IRS Releases 2026 Draft Instructions for Form 8889, HSA Reporting

The Internal Revenue Service (IRS) has posted 2026 tax year draft Instructions for Form 8889, Health Savings Accounts (HSAs). Taxpayers file Form 8889 to report HSA contributions and associated tax deductions, as well as distributions and any tax or penalty owed for distributions not used for qualified medical expenses. The “What's New” section outlines areas of expanded coverage under the One Big Beautiful Bill Act (OBBBA) enacted last year.

• Telehealth and Remote Care Services. The OBBBA made permanent the ability to receive telehealth and other remote care services before meeting the high deductible health plan (HDHP) deductible while remaining eligible to contribute to an HSA, effective for plan years beginning after 2024.

• Bronze and Catastrophic Plans Treated as HDHPs. After 2025, bronze and catastrophic plans available through an Exchange are considered HSA-compatible, regardless of whether the plans satisfy the general definition of an HDHP. This expands the ability of people enrolled in these plans to contribute to HSAs, which they generally have not been able to do in the past. Notice 2026-5 clarifies that bronze and catastrophic plans do not have to be purchased through an Exchange to qualify for the new relief.

• Direct Primary Care Service Arrangements. After 2025, an otherwise eligible individual enrolled in certain direct primary care (DPC) service arrangements may contribute to an HSA. In addition, they may use their HSA funds tax-free to pay periodic DPC fees.