Health Savings Account Information
What is a Health Savings Account (HSA)?
A Health Savings Account works in conjunction with a High-Deductible Health Plan (HDHP). The account allows you to put money aside and reimburse yourself for medical expenses on a pre-tax deductible basis. Unspent funds accumulate tax free and roll over from year-to-year. (There is no “use it or lose it” rule as with flexible spending accounts.) An HSA gives you the freedom to spend the funds today or save them for the future. The HSA is your account. You own it. You fund it with out-of-pocket money or excess Flex Credits contributions…and you can take it with you wherever you go.
How does an HSA work?
You withdraw funds on a pre-tax basis to pay for qualified healthcare expenses, as defined by Section 213(d) of the IRS Tax Code. If you use your HSA funds to pay for non-health related expenses, the amount will be taxable and you will pay an additional 20 percent tax penalty.
What are the Contribution Limits?
The 2020 maximum contribution amounts are:
• Employee only coverage: $3,550
• Employee + 1 or more coverage: $7,100
Catch-up Contributions – If you are age 55 or older, you can make an additional “catch-up” contribution of $1,000.
The minimum contribution is $120. The minimum per pay period contribution amount is $5.
Who is Eligible?
You must be enrolled in a High-Deductible Health Plan in order to open an HSA. The following individuals are not eligible to open an HSA:
- Those who are enrolled in Medicare (remember, enrolling in Social Security Income or SSI – the income portion of Social Security – automatically enrolls you in Medicare Part A)
- Those who are receiving health benefits under TRICARE
- Those who are covered by another non-qualified health plan (such as a spouse’s plan)
- Those who can be claimed as a dependent on another individual’s tax return
- Those who are considered active military
- Those who have a balance in a medical FSA account
How Do I Start Saving in my HSA?
You must be enrolled in a High Deductible Health Plan in order to open an HSA account. If you elect HSA contributions through payroll deductions or if you have excess Flex Credits going to an HSA, an HSA will be opened with Optum Bank on your behalf. If Optum requires additional information in order to open the account, they will contact your directly.
If you have a High Deductible Medical plan and you have excess Flex Credits, the excess Flex Credits will be routed/contributed to Optum Bank HSA.
For more information about HSAs visit www.optumbank.com or call 866-234-8913.