What Is Form 1099-SA?

Form 1099-SA, "Distributions from an HSA, Archer MSA, or Medicare Advantage MSA," is the Internal Revenue Service (IRS) form that you receive if you must include a distribution from a health savings account (HSA), an Archer medical savings account (MSA), or a Medicare Advantage (MA) MSA on your federal taxes. Distributions from these accounts are reported to you on Form 1099-SA. The form also provides reporting information on the inheritance of accounts by spouses, nonspouses, and estates.

Key Takeaways

  • You receive a 1099-SA form if you must report distributions from health savings, medical savings, and Medicare Advantage accounts.
  • You can repay a mistaken distribution from a health savings account no later than April 15.
  • If you inherited an account from your deceased spouse, special rules apply.

What Is Form 1099-SA Used For?

Receiving Form 1099-SA means that depending on which distributions you received from which accounts, there are certain tax forms you will have to file. Fortunately, if you have an HSA, Archer MSA, or MA MSA, it probably saved you taxes. You can deduct contributions in the year you made them, and using the funds is often tax free as long as withdrawals are spent on qualifying health expenses for the account beneficiary or the beneficiary’s spouse or dependents.

Distributions from these medical savings accounts that are used to pay for qualifying health expenses are generally tax free.

When Distributions Are Tax Free

An HSA or Archer MSA distribution isn’t taxable if you used it to pay qualified medical expenses of the account holder or eligible family member or you rolled it over. An HSA may be rolled over to another HSA; an Archer MSA may be rolled over to another Archer MSA or an HSA.

An MA MSA isn't taxable if you used it to pay qualified medical expenses of the account holder only.

You must file IRS Form 8853, "Archer MSAs and Long-Term Care Insurance Contracts," or Form 8889, "Health Savings Accounts (HSAs)," with your Form 1040 or 1040-SR tax return forms to report a distribution from these accounts, even if the distribution isn’t taxable.

When Distributions Are Taxable

If you didn't use the distribution from an HSA, Archer MSA, or MA MSA to pay for qualified medical expenses—or, in the case of an HSA or Archer MSA, you didn’t roll it over—you must include the distribution in your income. Also, you may owe a penalty.

If you made excess contributions to an HSA or Archer MSA and had earnings on those contributions, taxes will apply. If you withdrew the excess, plus the earnings, by the due date of your income tax return, you must include the earnings in your income in the year you received the distribution, even if you used it to pay qualified medical expenses. Furthermore, a 6% excise tax for each year is imposed on you for excess individual and employer contributions that remain in the account.

You may repay a mistaken distribution from an HSA no later than April 15 following the first year you knew or should have known the distribution was a mistake.

Inherited Accounts and Taxes

If you inherited an Archer MSA or MA MSA from your deceased spouse, special rules apply. If you inherited an HSA because of the death of your spouse, see the Instructions for Form 8889.

If you inherited the account from someone who wasn't your spouse, you must report as income on your tax return the fair market value of the account as of the date of death. Report the amount on your tax return for the year the account owner died, even if you received the distribution from the account in a later year. Earnings on the account after the date of death are also taxable; include the earnings on the "Other income" line of your tax return.

If the account holder dies and the estate is the beneficiary, the fair market value of the account on the date of death is included in the account holder's gross income. Report the amount on the account holder’s final income tax return.

1099-SA

All copies of Form 1099-SA are available on the IRS website.

How to Read Form 1099-SA

On the left side of Form 1099-SA you will find the trustee’s or payer’s name, address, and telephone number; all or part of the payer's taxpayer identification number (TIN); all or part of your TIN, Social Security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number; your name and address; and your account number.

On the right side you will find the amount received (which may have been a direct payment to a medical provider or distributed to you), the amount of any earnings on excess contributions, the distribution code (which identifies the type of distribution—there are six), the fair market value of the account on the date of the holder's death, and information on whether the account is an HSA, Archer MSA, or MA MSA.

Where to Get Form 1099-SA

The financial institution that manages the account is responsible for sending you a copy of Form 1099-SA. If you haven’t received one and believe you should have, contact it.

Can Form 1099-SA Be E-Filed?

Yes, financial institutions can file electronically. To do so, they must have software that generates a file according to the specifications in IRS Pub. 1220. The IRS also provides a fill-in-form option.

Where to Mail Form 1099-SA

There are three copies of the 1099-SA. The financial institution managing the account files Copy A with the IRS, sends you Copy B, and retains Copy C. You should receive Form 1099-SA in the mail. You do not need to submit it when you file your tax return, but you should hold onto it for your records.

The Bottom Line

The 1099-SA is an important form when you report distributions from special accounts to pay medical expenses. The form contains specific information that must be reported correctly and may or may not mean you owe additional taxes. If you have questions, work with a tax preparer or expert.