Form 8889 Instructions: Contributions, Distributions, and Limits

Form 8889 is the IRS form you attach to your Form 1040 to report Health Savings Account activity. The Form 8889 instructions walk you through three parts: Part I calculates your deduction for contributions, Part II determines whether any distributions are taxable, and Part III applies only if you used the last-month rule to contribute a full year’s worth while eligible for fewer than 12 months. You file the form for any year contributions were made to your HSA (by you or your employer) or distributions came out of it.

When You Have To File Form 8889

File Form 8889 for any year you or someone else contributed to your HSA, any year you took a distribution, or both. If your HSA custodian issued you a Form 1099-SA, you file Form 8889 even when every dollar went to qualified medical expenses and nothing is taxable.¹ Each spouse with an HSA files a separate Form 8889, even on a joint return.²

Part I: Contributions and Your Deduction

Part I works out how much of your HSA activity reduces your taxable income. Personal contributions you sent to the account go on Line 2. Employer contributions, including anything you routed through a cafeteria plan as a pre-tax payroll deduction, go on Line 9. That employer figure comes from Box 12 of your W-2, marked with Code W.²

The Code W amount on your W-2 can include contributions attributed to a different tax year. If your employer made a January contribution for the prior year, or you’re looking at contributions made in early next year that count toward the current year, use the Employer Contribution Worksheet in the Form 8889 instructions to sort out which dollars belong to which year.²

Your deduction on Line 13 is the lesser of your personal contributions or the room left under the annual limit after employer contributions are subtracted. That number flows to Schedule 1 (Form 1040), Line 13.³ Employer contributions do not appear as a deduction on your return because they were already excluded from your taxable wages.

2026 Contribution Limits and Eligibility

For 2026 the annual contribution ceiling is $4,400 for self-only HDHP coverage and $8,750 for family coverage.⁴ Those limits count every dollar going in, from any source. If you’re 55 or older by December 31, add $1,000 as a catch-up.⁵ You have until April 15, 2027 to make contributions for tax year 2026.⁶ If you send in a prior-year contribution, confirm your custodian codes it to the right year.

To contribute at all, you must be covered by a qualifying HDHP. For 2026, the plan needs an annual deductible of at least $1,700 self-only or $3,400 family, and out-of-pocket costs (excluding premiums) no higher than $8,500 self-only or $17,000 family.⁴ You also cannot be enrolled in Medicare, cannot be claimed as a dependent, and cannot have other non-HDHP coverage, with narrow exceptions for dental, vision, and some preventive care.

Two 2026 changes from the One, Big, Beautiful Bill Act broaden eligibility. First, all bronze and catastrophic plans available through a Health Insurance Marketplace are treated as HDHPs starting January 1, 2026, even without meeting the traditional deductible thresholds; off-Exchange plans qualify if the same plan is offered through a Marketplace.⁷ Second, a direct primary care (DPC) arrangement no longer disqualifies you, and DPC fees paid from HSA funds are tax-free as long as the monthly fee stays at or below $150 for an individual or $300 for a plan covering more than one person.⁴ You still need qualifying HDHP or bronze/catastrophic coverage alongside the DPC.

Prorated Limits and the Last-Month Rule

If you were HSA-eligible only part of the year, prorate your limit: count each month you had qualifying coverage on the first day, divide by 12, and multiply by the full annual amount. Eight months of self-only coverage in 2026 gives a limit of $2,933 ($4,400 × 8/12). The catch-up prorates the same way.

The last-month rule is the exception. If you have qualifying HDHP coverage on December 1, you can contribute the full annual amount regardless of how many months you were actually eligible. Using this rule triggers the Part III testing period covered below.

Part II: Distributions and Qualified Medical Expenses

Part II decides whether any money that came out of the HSA is taxable. Your custodian sends Form 1099-SA showing total distributions. Enter that total on Line 14a.⁸ Subtract any rollovers to another HSA on Line 14b, along with any excess contributions you withdrew before the filing deadline. The result on Line 14c is your net distributions.

