
the deductible part of self-employment tax).
Example 1. Simon Snowhill earned $25,000 from TR
Company in 2018. Through TR, he had an HDHP for his
family for the entire year. The annual deductible was
$5,000. He can contribute up to $3,750 to his Archer MSA
(75% × $5,000). He can contribute the full amount be-
cause he earned more than $3,750 at TR.
Example 2. Westley Lawrence is self-employed. He
had an HDHP for his family for the entire year in 2018. The
annual deductible was $5,000. Based on the annual de-
ductible, the maximum contribution to his Archer MSA
would have been $3,750 (75% × $5,000). However, after
deducting his business expenses, Westley’s net self-em-
ployment income is $2,500 for the year. Therefore, he is
limited to a contribution of $2,500.
Individuals enrolled in Medicare. Beginning with the
first month you are enrolled in Medicare, you can’t contrib-
ute to an Archer MSA. However, you may be eligible for a
Medicare Advantage MSA, discussed later.TIP
Page 12 Publication 969 (2018)
When To Contribute
You can make contributions to your Archer MSA for 2018
until April 15, 2019.
Reporting Contributions on Your Return
Report all contributions to your Archer MSA on Form 8853
and file it with your Form 1040 or Form 1040NR. You
should include all contributions you or your employer
made for 2018, including those made from January 1,
2019, through April 15, 2019, that are designated for
2018.
You should receive Form 5498-SA, HSA, Archer MSA,
or Medicare Advantage MSA Information, from the trustee
showing the amount you or your employer contributed
during the year. Your employer’s contributions should be
shown in box 12 of Form W-2, with code R. Follow the in-
structions for Form 8853 and complete the Line 3 Limita-
tion Chart and Worksheet in the instructions. Report your
Archer MSA deduction on Form 1040 or Form 1040NR.
Excess contributions. You will have excess contribu-
tions if the contributions to your Archer MSA for the year
are greater than the limits discussed earlier. Excess con-
tributions aren’t deductible. Excess contributions made by
your employer are included in your gross income. If the
excess contribution isn’t included in box 1 of Form W-2,
you must report the excess as “Other income” on your tax
return.
Generally, you must pay a 6% excise tax on excess
contributions. See Form 5329, Additional Taxes on Quali-
fied Plans (Including IRAs) and Other Tax-Favored Ac-
counts, to figure the excise tax. The excise tax applies to
each tax year the excess contribution remains in the ac-
count.
You may withdraw some or all of the excess contribu-
tions and avoid paying the excise tax on the amount with-
drawn if you meet the following conditions.
• You withdraw the excess contributions by the due
date, including extensions, of your tax return.
• You withdraw any income earned on the withdrawn
contributions and include the earnings in “Other in-
come” on your tax return for the year you withdraw the
contributions and earnings.
Deducting an excess contribution in a later year. You
may be able to deduct excess contributions for previous
years that are still in your Archer MSA. The excess contri-
bution you can deduct in the current year is the lesser of
the following two amounts.
• Your maximum Archer MSA contribution limit for the
year minus any amounts contributed to your Archer
MSA for the year.
• The total excess contributions in your Archer MSA at
the beginning of the year.
Any excess contributions remaining at the end of a tax
year are subject to the excise tax. See Form 5329.
Distributions From an MSA
You generally will pay medical expenses during the year
without being reimbursed by your HDHP until you reach
the annual deductible for the plan. When you pay medical
expenses during the year that aren’t reimbursed by your
HDHP, you can ask the trustee of your Archer MSA to
send you a distribution from your Archer MSA.
You can receive tax-free distributions from your Archer
MSA to pay for qualified medical expenses (discussed
later). If you receive distributions for other reasons, the
amount will be subject to income tax and may be subject
to an additional 20% tax as well. You don’t have to make
withdrawals from your Archer MSA each year.
If you no longer qualify to make contributions, you
can still receive tax-free distributions to pay or re-
imburse your qualified medical expenses.
A distribution is money you get from your Archer MSA.
The trustee will report any distribution to you and the IRS
on Form 1099-SA, Distributions From an HSA, Archer
MSA, or Medicare Advantage MSA.
Qualified medical expenses. Qualified medical expen-
ses are those expenses that generally would qualify for
the medical and dental expenses deduction. These are
explained in Pub. 502.
Also, non-prescription medicines (other than insulin)
aren’t considered qualified medical expenses for MSA
purposes. A medicine or drug will be a qualified medical
expense for MSA purposes only if the medicine or drug:
1. Requires a prescription,
2. Is available without a prescription (an over-the-coun-
ter medicine or drug) and you get a prescription for it,
or
3. Is insulin.
Qualified medical expenses are those incurred by the
following persons.
1. You and your spouse.
2. All dependents you claim on your tax return.
3. Any person you could have claimed as a dependent
on your return except that:
a. The person filed a joint return,
b. The person had gross income of $4,150 or more,
or
c. You, or your spouse if filing jointly, could be
claimed as a dependent on someone else’s 2018
return.
For this purpose, a child of parents that are di-
vorced, separated, or living apart for the last 6
months of the calendar year is treated as the de-
pendent of both parents whether or not the custodial pa-
rent releases the claim to the child’s exemption.TIPTIP
Publication 969 (2018) Page 13
You can’t deduct qualified medical expenses as
an itemized deduction on Schedule A (Form
1040) that are equal to the tax-free distribution
from your Archer MSA.
Special rules for insurance premiums. Generally,
you can’t treat insurance premiums as qualified medical
expenses for Archer MSAs. You can, however, treat pre-
miums for long-term care coverage, health care coverage
while you receive unemployment benefits, or health care
continuation coverage required under any federal law as
qualified medical expenses for Archer MSAs.
Health coverage tax credit. You can’t claim this
credit for premiums that you pay with a tax-free distribu-
tion from your Archer MSA. See Pub. 502 for information
on this credit.
Deemed distributions from Archer MSAs. The follow-
ing situations result in deemed taxable distributions from
your Archer MSA.
• You engaged in any transaction prohibited by section
4975 with respect to any of your Archer MSAs at any
time in 2018. Your account ceases to be an Archer
MSA as of January 1, 2018, and you must include the
fair market value of all assets in the account as of Jan-
uary 1, 2018, on Form 8853.
• You used any portion of any of your Archer MSAs as
security for a loan at any time in 2018. You must in-
clude the fair market value of the assets used as se-
curity for the loan as income on Form 1040 or Form
1040NR.
Examples of prohibited transactions include the direct
or indirect:
• Sale, exchange, or leasing of property between you
and the Archer MSA;
• Lending of money between you and the Archer MSA;
• Furnishing goods, services, or facilities between you
and the Archer MSA; and
• Transfer to or use by you, or for your benefit, of any
assets of the Archer MSA.
Any deemed distribution won’t be treated as used to
pay qualified medical expenses. These distributions are
included in your income and are subject to the additional
20% tax, discussed later.
Recordkeeping. You must keep records suffi-
cient to show that:
• The distributions were exclusively to pay or reimburse
qualified medical expenses,
• The qualified medical expenses hadn’t been previ-
ously paid or reimbursed from another source, and
• The medical expenses hadn’t been taken as an item-
ized deduction in any year.
Don’t send these records with your tax return. Keep them
with your tax records.CAUTION
!RECORDS
Reporting Distributions on Your Return
How you report your distributions depends on whether or
not you use the distribution for qualified medical expen-
ses, defined earlier.
• If you use a distribution from your Archer MSA for
qualified medical expenses, you don’t pay tax on the
distribution but you have to report the distribution on
Form 8853. Follow the instructions for the form and file
it with your Form 1040 or Form 1040NR.
• If you don’t use a distribution from your Archer MSA
for qualified medical expenses, you must pay tax on
the distribution. Report the amount on Form 8853 and
file it with your Form 1040 or Form 1040NR. You may
have to pay an additional 20% tax, discussed later, on
your taxable distribution.
If an amount (other than a rollover) is contributed
to your Archer MSA this year (by you or your em-
ployer), you also must report and pay tax on a dis-
tribution you receive from your Archer MSA this year that
is used to pay medical expenses of someone who isn’t
covered by an HDHP, or is also covered by another health
plan that isn’t an HDHP, at the time the expenses are in-
curred.
Rollovers. Generally, any distribution from an Archer
MSA that you roll over into another Archer MSA or an
HSA isn’t taxable if you complete the rollover within 60
days. An Archer MSA and an HSA can receive only one
rollover contribution during a 1-year period. See the Form
8853 instructions for more information.
Additional tax. There is a 20% additional tax on the part
of your distributions not used for qualified medical expen-
ses. Figure the tax on Form 8853 and file it with your Form
1040 or Form 1040NR. Report the additional tax in the to-
tal on Form 1040 or Form 1040NR.
Exceptions. There is no additional tax on distributions
made after the date you are disabled, reach age 65, or
die.
Balance in an Archer MSA
An Archer MSA is generally exempt from tax. You are per-
mitted to take a distribution from your Archer MSA at any
time; however, only those amounts used exclusively to
pay for qualified medical expenses are tax free. Amounts
that remain at the end of the year are generally carried
over to the next year (see Excess contributions, earlier).
Earnings on amounts in an Archer MSA aren’t included in
your income while held in the Archer MSA.
