The Basics
Q. What is a Health Savings Account (HSA)?
A. A Health Savings Account is an account where individuals can save money, earn interest, and spend money all on a tax-free basis as long as the money is being spent for qualified medical expenses. Unused balances roll from year to year. There is no ‘use-it-or-lose-it’ penalty.
A. A Health Savings Account is an account where individuals can save money, earn interest, and spend money all on a tax-free basis as long as the money is being spent for qualified medical expenses. Unused balances roll from year to year. There is no ‘use-it-or-lose-it’ penalty.
Q Who can participate in an HSA?
A. Individuals who:
• Are enrolled in a high deductible health plan (HDHP)
• Have no other medical insurance
• Are not enrolled in Medicare
• Are not claimed on someone else’s income tax
Q. What is a qualified high deductible health plan (HDHP)?
A. A qualified HDHP as per IRS guidelines is one that has both a qualified annual deductible, as well as no co-payments for medical services or prescriptions.
Q. How do you contribute to an HSA?
A. Contributions to a HSA can be made by you, your employer or any other person for your benefit. The combined contribution each year cannot exceed the maximum set by the IRS. Contributions can be made by direct deposit, electronically between accounts, by mail or in-person.
Q. What are the contribution limits?
A. IRS contribution limits
2020: Single $3,550 | Family $7,100
2021: Single $3,600 | Family $7,200
2022: Single $3,650 | Family $7,300
Individuals age 55 or older can make an additional $1,000 per year catch-up contribution. Contributions for the current year can be made until April 15 of the next year. (Contribution information provided by the IRS).
Spouses may each contribute the same Catch Up Contribution amount, but the spouse who is not the primary HSA owner must meet all eligibility requirements and establish a separate HSA to hold their Catch Up Contributions.
Q. Who owns an HSA?
A. The HSA account and all contributions are owned by the individual (you). It is yours even if you change jobs, change medical plans, move, change your marital status, etc. You decide when and how to use the money in your account.
Q. How do you use the money in an HSA?
A. Money in the HSA account can be used to pay for a variety of your out-of-pocket medical expense incurred by you, your spouse and your dependents. To pay for an expense, you can use the debit card associated with your account or purchase optional checks for the account.
Q. What is a qualified medical expense?
A. Qualified medical expenses are services that are typically covered by a healthcare plan, such as office visits, emergency room services and hospitalization. Prescription drugs, many over the counter drugs, vision expenses including eyeglasses and contact lenses and non-cosmetic dental expenses are also included. Covered items are defined by IRS code 213(d) and are listed in IRS publication 502. For more information, visit www.ustreas.gov
Q. What if I use the money to purchase something other than a qualified medical expense?
A. Your HSA money is tax-free as long as it used to pay for qualified medical expenses. If you use the money for any other reason, you will be required to pay income tax and a 20% penalty on that amount (you will not pay a penalty if you are disabled or age 65 or older). It is up to you to keep the supporting records to show the Internal Revenue Service whether you used the funds to pay qualified medical expenses..
Q. How do I keep track of the balance of my HSA?
A. Keeping track of your account balance is easy. You can review account information 24/7 by logging onto www.blackhawkbank.com or by calling the automated toll-free phone service at 888.769.2600. You will also receive a monthly account statement.
Advanced
Q. What types of insurance and other coverage can I have and still be eligible to take advantage of an HSA plan?
A. Permitted insurance includes workers’ compensation, property insurance, insurance for a specific disease, such as cancer coverage and insurance that pays a fixed amount per day of hospitalization. Coverage for dental, vision, long-term care, accidents and disability are also permitted.
A. Permitted insurance includes workers’ compensation, property insurance, insurance for a specific disease, such as cancer coverage and insurance that pays a fixed amount per day of hospitalization. Coverage for dental, vision, long-term care, accidents and disability are also permitted.
Q. Can I use the money in my HSA account to pay medical insurance premiums?
A. Generally, you cannot use your HSA account to pay premiums for medical insurance coverage. If you purchase medical insurance coverage through your employer, these premiums may already be purchased on a pre-tax basis. Exceptions, however, include COBRA premiums, long-term care premiums and premium payments that allow you to retain health coverage while you are receiving unemployment compensation. If you are age 65 or older, you can treat insurance premiums (other than premiums for a Medicare Supplemental policy such as Medigap) as qualified medical expenses for HSAs.
Q. Can I use the money in my HSA account to pay for qualified medical dental, and vision related expenses of other family members?
A. You can use the money in your HSA account to pay for qualified medical expenses of your spouse, your dependent children or yourself.
Q. Can I choose to invest the money in my HSA account in investment funds?
A. HSA funds may be invested in bank accounts, annuities, certificates of deposit, stocks, mutual funds or bonds. The HSA custodial agreement may restrict use to certain types of permissible investments (e.g., certain types of investment funds).
Q. Can I have more than one HSA?
A. You can have more than one HSA, but your annual contribution(s) cannot exceed the IRS maximum (allowed for the tax year) between all contributions to all HSA accounts.
Q. I have a MSA/HSA with another custodian. How can I combine that balance with my Blackhawk HSA?
A. By completing a ‘Transfer Request’ form, Blackhawk Bank can assist you in moving your MSA/HSA balance(s) to Blackhawk Bank.
Q. I want to move monies from my former FSA or HRA arrangement
with my employer into my new Blackhawk HSA. Can I do this?
A. Yes. This is considered a “rollover.” The amount rolled may not exceed an amount equal to the lesser of the balance in the FSA or HRA as of September 21 of the previous year, OR the balance of the FSA or HRA as of the date of distribution. This distribution is not includable in your taxable income, AND may be over and above the IRS maximum HSA contribution level for that year.
Q. Can I move IRA funds into my HSA?
A. Yes. For IRA monies, a direct trustee-to-trustee rollover can be made only one time per lifetime (the exception being if coverage changes from single to family during the tax year). Regardless, the total amount transferred cannot exceed the total IRS contribution limit for the tax year. The amount transferred is not considered includable in your taxable income.
Q. If another person makes a contribution to my HSA, who gets the tax benefit?
A. You do! You can claim contributions you made and contributions made by any other person other than your employer, on your behalf, as an adjustment to income.
Q: Do I need to stop contributing to my HSA when I reach age 65?
A. An otherwise eligible individual under section 223(c)(1) who is not actually enrolled in Medicare Part A or Part B may contribute to an HSA until the month that individual is enrolled in Medicare.
If you have any questions, please email the Health Savings Account Coordinator or call them at 608.364.8911 or 800.209.2616.