For the 2025 return, Form 8889 reports HSA contributions and distributions, including employer contributions and withdrawals used for medical expenses. For 2026, the annual contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, with additional catch-up contributions potentially available to eligible account holders age 55 or older.

From AIM Financial — Tax Preparation Services in Grand Rapids, Kentwood, Wyoming, and West Michigan

A Health Savings Account, commonly called an HSA, can help eligible taxpayers save money for medical expenses while receiving valuable federal tax benefits. However, HSA contributions and withdrawals must be reported correctly to avoid unexpected taxes and penalties.

IRS Form 8889, Health Savings Accounts (HSAs), is used to report HSA contributions, calculate allowable deductions, and determine whether withdrawals are taxable. Whether you receive HSA contributions from your employer or fund an account yourself, understanding the form can help you prepare an accurate federal income tax return.

AIM Financial helps individuals and families in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan understand tax forms and prepare their federal and Michigan tax returns.

What Is IRS Form 8889?

Form 8889 is the federal tax form used to report activity involving a Health Savings Account. An HSA is a tax-advantaged account designed to help eligible individuals pay qualified medical expenses.

HSAs offer several potential tax benefits:

• Eligible personal contributions may be deductible even if you do not itemize deductions.
• Qualifying employer contributions are generally excluded from your taxable income.
• Money in the account can grow tax-free.
• Withdrawals used for qualified medical expenses are generally tax-free.

To receive these benefits, taxpayers must follow the applicable eligibility, contribution, and distribution rules.

You can find the official form and instructions at the IRS Form 8889 page.

Who Can Contribute to an HSA?

To contribute to an HSA, you generally must meet several requirements. These include having qualifying high-deductible health plan (HDHP) coverage, not having disqualifying additional health coverage, not being enrolled in Medicare, and not being eligible to be claimed as another taxpayer’s dependent.

Certain other coverage arrangements are permitted, so eligibility should be reviewed carefully.

An HSA is different from a flexible spending arrangement (FSA). HSAs generally belong to the individual and can remain available when changing employers, while FSAs are usually employer-sponsored arrangements with different rules.

For 2025, the annual HSA contribution limits were:

• Self-only coverage: $4,300.
• Family coverage: $8,550.

For 2026, the limits increased to:

• Self-only coverage: $4,400.
• Family coverage: $8,750.

Eligible account holders age 55 or older by the end of the tax year may generally make an additional $1,000 catch-up contribution. Each eligible spouse must have a separate HSA to make their own catch-up contribution.

These are annual limits, not automatic deductions. The amount you may contribute depends on eligibility, coverage, age, and other circumstances during the year.

How Do You Report HSA Contributions?

Form 8889 helps determine how much you can deduct for eligible HSA contributions.

Contributions may come from several sources:

Personal contributions: If you contribute directly to your HSA with money that has already been included in taxable income, you may qualify for an above-the-line deduction.

Employer contributions: Contributions made by an employer, including certain contributions made through a cafeteria plan, are generally excluded from the employee’s income when the requirements are met. These contributions count toward the annual HSA limit.

Contributions through payroll deductions: Contributions made through a qualifying employer cafeteria plan are generally treated as employer contributions for tax purposes. They normally are not deducted a second time as personal contributions.

Form 8889 asks for information about contributions from different sources and helps determine whether your total contributions exceed the permitted limit.

Excess contributions can create additional tax consequences. If you contributed too much, the correction rules and deadlines should be reviewed promptly.

How Are HSA Withdrawals Reported?

HSA withdrawals, also called distributions, are generally reported to the account holder on Form 1099-SA. Form 8889 is used to determine how those distributions are treated for federal income tax purposes.

Withdrawals used to pay or reimburse qualified medical expenses are generally tax-free, provided the requirements are met.

Qualified expenses may include eligible costs for:

• Doctor and specialist visits.
• Prescription medications.
• Certain dental treatments.
• Eligible vision care.
• Other qualifying medical services and supplies.

Expenses generally must be incurred after the HSA was established. You cannot use an HSA withdrawal tax-free for an expense that was incurred before the account was established.

Keep receipts and other records showing that the expenses qualify and were not reimbursed by insurance or another source. You also cannot claim an itemized medical expense deduction for an expense paid or reimbursed tax-free from your HSA.

What Happens If You Use HSA Money for Nonmedical Expenses?

Using HSA funds for something other than qualified medical expenses can result in income tax and an additional penalty.

Generally, the nonqualified distribution must be included in taxable income. An additional 20% tax may also apply.

The additional tax generally does not apply to distributions made after the account holder reaches age 65, becomes disabled, or dies. However, a nonqualified withdrawal may still be taxable as income.

For example, if you withdraw HSA funds to pay for a vacation or ordinary household expenses rather than qualified medical care, the withdrawal generally will not qualify for tax-free treatment. You should not assume that reaching age 65 makes every HSA withdrawal tax-free; it generally removes the additional 20% tax, not the income tax on nonqualified distributions.

How Do You Complete Form 8889?

The form has separate sections for contributions and distributions.

1. Gather your documents. Collect Form 1099-SA, Form 5498-SA if available, employer contribution information, and records of personal contributions.
2. Determine your eligibility. Review your health coverage, Medicare status, and any other factors affecting HSA eligibility.
3. Calculate eligible contributions. Apply the correct annual limit and any applicable catch-up contribution.
4. Calculate your deduction. Report eligible personal contributions and account for employer contributions correctly.
5. Report distributions. Use Form 1099-SA and your receipts to identify qualified medical expenses and any taxable withdrawals.
6. Transfer the results. Follow the Form 8889 instructions to report the deduction, taxable distributions, and any additional tax on your federal income tax return.

You generally must file Form 8889 if you or your spouse had HSA activity during the year, even if the only contributions came from an employer.

Important HSA Rule Changes to Know

Tax rules can change, so it is important to use the instructions for the tax year you are filing.

For example, legislation enacted in 2025 expanded the rules concerning telehealth and other remote-care services for qualifying HDHPs. The changes apply to plan years beginning after 2024.

This can matter when determining whether health coverage qualifies for HSA contributions. Taxpayers should review the current IRS guidance rather than assume that every health plan with a high deductible qualifies.

The IRS explains the eligibility rules, qualified expenses, and reporting requirements in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Get Help With Form 8889 From AIM Financial

HSA reporting can become confusing when you have contributions from several sources, change health plans during the year, receive distributions, or discover that you made excess contributions.

AIM Financial helps individuals and families in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan with tax preparation. We can help you organize your HSA tax documents, review applicable reporting requirements, and prepare your federal and Michigan income tax returns.

Contact AIM Financial for help with Form 8889 and your other tax documents. Proper reporting can help you preserve the tax advantages of your HSA and avoid unnecessary tax complications.

This article is for general educational purposes only. HSA eligibility, contribution limits, and distribution rules depend on the applicable tax year and individual circumstances. Consult the current IRS form instructions for your filing year.