Death of the Archer MSA Holder
You should choose a beneficiary when you set up your
Archer MSA. What happens to that Archer MSA when you
die depends on whom you designate as the beneficiary.CAUTION
!
Page 14 Publication 969 (2018)
Spouse is the designated beneficiary. If your spouse
is the designated beneficiary of your Archer MSA, it will be
treated as your spouse’s Archer MSA after your death.
Spouse isn’t the designated beneficiary. If your
spouse isn’t the designated beneficiary of your Archer
MSA:
• The account stops being an Archer MSA, and
• The fair market value of the Archer MSA becomes tax-
able to the beneficiary in the year in which you die.
If your estate is the beneficiary, the fair market value of
the Archer MSA will be included on your final income tax
return.
The amount taxable to a beneficiary other than
the estate is reduced by any qualified medical ex-
penses for the decedent that are paid by the ben-
eficiary within 1 year after the date of death.
Filing Form 8853
You must file Form 8853 with your Form 1040 or Form
1040NR if you (or your spouse, if married filing a joint re-
turn) had any activity in your Archer MSA during the year.
You must file the form even if only your employer or your
spouse’s employer made contributions to the Archer
MSA.
If, during the tax year, you are the beneficiary of two or
more Archer MSAs or you are a beneficiary of an Archer
MSA and you have your own Archer MSA, you must com-
plete a separate Form 8853 for each MSA. Enter “state-
ment” at the top of each Form 8853 and complete the form
as instructed. Next, complete a controlling Form 8853
combining the amounts shown on each of the statement
Forms 8853. Attach the statements to your tax return after
the controlling Form 8853.
Employer Participation
This section contains the rules that employers must follow
if they decide to make Archer MSAs available to their em-
ployees. Unlike the previous discussions, “you” refers to
the employer and not to the employee.
Health plan. If you want your employees to be able to
have Archer MSAs, you must make an HDHP available to
them. You can provide no additional coverage other than
those exceptions listed previously under Other health cov-
erage.
Contributions. You can make contributions to your em-
ployees’ Archer MSAs and deduct them for the year in
which you make them.
Comparable contributions. If you decide to make con-
tributions, you must make comparable contributions to all
comparable participating employees’ Archer MSAs. Your
contributions are comparable if they are either:
• The same amount, orTIP
• The same percentage of the annual deductible limit
under the HDHP covering the employees.
Comparable participating employees. Comparable
participating employees:
• Are covered by your HDHP and are eligible to estab-
lish an Archer MSA,
• Have the same category of coverage (either self-only
or family coverage), and
• Have the same category of employment (either
part-time or full-time).
Excise tax. If you made contributions to your employees’
Archer MSAs that weren’t comparable, you must pay an
excise tax of 35% of the amount you contributed.
Employment taxes. Amounts you contribute to your em-
ployees’ Archer MSAs generally aren’t subject to employ-
ment taxes. You must report the contributions in box 12 of
the Form W-2 you file for each employee. Enter code R in
box 12.
Medicare Advantage MSAs
A Medicare Advantage MSA is an Archer MSA designa-
ted by Medicare to be used solely to pay the qualified
medical expenses of the account holder. To be eligible for
a Medicare Advantage MSA, you must be enrolled in
Medicare and have an HDHP that meets the Medicare
guidelines.
A Medicare Advantage MSA is a tax-exempt trust or
custodial savings account that you set up with a financial
institution (such as a bank or an insurance company) in
which the Medicare program can deposit money for quali-
fied medical expenses. The money in your account isn’t
taxed if it is used for qualified medical expenses, and it
may earn interest or dividends.
An HDHP is a special health insurance policy that has a
high deductible. You choose the policy you want to use as
part of your Medicare Advantage MSA plan. However, the
policy must be approved by the Medicare program.
Medicare Advantage MSAs are administered through
the federal Medicare program. You can get information by
calling 800-Medicare (800-633-4227) or through the Inter-
net at Medicare.gov.
Note. You must file Form 8853, Archer MSAs, and
Long-Term Care Insurance Contracts, with your tax return
if you have a Medicare Advantage MSA.
Flexible Spending
Arrangements (FSAs)
A health Flexible Spending Arrangement (FSA) allows
employees to be reimbursed for medical expenses. FSAs
are usually funded through voluntary salary reduction
agreements with your employer. No employment or
Publication 969 (2018) Page 15
federal income taxes are deducted from your contribution.
The employer also may contribute.
Note. Unlike HSAs or Archer MSAs, which must be
reported on Form 1040 or Form 1040NR, there are no re-
porting requirements for FSAs on your income tax return.
For information on the interaction between a health
FSA and an HSA, see Other employee health plans under
Qualifying for an HSA, earlier.
What are the benefits of an FSA? You may enjoy sev-
eral benefits from having an FSA.
