Form 1099-SA reports withdrawals from a health savings account (HSA), Archer MSA or Medicare Advantage MSA during the year. Getting one doesn't mean you owe tax: withdrawals used for qualified medical expenses are tax-free. You report the box 1 total on Form 8889, and only the part not spent on qualified expenses is taxed, usually with an extra 20% unless you're 65 or older, disabled or the account holder has died.
Your HSA provider sends a 1099-SA for each plan type, whether the payment went to you or straight to a doctor or pharmacy. The form doesn't say whether the spending was qualified. That's your job, and it's why you need receipts. Everything here comes from the IRS Instructions for Forms 1099-SA and 5498-SA and the Instructions for Form 8889 for 2025.
The boxes on Form 1099-SA
| Box | What it shows |
|---|---|
| 1 | Gross distribution: the total taken out, including any earnings |
| 2 | Earnings on excess contributions, when an excess is returned |
| 3 | Distribution code (see below) |
| 4 | Fair market value on the date of death, if the account holder died |
| 5 | Which kind of account it was: HSA, Archer MSA or MA MSA |
The provider isn't required to work out the taxable amount. It reports the gross figure, and the tax treatment is settled on your own return. If you have more than one HSA, or an HSA and an Archer MSA, expect a separate form for each, and add them together on your return.
The distribution codes in box 3
| Code | Meaning |
|---|---|
| 1 | Normal distribution to you or directly to a medical provider (the default) |
| 2 | Return of excess HSA or Archer MSA contributions |
| 3 | Distribution after the account holder became disabled |
| 4 | Death distribution to the estate (not used with code 6) |
| 5 | Prohibited transaction |
| 6 | Death distribution after the year of death to a non-spouse beneficiary |
What counts as a qualified medical expense
For HSA purposes, qualified medical expenses are generally the unreimbursed medical costs you could otherwise deduct on Schedule A, for you, your spouse and your dependents. The HSA rules are a little wider than the deduction rules, and a little narrower on insurance:
- Nonprescription medicines count for an HSA, even though they don't count for the Schedule A deduction (insulin aside).
- Menstrual care products such as tampons, pads, liners and cups can be reimbursed.
- Home COVID-19 tests, and masks, hand sanitiser and wipes bought mainly to prevent its spread, are eligible.
- Insurance premiums don't count, except long-term care insurance, continuation coverage such as COBRA, coverage while you're receiving unemployment compensation, and Medicare and other coverage if you're 65 or older (but not a Medigap supplemental policy).
If you're under 65, Medicare premiums for a spouse or dependent who's 65 or older generally aren't qualified. Keep the receipt for every withdrawal: the 1099-SA only proves the cash left the account, not what it paid for.
How to report it on Form 8889
- Enter the total HSA distributions from box 1 of every Form 1099-SA on Form 8889, line 14a.
- On line 14b, include amounts rolled over to another HSA and excess contributions you withdrew by the return's due date, including extensions.
- On line 15, enter what you used for qualified medical expenses for you, your spouse and your dependents, incurred after the HSA was set up and not reimbursed elsewhere.
- Whatever's left is taxable income on line 16.
- Unless an exception applies, add 20% of that taxable amount as an additional tax on line 17b.
Two rules people miss: expenses from before you opened the HSA never count, and you can't also deduct on Schedule A anything you've covered with tax-free HSA withdrawals. A child of parents who are divorced, separated or living apart for the last 6 months of the year counts as a dependent of both parents for this purpose.
When the 20% additional tax doesn't apply
The extra 20% doesn't apply to distributions made after the account beneficiary dies, becomes disabled or turns 65. The withdrawal is still taxable income if it wasn't spent on qualified medical expenses, but without the penalty on top.
Mistakes, transfers and rollovers
- A mistaken distribution, for example you reasonably thought an expense qualified and it didn't, can be repaid to the HSA by the due date of the return (not counting extensions) after you knew or should have known. Repaid that way, it isn't income and doesn't get the 20% tax. The provider doesn't have to accept the repayment, though.
- A direct trustee-to-trustee transfer from one HSA to another isn't a distribution and shouldn't appear on a 1099-SA at all. There's no limit on how many of these you can make.
- A rollover you take out yourself generally has to be completed within 60 days, and an HSA can only receive one rollover in a 12-month period.
If the account holder has died
If the beneficiary is the surviving spouse, the spouse simply becomes the HSA's account holder. For anyone else the account stops being an HSA on the date of death, and the fair market value at that date is reported in box 4. A non-spouse beneficiary can reduce the taxable amount by the deceased's qualified medical expenses paid within 1 year after death, and that income isn't subject to the 20% additional tax.
The 1099-SA has a partner form, Form 5498-SA, which reports contributions and rollovers into the account. Your own HSA contributions through payroll show on your W-2 in box 12.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
The verdict
Don't panic at a 1099-SA. Match box 1 to your medical receipts, put the qualified part on Form 8889, line 15, and only the rest is taxed. If you made an honest mistake, ask your provider about repaying it before your filing deadline, because that's the only way to undo both the tax and the 20%.
Anyone who gets a handful of information forms each spring may also want our guide to the miscellaneous reporting form.
Frequently asked questions
Is Form 1099-SA taxable?
Not if the withdrawal was spent on qualified medical expenses. Only the part that wasn't is taxable, usually with an additional 20% tax.
Where do I report Form 1099-SA?
Enter box 1 on Form 8889, line 14a, and your qualified medical expenses on line 15.
When doesn't the 20% HSA penalty apply?
After the account beneficiary dies, becomes disabled or turns 65.
Does an HSA-to-HSA transfer get a 1099-SA?
No. A direct trustee-to-trustee transfer isn't reported as a distribution.
