What a 1099-SA Form Is and Why You Might Receive One

The 1099-SA reports withdrawals from your health savings account

A 1099-SA is a tax form that reports money you took out of a Health Savings Account (HSA) or Archer Medical Savings Account (Archer MSA) during the year. Your HSA or MSA provider sends it to you and to the IRS. The form shows the total amount withdrawn and the date of the withdrawal, but it does not tell the IRS whether that withdrawal was for a may have access to medical expense or not — that information is your responsibility when you file your tax return.

You will receive a 1099-SA if you withdrew any money from an HSA or Archer MSA in a calendar year, regardless of the amount. The form arrives by January 31 of the following year. If you have multiple HSAs or MSAs, you may receive more than one 1099-SA.

Key Takeaways

• A 1099-SA reports the total amount you withdrew from an HSA or Archer MSA during the year, not whether the withdrawal was for a may have access to medical expense.
• You receive a 1099-SA from your HSA or MSA provider by January 31, and you must report the information on your tax return.
• Withdrawals used for may have access to medical expenses are not taxed, but withdrawals for other purposes are subject to income tax plus a 20 percent penalty if you are under age 65.
• The IRS does not require you to submit receipts with your tax return, but you should keep medical records to prove the withdrawal was for a may have access to expense if you are audited.

How the 1099-SA connects to your tax return

When you file your federal income tax return, you report the information from your 1099-SA on Form 8889 (Health Savings Accounts). Form 8889 is where you tell the IRS whether your HSA or MSA withdrawals were for may have access to medical expenses or for other purposes. The IRS uses Form 8889 to calculate whether you owe tax on any of the withdrawn money.

If all your withdrawals were for may have access to medical expenses, you will not owe income tax on them. If you withdrew money for non-medical reasons, that portion is taxable income, and you may also owe a 20 percent penalty on top of the income tax — unless you are age 65 or older, in which case the penalty does not explore (though income tax still does).

What counts as a may have access to medical expense

may have access to medical expenses are costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatment affecting any part or function of the body. This includes doctor visits, hospital stays, prescription medications, dental work, vision care, and medical equipment like wheelchairs or hearing aids. It also includes health insurance premiums in certain situations: COBRA continuation coverage, long-term care insurance, and health insurance while you are receiving unemployment benefits.

Expenses that do not count include cosmetic surgery (unless it is reconstructive after an accident or illness), over-the-counter medications (with a narrow exception for insulin), gym memberships, and general wellness products. If you are unsure whether a specific expense qualifies, the IRS publishes a detailed list in Publication 502.

The difference between what the 1099-SA shows and what you owe tax on

The 1099-SA shows your total withdrawals, but the tax you owe depends on how much of that total was for may have access to expenses. For example, if your 1099-SA shows $5,000 in withdrawals and $4,000 of that was for may have access to medical expenses, only the remaining $1,000 is subject to income tax and penalty.

The IRS does not require you to attach receipts or medical records to your tax return when you file. However, you should keep all documentation — receipts, invoices, explanation of benefits statements, and any other proof that the expense was medical in nature — for at least three years in case the IRS audits your return. If you cannot prove an expense was may have access to, the IRS will treat the entire withdrawal as taxable income.

When you might not receive a 1099-SA

If you did not withdraw any money from your HSA or Archer MSA during the year, your provider will not send you a 1099-SA. You also will not receive one if your only activity was depositing money into the account or earning interest. The form is only issued when money leaves the account.

If you closed your HSA or MSA during the year and withdrew the remaining balance, you will still receive a 1099-SA for that withdrawal. The form will show the total amount withdrawn, and you will report it on Form 8889 just as you would any other HSA or MSA withdrawal.

Correcting errors on your 1099-SA

If your 1099-SA contains an error — for example, the withdrawal amount is wrong or the account number is incorrect — contact your HSA or MSA provider when ready. They can issue a corrected form, called a 1099-SA with a "CORRECTED" label, and send it to you and the IRS. Do not file your tax return until you have the corrected form.

If you discover the error after you have already filed your return, you can file an amended return (Form 1040-X) to correct the information. Keep a copy of the corrected 1099-SA with your amended return for your records.

Frequently Asked Questions

Do I have to report my 1099-SA even if all my withdrawals were for medical expenses?

Yes. You must report the 1099-SA information on Form 8889 when you file your tax return, even if every dollar was for a may have access to medical expense and you owe no tax on it. The IRS uses Form 8889 to track HSA and MSA activity.

What happens if I withdraw money from my HSA for a non-medical reason before age 65?

The withdrawn amount is subject to income tax at your regular tax rate, plus a 20 percent penalty. For example, a $1,000 non-medical withdrawal might result in $200 to $300 in taxes and penalties, depending on your tax bracket. After age 65, the income tax still applies but the penalty does not.

Can I use my HSA to pay for my spouse's or child's medical expenses?

Yes. You can withdraw money from your HSA to pay for may have access to medical expenses of your spouse and dependents, even if they are not covered under your health plan. These withdrawals are not taxed as long as the expenses are may have access to.

What if I lost my 1099-SA or did not receive one?

Contact your HSA or MSA provider and request a copy. They are required to send you one by January 31. If the provider cannot locate a copy, ask them to issue a duplicate. You will need this form to file your tax return accurately.