• Contributions made by your employer can be exclu-
ded from your gross income.
• No employment or federal income taxes are deducted
from the contributions.
• Reimbursements may be tax free if you pay qualified
medical expenses. See Qualified medical expenses,
later.
• You can use an FSA to pay qualified medical expen-
ses even if you haven’t yet placed the funds in the ac-
count.
Qualifying for an FSA
Health FSAs are employer-established benefit plans.
These may be offered in conjunction with other em-
ployer-provided benefits as part of a cafeteria plan. Em-
ployers have complete flexibility to offer various combina-
tions of benefits in designing their plan.
Self-employed persons aren’t eligible for FSAs.
Certain limitations may apply if you are a highly
compensated participant or a key employee.
Contributions to an FSA
You contribute to your FSA by electing an amount to be
voluntarily withheld from your pay by your employer. This
is sometimes called a salary reduction agreement. The
employer also may contribute to your FSA if specified in
the plan.
You don’t pay federal income tax or employment taxes
on the salary you contribute or the amounts your employer
contributes to the FSA. However, contributions made by
your employer to provide coverage for long-term care in-
surance must be included in income.
When To Contribute
At the beginning of the plan year, you must designate how
much you want to contribute. Then, your employer will de-
duct amounts periodically (generally, every payday) in ac-
cordance with your annual election. You can change or re-
voke your election only if there is a change in your
employment or family status that is specified by the plan.CAUTION
!
Amount of Contribution
For 2018, salary reduction contributions to a health FSA
can’t be more than $2,650 a year (or any lower amount set
by the plan). This amount is indexed for inflation and may
change from year to year.
Generally, contributed amounts that aren’t spent by the
end of the plan year are forfeited. However, see Balance
in an FSA, later, for possible exceptions. For this reason, it
is important to base your contribution on an estimate of
the qualifying expenses you will have during the year.
Distributions From an FSA
Generally, distributions from a health FSA must be paid
only to reimburse you for qualified medical expenses you
incurred during the period of coverage. You must be able
to receive the maximum amount of reimbursement (the
amount you have elected to contribute for the year) at any
time during the coverage period, regardless of the amount
you have actually contributed. The maximum amount you
can receive tax free is the total amount you elected to con-
tribute to the health FSA for the year.
You must provide the health FSA with a written state-
ment from an independent third party stating that the med-
ical expense has been incurred and the amount of the ex-
pense. You also must provide a written statement that the
expense hasn’t been paid or reimbursed under any other
health plan coverage. The FSA can’t make advance reim-
bursements of future or projected expenses.
Debit cards, credit cards, and stored value cards given
to you by your employer can be used to reimburse partici-
pants in a health FSA. If the use of these cards meets cer-
tain substantiation methods, you may not have to provide
additional information to the health FSA. For information
on these methods, see Rev. Rul. 2003-43, 2003-21 I.R.B.
935, available at IRS.gov/pub/irs-drop/rr-03-43.pdf, Notice
2006-69, 2006-31 I.R.B. 107, available at IRS.gov/irb/
2006-31_IRB/ar10.html, and Notice 2007-2, 2007-2 I.R.B.
254, available at IRS.gov/irb/2007-2_IRB/ar09.html.
Qualified medical expenses. Qualified medical expen-
ses are those specified in the plan that generally would
qualify for the medical and dental expenses deduction.
These are explained in Pub. 502.
Also, non-prescription medicines (other than insulin)
aren’t considered qualified medical expenses for FSA pur-
poses. A medicine or drug will be a qualified medical ex-
pense for FSA purposes only if the medicine or drug:
1. Requires a prescription,
2. Is available without a prescription (an over-the-coun-
ter medicine or drug) and you get a prescription for it,
or
3. Is insulin.
Qualified medical expenses are those incurred by the
following persons.
1. You and your spouse.
Page 16 Publication 969 (2018)
2. All dependents you claim on your tax return.
3. Any person you could have claimed as a dependent
on your return except that:
a. The person filed a joint return,
b. The person had gross income of $4,150 or more,
or
c. You, or your spouse if filing jointly, could be
claimed as a dependent on someone else’s 2018
return.
4. Your child under age 27 at the end of your tax year.
You can’t receive distributions from your FSA for the
following expenses.
• Amounts paid for health insurance premiums.
• Amounts paid for long-term care coverage or expen-
ses.
• Amounts that are covered under another health plan.
If you are covered under both a health FSA and an HRA,
see Notice 2002-45, Part V, 2002-28 I.R.B. 93, available
at IRS.gov/pub/irs-drop/n-02-45.pdf.
You can’t deduct qualified medical expenses as
an itemized deduction on Schedule A (Form
1040) that are equal to the reimbursement you re-
ceive from the FSA.
Qualified reservist distribution. A special rule allows
amounts in a health FSA to be distributed to reservists or-
dered or called to active duty. This rule applies to distribu-
tions made after June 17, 2008, if the plan has been
amended to allow these distributions. Your employer must
report the distribution as wages on your Form W-2 for the
year in which the distribution is made. The distribution is
subject to employment taxes and is included in your gross
income.
A qualified reservist distribution is allowed if you were
(because you were in the reserves) ordered or called to
active duty for a period of more than 179 days or for an in-
definite period, and the distribution is made during the pe-
riod beginning on the date of the order or call and ending
on the last date that reimbursements could otherwise be
made for the plan year that includes the date of the order
or call.
Balance in an FSA
FSAs are generally “use-it-or-lose-it” plans. This means
that amounts in the account at the end of the plan year
generally can’t be carried over to the next year. However,
the plan can provide for either a grace period or a carry-
over.
The plan can provide for a grace period of up to 21/2
months after the end of the plan year. If there is a grace
period, any qualified medical expenses incurred in that
period can be paid from any amounts left in the account at
the end of the previous year. Your employer isn’t permit-
ted to refund any part of the balance to you. See Qualified
reservist distribution, earlier.CAUTION
!
Plans may allow up to $500 of unused amounts remain-
ing at the end of the plan year to be paid or reimbursed for
qualified medical expenses you incur in the following plan
year. The plan may specify a lower dollar amount as the
maximum carryover amount. If the plan permits a carry-
over, any unused amounts in excess of the carryover
amount are forfeited. The carryover doesn’t affect the
maximum amount of salary reduction contributions that
you are permitted to make.
A plan may allow either the grace period or a carryover,
but it may not allow both.
Employer Participation
For the health FSA to maintain tax-qualified status, em-
ployers must comply with certain requirements that apply
to cafeteria plans. For example, there are restrictions for
plans that cover highly compensated employees and key
employees. The plans also must comply with rules appli-
cable to other accident and health plans. Chapters 1 and
2 of Pub. 15-B, Employer’s Tax Guide to Fringe Benefits,
explain these requirements.
Health Reimbursement
Arrangements (HRAs)
A Health Reimbursement Arrangement (HRA) must be
funded solely by an employer. The contribution can’t be
paid through a voluntary salary reduction agreement on
the part of an employee. Employees are reimbursed tax
free for qualified medical expenses up to a maximum dol-
lar amount for a coverage period. An HRA may be offered
with other health plans, including FSAs.
Note. Unlike HSAs or Archer MSAs, which must be
reported on Form 1040 or Form 1040NR, there are no re-
porting requirements for HRAs on your income tax return.
For information on the interaction between an HRA and
an HSA, see Other employee health plans under Qualify-
ing for an HSA, earlier.
What are the benefits of an HRA? You may enjoy sev-
eral benefits from having an HRA.
• Contributions made by your employer can be exclu-
ded from your gross income.
• Reimbursements may be tax free if you pay qualified
medical expenses. See Qualified medical expenses,
later.
• Any unused amounts in the HRA can be carried for-
ward for reimbursements in later years.
Qualifying for an HRA
HRAs are employer-established benefit plans. These may
be offered in conjunction with other employer-provided
Publication 969 (2018) Page 17
health benefits. Employers have complete flexibility to of-
fer various combinations of benefits in designing their
plan.
Self-employed persons aren’t eligible for HRAs.
Certain limitations may apply if you are a highly
compensated participant.
Contributions to an HRA
HRAs are funded solely through employer contributions
and may not be funded through employee salary deferrals
under a cafeteria plan. These contributions aren’t included
in the employee’s income. You don’t pay federal income
tax or employment taxes on amounts your employer con-
tributes to the HRA.
Amount of Contribution
There is no limit on the amount of money your employer
can contribute to the accounts. Additionally, the maximum
reimbursement amount credited under the HRA in the fu-
ture may be increased or decreased by amounts not pre-
viously used. See Balance in an HRA, later.
Distributions From an HRA
Generally, distributions from an HRA must be paid to re-
imburse you for qualified medical expenses you have in-
curred. The expense must have been incurred on or after
the date you are enrolled in the HRA.
Debit cards, credit cards, and stored value cards given
to you by your employer can be used to reimburse partici-
pants in an HRA. If the use of these cards meets certain
substantiation methods, you may not have to provide ad-
ditional information to the HRA. For information on these
methods, see Rev. Rul. 2003-43, 2003-21 I.R.B. 935,
available at IRS.gov/pub/irs-drop/rr-03-43.pdf, Notice
2006-69, 2006-31 I.R.B. 107, available at IRS.gov/irb/
2006-31_IRB/ar10.html, and Notice 2007-2, 2007-2 I.R.B.
254, available at IRS.gov/irb/2007-2_IRB/ar09.html.
If any distribution is, or can be, made for other than the
reimbursement of qualified medical expenses, any distri-
bution (including reimbursement of qualified medical ex-
penses) made in the current tax year is included in gross
income. For example, if an unused reimbursement is pay-
able to you in cash at the end of the year, or upon termina-
tion of your employment, any distribution from the HRA is
included in your income. This also applies if any unused
amount upon your death is payable in cash to your benefi-
ciary or estate, or if the HRA provides an option for you to
transfer any unused reimbursement at the end of the year
to a retirement plan.
If the plan permits amounts to be paid as medical bene-
fits to a designated beneficiary (other than the employee’s
spouse or dependents), any distribution from the HRA is
included in income.
Reimbursements under an HRA can be made to the
following persons.CAUTION
!
1. Current and former employees.
2. Spouses and dependents of those employees.
3. Any person you could have claimed as a dependent
on your return except that:
a. The person filed a joint return,
b. The person had gross income of $4,150 or more,
or
c. You, or your spouse if filing jointly, could be
claimed as a dependent on someone else’s 2018
return.
4. Your child under age 27 at the end of your tax year.
5. Spouses and dependents of deceased employees.
For this purpose, a child of parents that are di-
vorced, separated, or living apart for the last 6
months of the calendar year is treated as the de-
pendent of both parents whether or not the custodial pa-
rent releases the claim to the child’s exemption.
Qualified medical expenses. Qualified medical expen-
ses are those specified in the plan that generally would
qualify for the medical and dental expenses deduction.
These are explained in Pub. 502.
Also, non-prescription medicines (other than insulin)
aren’t considered qualified medical expenses for HRA
purposes. A medicine or drug will be a qualified medical
expense for HRA purposes only if the medicine or drug:
1. Requires a prescription,
2. Is available without a prescription (an over-the-coun-
ter medicine or drug) and you get a prescription for it,
or
3. Is insulin.
Qualified medical expenses from your HRA include the
following.
• Amounts paid for health insurance premiums.
• Amounts paid for long-term care coverage.
• Amounts that aren’t covered under another health
plan.
If you are covered under both an HRA and a health FSA,
see Notice 2002-45, Part V, which is available at IRS.gov/
pub/irs-drop/n-02-45.pdf.
You can’t deduct qualified medical expenses as
an itemized deduction on Schedule A (Form
1040) that are equal to the distribution from the
HRA.
Balance in an HRA
Amounts that remain at the end of the year generally can
be carried over to the next year. Your employer isn’t per-
mitted to refund any part of the balance to you. These
amounts may never be used for anything but reimburse-
ments for qualified medical expenses.TIPCAUTION
!
Page 18 Publication 969 (2018)
Employer Participation
For an HRA to maintain tax-qualified status, employers
must comply with certain requirements that apply to other
accident and health plans. Chapters 1 and 2 of Pub. 15-B,
Employer’s Tax Guide to Fringe Benefits, explain these
requirements.
How To Get Tax Help
If you have questions about a tax issue, need help prepar-
ing your tax return, or want to download free publications,
forms, or instructions, go to IRS.gov and find resources
that can help you right away.
Tax reform. Major tax reform legislation impacting indi-
viduals, businesses, and tax-exempt entities was enacted
in the Tax Cuts and Jobs Act on December 22, 2017. Go
to IRS.gov/TaxReform for information and updates on
how this legislation affects your taxes.
Preparing and filing your tax return. Find free options
to prepare and file your return on IRS.gov or in your local
community if you qualify.
The Volunteer Income Tax Assistance (VITA) program
offers free tax help to people who generally make $55,000
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own tax returns. The Tax Counseling for the Elderly (TCE)
program offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volunteers
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tirement-related issues unique to seniors.
You can go to IRS.gov to see your options for preparing
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• Free File. Go to IRS.gov/FreeFile to see if you qualify
to use brand-name software to prepare and e-file your
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Getting answers to your tax questions. On
IRS.gov, get answers to your tax questions any-
time, anywhere.
• Go to IRS.gov/Help for a variety of tools that will help
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• Go to IRS.gov/ITA for the Interactive Tax Assistant, a
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• Go to IRS.gov/Pub17 to get Pub. 17, Your Federal In-
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tax-saving opportunities, 2018 tax changes, and
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• You may also be able to access tax law information in
your electronic filing software.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all of the forms and pub-
lications you may need. You can also download and view
popular tax publications and instructions (including the
1040 instructions) on mobile devices as an eBook at no
charge. Or you can go to IRS.gov/OrderForms to place an
order and have forms mailed to you within 10 business
days.
Access your online account (individual taxpayers
only). Go to IRS.gov/Account to securely access infor-
mation about your federal tax account.