On Line 15 you enter total qualified medical expenses you paid with HSA funds. Expenses must have been incurred after the HSA was established and cannot have been reimbursed by insurance or any other source. The IRS defines qualified expenses broadly in Publication 502, and starting in 2026 that list includes periodic DPC fees within the caps noted above.⁹

Any amount on Line 16 (net distributions minus qualified expenses) is taxable income, plus a 20% additional tax. Three situations waive the 20% penalty but not the income tax: the account holder reached age 65, became disabled, or died.⁵

Part III: Testing Period for the Last-Month Rule

Skip Part III unless you used the last-month rule. If you did, you have to stay HSA-eligible from December 1 of the contribution year through December 31 of the following year. Lose eligibility during that window (switching to a non-HDHP, enrolling in Medicare, and so on) and the extra contributions you were only able to make because of the last-month rule get added back to your gross income. A 10% additional tax applies to that amount, calculated in Part III.⁵ The penalty applies only to what exceeds the prorated limit you would have had without the rule, not to the whole contribution.

Fixing Excess Contributions

Contributions over the annual limit face a 6% excise tax each year they stay in the account, reported on Form 5329.¹⁰ That 6% compounds annually.

You can avoid the excise tax by withdrawing the excess and any earnings on it before the filing deadline for that year’s return, including extensions. Do not claim a deduction for the excess, and report the earnings as other income on the return for the year you make the withdrawal. If you already filed without correcting, you have six more months after the original due date (without extensions) to withdraw the excess and file an amended return, writing “Filed pursuant to section 301.9100-2” at the top.² Miss both deadlines and the 6% applies.

Married Couples: Two Forms, One Return

Each spouse with an HSA files their own Form 8889. On a joint return, attach both forms and combine the Line 13 amounts into a single entry on Schedule 1.² When one spouse has family HDHP coverage, the $8,750 family limit is shared between both spouses’ HSAs; you can split it however you want, but the combined total cannot exceed the family limit. Each spouse 55 or older gets their own $1,000 catch-up, and that catch-up has to go into that spouse’s own HSA.

Medicare and HSA Contributions

Contribution eligibility ends the month your Medicare Part A or Part B coverage begins. For most people Part A starts on the first day of the month they turn 65, or the first day of the prior month if their birthday falls on the first.

If you work past 65 and delay Medicare to keep contributing, watch out: when you eventually enroll, Part A coverage is often backdated up to six months. HSA contributions made during that retroactive coverage period become excess contributions subject to the 6% excise tax.¹⁰ The safe move is to stop contributing several months before Medicare starts. Existing HSA funds can still pay qualified medical expenses tax-free after enrollment.

Attaching the Form and Keeping Records

Form 8889 attaches to your Form 1040, 1040-SR, or 1040-NR. You are not asked to send receipts, but you have to keep them: documentation for every medical expense you paid or reimbursed from the HSA, including explanation-of-benefits statements and proof the expense was not reimbursed elsewhere. There is no time limit on reimbursing yourself from an HSA for a qualified expense you paid out of pocket, so if you use that strategy, careful records are what protects the tax-free treatment if the IRS asks.

1
Internal Revenue Service. About Form 8889, Health Savings Accounts
2
Internal Revenue Service. Instructions for Form 8889
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Internal Revenue Service. Instructions for Form 8889
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Internal Revenue Service. Notice 2026-5 – Expanded Availability of Health Savings Accounts Under the One, Big, Beautiful Bill Act
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Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
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Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Accounts
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Internal Revenue Service. Treasury, IRS Provide Guidance on New Tax Benefits for Health Savings Account Participants Under the One, Big, Beautiful Bill
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Internal Revenue Service. About Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
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Internal Revenue Service. Publication 502 – Medical and Dental Expenses
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Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities