As a component of the HDHP health plan, the County funds a Health Savings Account (HSA) based on tier of coverage. This account may be used to reimburse eligible health care and prescription expenses for you and any enrolled, eligible dependent(s)* that have not been reimbursed by your health plan such as coinsurance and deductible. These expenses can be reimbursed up to the HSA account balance. Vision and dental expenses are reimbursable under the HSA. *See Over Age Dependents age 26-30 and Domestic Partner exclusions on page 45. You may also choose to “bank” your HSA funds for rollover accrual (rollovers are not subject to annual maximum contribution). The annual maximum contribution limit is $3,300 for Individual Coverage; $6,550 for Family Coverage. See Health Savings Account booklet for detailed plan rules on usage, documentation and payback rules.
What is a Health Savings Account (“HSA”)?
A Health Savings Account is a special type of savings account similar to an Individual Retirement Account (IRA) that offers a different way for consumers to pay for their health care. HSAs enable you to pay for current health expenses and/or save for future qualified medical and retiree health expenses on a tax-free basis.
You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs.
You own and you control the money in your HSA from Day 1.
You own your account, making it fully portable after retirement or separation from the County. Decisions on how to spend the money are made by you without interference from a third party or a health insurer. To be eligible for a Health Savings Account, an individual must be covered by a HSA-qualified High Deductible Health Plan (HDHP) and must not be covered by other health insurance that is not an HDHP.
Is there an annual limit on how much I can contribute?
For 2014, the maximum you may contribute is $3,300 if you have self-only coverage, or $6,550 if you have family coverage. Individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare. The additional “catch-up” contribution allowed to an HSA is $1,000 annually. You can make contributions to your HSA on a pretax basis (i.e., before income and employment taxes are applied). You are not allowed to contribute more than the annual limit to your HSA. Contributions in excess of the annual limit may be withdrawn by the tax filing deadline without penalty (a pro-rata share of earnings on the excess amount must also be withdrawn). Excess contributions remaining in the account after the tax filing deadline must be withdrawn and are subject to a 6 percent excise tax.
HSA FUNDS CAN PAY FOR ANY “QUALIFIED MEDICAL EXPENSE INCLUDING MANY DENTAL AND VISION CARE EXPENSES
Who decides whether the money I’m spending from my HSA is for a “qualified medical expense”?
The IRS has the final say, but the question may not arise unless your tax return is audited. You are responsible for reporting on your tax return the amount you withdraw from your HSA that is used for qualified medical expenses and the amount that is not (and is therefore taxable). It is recommended that you familiarize yourself with what qualified medical expenses are (as partially defined in IRS Publication 502) and also keep your receipts in case you need to prove your expenditures or decisions during an audit. Distributions from an HSA that are not used for qualified medical expenses are includable in gross income and, for applicants under age 65, subject to an additional 10 percent tax.
The employee is responsible for how they spend their HSA money within the IRS guidelines and must report all HSA spending on annual tax returns. HSA reporting requirements are straightforward. Form 5498 is used to report total contributions made to the account during the year and the value of the account at the end of the year. Both the form and instructions for completing the form are available from the IRS or can be downloaded from the Treasury and IRS websites. Health copays, coinsurance and deductibles can be paid at time of service/sale by using your Humana HSA payment card up to the available balance including pharmacy coinsurance.
|Employee + Dependents (Spouse/Children/Family)
How can I use my HSA account to pay for eligible services?
There are two ways to access your HRA funds:
- By using your Humana HSA payment card at the time of service/sale for immediate payment to the provider; or
- Pay by check, cash or credit card and reimburse yourself later from your HSA.
What if I don’t use all my HSA money before the end of the year?
The money rolls over year to year. You do not lose the money in the HSA; it is your account and your money.
What happens to the money in my HSA if I leave my job or retire?
You take that money with you wherever you go. The HSA is in your name, it’s your account. If you’re enrolled in Medicare or go to another employer that doesn’t have a qualified health plan, you can still use your HSA money to pay for qualified medical expenses. However, under these circumstances, you’re no longer eligible to contribute to your HSA.