• View the amount you owe, pay online, or set up an on-
line payment agreement.
• Access your tax records online.
• Review the past 24 months of your payment history.
• Go to IRS.gov/SecureAccess to review the required
identity authentication process.
Using direct deposit. The fastest way to receive a tax
refund is to combine direct deposit and IRS e-file. Direct
deposit securely and electronically transfers your refund
directly into your financial account. Eight in 10 taxpayers
use direct deposit to receive their refund. The IRS issues
more than 90% of refunds in less than 21 days.
Refund timing for returns claiming certain credits.
The IRS can’t issue refunds before mid-February 2019 for
returns that claimed the earned income credit (EIC) or the
additional child tax credit (ACTC). This applies to the en-
tire refund, not just the portion associated with these cred-
its.
Getting a transcript or copy of a return. The quickest
way to get a copy of your tax transcript is to go to IRS.gov/
Transcripts. Click on either "Get Transcript Online" or "Get
Transcript by Mail" to order a copy of your transcript. If
you prefer, you can:
• Order your transcript by calling 800-908-9946, or
• Mail Form 4506-T or Form 4506T-EZ (both available
on IRS.gov).
Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
• The Earned Income Tax Credit Assistant (IRS.gov/
EITCAssistant) determines if you’re eligible for the
EIC.
• The Online EIN Application (IRS.gov/EIN) helps you
get an employer identification number.
• The IRS Withholding Calculator (IRS.gov/W4App) es-
timates the amount you should have withheld from
Publication 969 (2018) Page 19
your paycheck for federal income tax purposes and
can help you perform a “paycheck checkup.”
• The First Time Homebuyer Credit Account Look-up
(IRS.gov/HomeBuyer) tool provides information on
your repayments and account balance.
• The Sales Tax Deduction Calculator (IRS.gov/
SalesTax) figures the amount you can claim if you
itemize deductions on Schedule A (Form 1040),
choose not to claim state and local income taxes, and
you didn’t save your receipts showing the sales tax
you paid.
Resolving tax-related identity theft issues.
• The IRS doesn’t initiate contact with taxpayers by
email or telephone to request personal or financial in-
formation. This includes any type of electronic com-
munication, such as text messages and social media
channels.
• Go to IRS.gov/IDProtection for information.
• If your SSN has been lost or stolen or you suspect
you’re a victim of tax-related identity theft, visit
IRS.gov/IdentityTheft to learn what steps you should
take.
Checking on the status of your refund.
• Go to IRS.gov/Refunds.
• The IRS can’t issue refunds before mid-February 2019
for returns that claimed the EIC or the ACTC. This ap-
plies to the entire refund, not just the portion associ-
ated with these credits.
• Download the official IRS2Go app to your mobile de-
vice to check your refund status.
• Call the automated refund hotline at 800-829-1954.
Making a tax payment. The IRS uses the latest encryp-
tion technology to ensure your electronic payments are
safe and secure. You can make electronic payments on-
line, by phone, and from a mobile device using the
IRS2Go app. Paying electronically is quick, easy, and
faster than mailing in a check or money order. Go to
IRS.gov/Payments to make a payment using any of the
following options.
• IRS Direct Pay: Pay your individual tax bill or estima-
ted tax payment directly from your checking or sav-
ings account at no cost to you.
• Debit or credit card: Choose an approved payment
processor to pay online, by phone, and by mobile de-
vice.
• Electronic Funds Withdrawal: Offered only when fil-
ing your federal taxes using tax return preparation
software or through a tax professional.
• Electronic Federal Tax Payment System: Best op-
tion for businesses. Enrollment is required.
• Check or money order: Mail your payment to the ad-
dress listed on the notice or instructions.
• Cash: You may be able to pay your taxes with cash at
a participating retail store.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options.
• Apply for an online payment agreement (IRS.gov/
OPA) to meet your tax obligation in monthly install-
ments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive im-
mediate notification of whether your agreement has
been approved.
• Use the Offer in Compromise Pre-Qualifier (IRS.gov/
OIC) to see if you can settle your tax debt for less than
the full amount you owe.
Checking the status of an amended return. Go to
IRS.gov/WMAR to track the status of Form 1040X amen-
ded returns. Please note that it can take up to 3 weeks
from the date you mailed your amended return for it to
show up in our system and processing it can take up to 16
weeks.
Understanding an IRS notice or letter. Go to IRS.gov/
Notices to find additional information about responding to
an IRS notice or letter.
