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Health Savings Account Q&A

• What are the advantages of an HSA?

  Considering the high costs of health care today, an HSA offers a wide range of benefits, including:

  • Affordable Health Insurance - You generally pay less each month for high deductible health insurance
  • Triple Tax Advantages - Pre-tax contributions to your HSA, tax-exempt interest and investment gains on your HSA and tax-free withdrawals from your HSA for qualified medical expenses
  • Unprecedented Control - You are now in control of how your health care dollars are used - save or spend, it's your choice
  • Portability - Your HSA is an account that you own and remains in place regardless of where you work or what insurance company you are insured by
  • Flexibility - Your HSA contributions can be used to pay for a wide range of eligible medical expenses not typically covered by low deductible health insurance or other health care accounts
  • Planning for the Future - HSA contributions can be directed toward long-term investment vehicles, such as mutual funds, to maximize the future value of your HSA

   

• Who is eligible for an HSA?

  There are four federal requirements to be eligible for HSAs:

  • A person must be covered simultaneously by a qualified HDHP
  • The HSA enrollee cannot be covered by any other health insurance plan, such as a spouse’s plan
  • The HSA enrollee must not be enrolled in Medicare
  • The HSA enrollee cannot be claimed as a dependent on someone else’s federal income tax return

   

• What is allowable for HSA payments or distributions?

  Traditional medical costs, such as diagnosis and treatment of disease are allowable, as well as routine medical visits. In addition, many expenses that may not be covered by traditional health insurance can be paid for through HSA accounts. These include prescription drugs and some non-prescription drugs, eye care, dental care, COBRA premiums, acupuncture, Braille books, midwife services, seeing-eye dogs, qualified long-term care services and more. A more complete list can be found in IRS  Publication 502 Medical and Dental Expenses for the tax year in question.

  To simplify your health related product purchases, HSAStore.com works with the latest in industry technology to ensure that every product they carry is guaranteed HSA eligible. If you use an active HSA card for a purchase, your purchase will be auto-substantiated and you can skip the claims process! 

  HSA Store

   

• What is the maximum HSA contribution for spouses who are both covered by an eligible HDHP?

  The family limit applies to the family unit, not the individually enrolled participants. If both spouses are enrolled in a qualified HDHP, best practice is to split the annual family limit between each spouse. (Please note, the enrollment platform will not provide this calculation, it is the member's responsibility to make sure they don't go over the family limit.) Each spouse, however, would be eligible for the $1,000 catchup contribution if both are over the age of 55. HealthEquity provides a contribution calculation tool to assist you with calculating this amount.

   

• What if I use my HSA funds for non-medical expenses?

  If an enrollee uses HSA money for non-medical expenses and is under the age of 65, he or she will incur a 10 percent penalty in addition to owing regular federal income tax on such amounts. After age 65, there is no 10 percent penalty, but regular federal income taxes would apply for non-medical expenditures.

   

• What happens to my HSA if I leave the University?

  The money you contribute to your HSA, either through payroll deductions or other deposits, is yours. The HSA account is in your name and you have sole rights to this account, regardless of what company you work for. The University contribution also becomes part of your account and belongs solely to you. It cannot be forfeited due to termination of employment. The $3.50 per month fee for balances below $1,000 reverts to the account owner when the health plan is no longer active.