What is a HSA?
A Health Savings Accounts (HSA) allows you to save, invest and budget for eligible healthcare expenses on a pre-tax basis. There are several advantages to establishing a HSA account:
- Reduces your taxable income. Your contributions to your HSA are tax-free, so you keep more of your paycheck
- The money always belongs to you. The monies in your account regardless if contributed by you or your employer will always be yours to use – even if you retire or leave Wright State. In addition, you can pass your investment onto your heirs if never needed.
- Your account earns interest tax-free. Your account earns interest, and the interest is never taxed, as long as you do not exceed the annual contribution limits.
- You control the money. Upon reaching a specified account level, you decide how to invest your monies including dollars received from Wright State.
- You can save the money for future needs. Even if you do not have healthcare needs today, your HSA funds will be there in the future – even after retirement.
- It’s easy to use the funds. You will have a debit card and can purchase checks.
Due to the favorable tax treatment for HSA, the IRS has strict guidelines as to who can qualify for contributions to an HSA account. For new enrollees, you will need to certify that the following situations do not exist. Enrollment and management of your HSA is your responsibility. If your situation changes at any time, for any reason, you are personally liability to ensure you take the necessary steps to ensure compliance with IRS rules. The following is required to be able to contribute to an HSA:
- You must be enrolled in a High Deductible Health Plan (HDHP)
- You cannot be covered by another non-high deductible medical plan
- Cannot be covered by a Healthcare Flexible Spending Account
- Cannot be enrolled for Medicare benefits - neither you nor Wright State can contribute money to an HSA once you’re enrolled in Medicare – but you can continue to spend the money even if no longer funding the account
- Cannot be claimed as a dependent on another person's tax return
- Cannot be enrolled in any other non-qualified medical plan.
- Cannot be covered by TRICARE or be eligible to receive VA medical benefits
- Cannot be on a J1 Visa
How It Works
You can use your HSA funds to pay for out-of-pocket medical expenses such as doctor office visits, prescriptions – the costs that apply to your medical deductibles. You can also use these dollars for other eligible expenses such as dental and vision—costs which do not apply to your medical deductibles. Also, looking towards the future, your HSA account can be used to fund long-term care insurance, COBRA premiums, and Medicare insurance premiums. For a listing of eligible expenses, please visit https://www.mywealthcareonline.com/fifththirdhsa/Resources/HSAResources/EligibleandIneligibleHSAExpenses.aspx and www.irs.gov.
Who Can Be Covered
You are allowed to use your HSA funds to pay for out-of-pocket medical expenses for yourself, your spouse and your dependents that can be claimed as a dependent on your federal tax return. According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling, or any descendant of these) who:
- Has the same principal place of abode as the covered employee for more than one-half of the taxable year.
- Has not provided more than one-half of his or her own support during the taxable year.
- Is not yet 19 (or, if a student, not yet 24) at the end of the tax year or is permanently and totally disabled.
So although you can cover you adult children (up to age 26) on your health plans, the IRS has not changed its definition of a dependent for the health savings accounts. This means that an employee whose 24-year-old child is covered on his HSA qualified high deductible health plan is not eligible to use HSA funds to pay that child's medical bills.
Health Savings Account IRS Annual Limits
The IRS annual contribution limits for 2020 have increased slightly. The limit is a total of all contributions to your account and cannot exceed:
- $3,550 for Individual
- $7,100 for Family
- $1,000 additional for HSA catch-up contributions (age 55 or older)
Calculating your Maximum Contributions
Contributions to your HSA Account can come from two sources:
- Employer contributions
Wright State’s contributions are based on the following:
- Based on HDHP coverage level and deposited semi-annually the first week of January and the first week of July listed on your Healthcare Premium listing.
- Based on participation in the Health Management Initiative and deposited February.
- Employee contributions
You can make pre-tax payroll deductions at any time during 2020. If desired, you can start your initial deductions in January by electing a HSA contribution via the Online Enrollment, for any dollar amount and any number of pay periods. Your elections can be stopped or started at any time during the year. They do not however, roll over into the next calendar year; so remember, if you desire contributions in January, you must elect via the Online Enrollment. You or another person can also make an “after-tax” contribution to your HSA.
- You must elect the HDHP as your medical plan choice.
- You must open your account at Fifth Third Bank before funds can be deposited (including any WSU contributions) or withdrawn to pay for qualified medical expenses.
- To open your account electronically, visit www.53hsa.com and use the enrollment code FTB-8649. Fifth Third Account Setup Instructions (PDF)
- Must be completed by November 21 to ensure a timely deposit of Wright State’s contribution for the first week of January and any further January contributions you elected during Online Enrollment.
Employee+ (Child(ren), Spouse, Family)
Health Management Initiative Participation