Understanding Tax Form 1099

Overview:Informs employees that the Form 1099-SA will be arriving in their mailboxes soon.

Understanding Your HSA Tax Forms: Your Optum Bank Form 1099-SA

In mid to lateJanuary, Optum BankSM, Member FDIC, will send out IRS Form 1099-SA to health saving account (HSA) holders. This form provides you with the total distributions that were made from your HSA. You will receive a separate 1099-SA for each type of distribution you had in that tax year.

The five types of distributions are:

  • normal,
  • excess contribution removal,
  • death,
  • disability; and
  • prohibited transaction.

If you did not have distributions during the tax year, you will not receive a 1099.The IRS requires Optum Bank to issue a Form 1099-SA if you took a distribution from your HSA during the tax year. If you did not take distributions during the tax year, you will not receive a 1099.

Why you need the Form 1099-SA:

Line 1:Reports the total amount of the distribution(s).

Line 2:Reports the earnings on any excess contributions you withdrew from an HSA; this amountis also included on Line 1.

Line 3:Please see the reverse side of your Form 1099-SA for official IRS distribution code definitions.

Line 4:Fair Market Value (FMV) on date of death for deceased participants.

Line 5:Shows the type of account that is reported on this Form 1099-SA.

Distributions are reported on IRS Form 8889

Distributions for qualified expenses should be reported on IRS Form 8889. This form must be completed by the account holder and attached to the IRS Form 1040, along with the Form 1099-SA.

Distributions for non-qualified medical expenses should be reported on IRS Form 1040 (line 21) and Form 8889. Distributions used to pay fornon-qualified medical expenses are considered taxable and are subject toincome tax. In addition, these distributions may be subject to a20% penalty.

Recordkeeping for your HSA is important

  • You should keep all receipts and records of medical expenses to show (if necessary) distributions from your HSA have been made for qualified medical expenses or reimbursement for qualified medical expenses. You should keep these items for your ownrecords; you do not needto submit them to Optum Bank or the IRS (unless audited).
  • Distributions from your Optum Bank HSA will be reported bythe bankto you and the IRS each tax year on IRS Form 1099-SA.
  • If your tax return is audited by the IRS, you might be asked to provide receipts for qualified medical expenses paidusing distributions from your Optum Bank HSA.

Qualifiedmedical expenses:

A “qualified medical expense” refers to most medical, dental and vision expenses, including but not limited to:

  • Routine health care: office visits, X-rays, lab work
  • Hospital expenses: room and board, surgery
  • Medications: prescription drugs
  • Dental care: cleanings, fillings, crowns
  • Vision care: eye exams, glasses, contacts
  • Copays and coinsurance (the portions of medical bills paid by you)

Have more questions? You have resources.

You can find additional information by:

  • Visitingthe Optum Bank Tax Resource Center
  • Consultingyour tax advisor
  • Reviewing the latestIRS forms and publication atIRS.gov forInstructions for Forms 8889, 1099-SA, 5498-SA, IRS Publication 969, “HealthSavings Accounts and Other Tax-Favored Accounts,” and IRS Publication 502,or call 1-800-829-1040.

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Health savings accounts (HSAs) are individual accounts offered by Optum BankSM, Member FDIC, and are subject to eligibility and restrictions, including but not limited to restrictions ondistributions forqualified medical expenses set forth in section213(d) of the Internal Revenue Code. State taxes may apply. This communication is not intended as legal or tax advice. Please contact a competent legal or tax professional for personal advice on eligibility, tax treatment, and restrictions. Federal and state laws and regulations are subject to change.

FSEDU0255Cv02NV Rev. 7/14