Contacting your local IRS office. Keep in mind, many
questions can be answered on IRS.gov without visiting an
IRS Tax Assistance Center (TAC). Go to IRS.gov/
LetUsHelp for the topics people ask about most. If you still
need help, IRS TACs provide tax help when a tax issue
can’t be handled online or by phone. All TACs now pro-
vide service by appointment so you’ll know in advance
that you can get the service you need without long wait
times. Before you visit, go to IRS.gov/TACLocator to find
the nearest TAC, check hours, available services, and ap-
pointment options. Or, on the IRS2Go app, under the Stay
Connected tab, choose the Contact Us option and click on
“Local Offices.”
Watching IRS videos. The IRS Video portal
(IRSVideos.gov) contains video and audio presentations
for individuals, small businesses, and tax professionals.
Getting tax information in other languages. For tax-
payers whose native language isn’t English, we have the
following resources available. Taxpayers can find informa-
tion on IRS.gov in the following languages.
• Spanish (IRS.gov/Spanish).
• Chinese (IRS.gov/Chinese).
• Vietnamese (IRS.gov/Vietnamese).
• Korean (IRS.gov/Korean).
• Russian (IRS.gov/Russian).
The IRS TACs provide over-the-phone interpreter serv-
ice in over 170 languages, and the service is available
free to taxpayers.
Page 20 Publication 969 (2018)
The Taxpayer Advocate Service (TAS)
Is Here To Help You
What is TAS?
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. Their job is
to ensure that every taxpayer is treated fairly and that you
know and understand your rights under the Taxpayer Bill
of Rights.
How Can You Learn About Your Taxpayer
Rights?
The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to
TaxpayerAdvocate.IRS.gov to help you understand what
these rights mean to you and how they apply. These are
your rights. Know them. Use them.
What Can TAS Do For You?
TAS can help you resolve problems that you can’t resolve
with the IRS. And their service is free. If you qualify for
their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do
everything possible to resolve your issue. TAS can help
you if:
• Your problem is causing financial difficulty for you,
your family, or your business;
• You face (or your business is facing) an immediate
threat of adverse action; or
• You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
date promised.
How Can You Reach TAS?
TAS has offices in every state, the District of Columbia,
and Puerto Rico. Your local advocate’s number is in your
local directory and at TaxpayerAdvocate.IRS.gov/
Contact-Us. You can also call them at 877-777-4778.
How Else Does TAS Help Taxpayers?
TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
please report it to them at IRS.gov/SAMS.
TAS also has a website, Tax Reform Changes, which
shows you how the new tax law may change your future
tax filings and helps you plan for these changes. The in-
formation is categorized by tax topic in the order of the
IRS Form 1040. Go to TaxChanges.us for more informa-
tion.
Low Income Taxpayer Clinics (LITCs)
LITCs are independent from the IRS. LITCs represent in-
dividuals whose income is below a certain level and need
to resolve tax problems with the IRS, such as audits, ap-
peals, and tax collection disputes. In addition, clinics can
provide information about taxpayer rights and responsibili-
ties in different languages for individuals who speak Eng-
lish as a second language. Services are offered for free or
a small fee. To find a clinic near you, visit
TaxpayerAdvocate.IRS.gov/LITCmap or see IRS Pub.
4134, Low Income Taxpayer Clinic List.
Publication 969 (2018) Page 21
To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.Index
A
Archer MSAs 11–15
Assistance (See Tax help)
C
Contributions to:
FSA 16
HRA 18
HSA 5
MSA 12
D
Death of:
HSA holder 10
MSA holder 14
Distributions from:
FSA 16
HRA 18
HSA 8
MSA 13
E
Employer participation:
FSA 17
HRA 19
HSA 10
MSA 15
F
Flexible spending
arrangements 15–17
Balance in 17
Contributions to 16
Distributions from 16
Grace period 17
Qualifying for 16
When to contribute 16
Form:
5329 8, 13
5498–SA 7, 13
8853 14, 15
8889 7, 9, 10
H
Health plans, high deductible 3, 11
Health reimbursement
arrangements 17–19
Balance in 18
Contributions to 18
Distributions from 18
Qualifying for 17
Health savings accounts 2–10
Balance in 9
Contributions to 5
Deemed distributions 9
Distributions from 8
Last-month rule 5
Partnerships 7
Qualifying for 3
Rollovers 7
S corporations 7
When to contribute 7
High deductible health plan 3, 11
I
Identity theft 20
M
Medical expenses, qualified 8, 13,
16, 18
Medical savings accounts 11–15
Balance in 14
Contributions to 12
Deemed distributions 14
Distributions from 13
Medicare Advantage MSAs 15
Qualifying for 11
When to contribute 13
Medicare Advantage MSAs 15
P
Preventive care 3
Publications (See Tax help)
Q
Qualified HSA funding
distribution 6
T
Tax help 19
Testing period:
Last-month rule 5
Qualified HSA funding
distribution 6
Page 22 Publication 969 (2018)