Question

Health Savings Account - High Deductible Health Plan Defined

Accepted Answer

You must be covered under a High Deductible Health Plan (HDHP) in order to establish and take a deduction for contributions to a Health Savings Account (HSA).

Per IRS Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans, on page 3:

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 include premiums.

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 limited to, the following.

Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.
Routine prenatal and well-child care.
Child and adult immunizations.
Tobacco cessation programs.
Obesity weight-loss programs.
Telehealth and other remote care services (for plan years beginning on or before December 31, 2021).
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#NOT-2004-23.

The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2020.

	Self-only coverage	Family coverage
Minimum annual deductible	$1,400	$2,800
Maximum annual deductible and other out-of-pocket expenses^*	$6,900	$13,800
^* 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.

On page 5:

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 individual).

To enter your HSA contribution and/or distribution information into the TaxAct^® program:

From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
Click Health Savings Accounts (HSA) in the Federal Quick Q&A Topics menu to expand, then click All HSA topics.
Continue with the interview process to enter all of the appropriate information.

Note. On the screen titled Health Savings Accounts - Type of Coverage, if No coverage under an HDHP in 2020 is selected, the HSA deduction will not carry to Line 12 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.