Health plans with health savings accounts (HSAs)
Health savings accounts (HSAs) are only available to members enrolled in a PEBB consumer-directed health plan (CDHP). You can use your HSA to pay for IRS-qualified, out-of-pocket medical expenses.
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Other features include:
- If you cover yourself and one or more family members, you must pay the entire family medical deductible before the CDHP begins paying benefits.
- Your prescription-drug costs count toward the annual medical deductible and out-of-pocket maximum.
- Preventive care services are covered at 100 percent with no medical deductible.
See benefits and coverage by plan for CDHP coverage details.
An HSA is a tax-exempt account anyone can deposit funds into on your behalf. You can deduct any amount you contribute from your taxable income, giving you a tax savings.
You can use your HSA to pay for IRS qualified out-of-pocket medical expenses (like deductibles, copays, and coinsurance), including some expenses and services that your health plans may not cover. You can spend HSA funds on qualified expenses for your spouse or other tax dependents, even if they aren't covered on your plan. In addition, your HSA balance can grow over the years, earn interest, and build savings that you can use to pay for health care as needed and/or pay for Medicare Part B premiums.
The PEBB Program offers consumer-directed health plans (CDHPs) with health savings accounts (HSAs) to eligible members through Group Health, Kaiser Permanente, and Uniform Medical Plan. When you enroll in a CDHP, you are automatically enrolled in an HSA. The plans' HSA trustee is HealthEquity, Inc.
You must meet certain eligibility requirements to enroll in a CDHP/HSA. If you (the subscriber) are not eligible for a CDHP/HSA and enroll, you may be liable for tax penalties.
You cannot enroll in a CDHP with an HSA if:
- You are enrolled in Medicare Part A or Part B or Medicaid (called Apple Health in Washington).
- You are enrolled in another comprehensive medical plan—for example, on a spouse’s or state-registered domestic partner’s plan.
- You or your spouse or state-registered domestic partner is enrolled in a Voluntary Employees’ Beneficiary Association Medical Expense Plan (VEBA MEP) account, unless you convert it to a limited VEBA MEP.
- You have TRICARE coverage.
- You enrolled in a Medical Flexible Spending Arrangement (FSA) or Health Reimbursement Arrangement (HRA). This also applies if your spouse has a Medical FSA, even if you are not covering your spouse on your CDHP. This does not apply if the Medical FSA or HRA is a limited purpose account, or for a post deductible Medical FSA.
- You are claimed as a dependent on someone else’s tax return.
Other exclusions apply. Check IRS Publication 969—Health Savings Accounts and Other Tax-Favored Health Plans at www.irs.gov, contact your tax advisor, or call HealthEquity toll-free at 1-877-873-8823 to verify whether you qualify. See The Complete HSA Guidebook for full details.
When you enroll in a CDHP, your employer contributes $700.08 for you, or $1,400.04 for your family* in your HSA.
The contribution goes into your HSA in monthly installments over the year on the last day of each month (the entire HSA amount is not available on January 1):
|People covered on CDHP||Monthly deposit into HSA||Total deposited by the end of the year|
|Just you||$58.34 x 12 (months)||$700.08|
|You and your family*||$116.67 x 12 (months)||$1,400.04|
*If you have at least one other family member on your CDHP, then you qualify for the family contribution.
You will get an additional $125 in your HSA (deposited at the end of January in the following calendar year) if you qualify for a SmartHealth wellness incentive.
Ask your employer if you can have money deducted from your paycheck pre-tax and deposited into your HSA. If you can, fill out an Employee Authorization for Payroll Deduction to Health Savings Account form and give it to your payroll office.
You can also make post-tax contributions from your bank account and deduct the amount from your taxable income when you prepare your tax return. You'll get a statement from HealthEquity to help you prepare your tax return.
The IRS has annual limits for contributions from all sources into an HSA.
- For 2017, the limit is $3,400 for single subscribers, and $6,750 for families.
- Members ages 55 and up can contribute up to $1,000 more per year. You must turn age 55 by the end of the taxable year--generally April 15 of the following year--to qualify.
It is your responsibility not to exceed the maximum annual contributions allowed under IRS rules. Before you make your own contributions, make sure to calculate both your employer’s contribution amount(s) for the year, the SmartHealth wellness incentive in January (if eligible), and any amount you contribute. If contributions from all sources are more than the maximum amount allowed, you may be subject to IRS penalties and/or fees from HealthEquity.
If you choose a medical plan that is not a CDHP, you should know:
- You won't forfeit any unspent funds in your HSA. You can spend your HSA funds on qualified medical expenses, or you can leave them for the future. However, you and your employer may no longer contribute to your HSA.
- HealthEquity will charge you a monthly fee of $3.95 if you have less than $2,500 in your account after you leave the CDHP. You can avoid this charge by either ensuring you have at least $2,500 in your HSA or spending all of your HSA funds.
- If you set up automatic contributions to your HSA either through your employer’s payroll office or to HealthEquity, you must contact them to stop the deductions from your paycheck.