What is a Health Savings Account (HSA)?
A health savings account (HSA) is a tax-sheltered savings account, which is only offered to employees covered under the High Deductible Health Plan (HDHP) medical plan. Cigna provides the underlying health coverage, and the HSA Bank is the financial institution that administers the HSAs.
You can make pre-tax contributions through payroll deductions, which reduces your tax liability on your wages.
When you use your account to pay for qualified medical expenses, you can withdraw the funds tax-free.
Any unused funds carry over from year to year and continue to grow tax-deferred.
Additionally, you own the account, so the balance in the account goes with you if you change employment.
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Who is eligible to open an HSA?
You’re eligible to open an HSA if you:
are covered under the Cigna high deductible plan.
are not enrolled in Medicare.
don’t have coverage under another health plan, such as a spouse’s plan (including a spouse’s flexible spending account plan).
are not claimed as a dependent on someone else’s tax return.
Contributions to my HSA Account
Total IRS Maximum Contribution for All of 2019
|Total University 2019 monthly contribution|
SPU’s dollar-for-dollar match, up to the maximum
$126 per month (Jan - June)
$84 per month (July - Dec)
Up to $400
|Employee & Dependent(s)|
$252 per month (Jan - June)
$168 per month (July - Dec)
Up to $800
Will the University contribute to my HSA Account?
Yes, SPU will make monthly contributions to your HSA account (see chart above). If you participate for all 12-months of 2019 and make your own voluntary contributions up to the dollar-for-dollar match, SPU will contribute:
- Individual: Up to $1,660
- Family: Up to $3,320
If you enroll mid-year, these amounts will be pro-rated based on the number of months you are eligible to participate in the plan.
How much can I contribute to my HSA Account?
The total amount deposited into your account by you and the University cannot exceed a maximum annual contribution established by the U.S. Treasury. The table outlines the maximum contribution, what the university will contribute and the amount remaining that you can contribute for 2019. If you’re 55 or older, you may make additional “catch-up” contributions of $1,000.
HSAs and FSAs: Can I have both?
If you have an HSA, neither you nor your spouse can have a healthcare FSA, but you may contribute to a limited purpose FSA option for dental and vision expenses. This means that you can have your HSA as well as this special FSA at the same time.
Like a regular FSA, receipts for the limited FSA will need to be submitted to BAC for eligibility verification and the monies in the account must be used by the end of the plan year.
Why would I want to have a limited purpose FSA and an HSA?
- Having a limited FSA along with your HSA can allow you to maximize your tax savings! For example, if you anticipate that you will have dental and/or vision expenses this year, you can defer up to $2,700 into your limited FSA, save the taxes on those expenses and let that money accumulate in your HSA for future use.
Once you reach the federal statutory minimum annual deductible for medical expenses, the monies in your limited FSA can be used for medical expenses as well after that date. This is helpful if you anticipate medical costs that will end up exceeding the deductible.
What if I terminate?
- If you or your coverage terminates, you keep the account balance with your HSA and are responsible for all fees incurred by this account. Contributions can only be made while you are enrolled in the HDHP but the funds in the account are available for qualified medical expenses, as well as for COBRA or continuation of coverage premiums if on unemployment.
- The limited FSA will terminate based on the last date of employment, and expenses incurred after this date will not be eligible for reimbursement.