Health plans with health savings accounts (HSAs)
Health savings accounts (HSAs) are available to subscribers enrolled in a SEBB high-deductible health plan (HDHP). You can use your HSA to pay for IRS-qualified, out-of-pocket medical expenses.
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An HDHP is a health plan with a health savings account (HSA). HDHPs offer lower premiums, a higher medical deductible, and a higher medical out-of-pocket limit than most traditional health plans.
Here are some other features:
- If you cover yourself and one or more dependents, you must pay the entire medical deductible for you and your dependents before the HDHP 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.
An HSA is a tax-exempt account used to pay certain medical expenses. Anyone can deposit funds into an HSA 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 medical, dental, and vision plans. Plus, the funds in your HSA roll over from year to year. That means your HSA balance can grow over the years, earn interest, and build savings that you can use to pay for health care as needed, or pay for Medicare Part B premiums.
The SEBB Program offers HDHPs with an HSA to eligible members through Uniform Medical Plan. When you enroll in an HDHP, you are automatically enrolled in an HSA. The plans' HSA trustee is HealthEquity, Inc.
You must meet certain eligibility requirements to enroll in an HDHP with an HSA. If you enroll in an HDHP with an HSA and you are not eligible, you may be liable for tax penalties.
You are not eligible to enroll in a HDHP with an HSA if:
- You are enrolled in Medicare Part A or Part B, or Apple Health (Medicaid).
- You are enrolled in another comprehensive medical plan—for example, on a spouse’s or state-registered domestic partner’s plan.
- You are enrolled in a TRICARE plan.
- You enrolled in a Medical Flexible Spending Arrangement (FSA) or HRA. This also applies if your spouse has a Medical FSA, even if you are not covering your spouse on your HDHP.
- However, if you have a Limited FSA (meaning your funds can only be spent on dental or vision expenses), you can enroll in an HDHP with an HSA.
- 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 or contact your tax advisor.
Ask your employer if you can have pretax money deducted from your paycheck and deposited into your HSA.
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 will get a statement from HealthEquity to help you prepare your tax return.
Are there contribution limits?
Yes. The IRS has annual limits for contributions from all sources into an HSA.
It is your responsibility not to exceed the maximum annual contributions allowed under IRS rules. Before you make your own contributions, be sure to calculate your employer’s contribution(s) for the year and the SmartHealth wellness incentive in January (if applicable). 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 an HDHP, you should know:
- You won't forfeit any unspent funds in your HSA after enrolling in a different plan. 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 if you have less than $2,500 in your account after December 31. You can avoid this charge by either ensuring you have at least $2,500 in your HSA or spending all of your HSA funds before December 31. Other fees may apply.
- 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.
Yes. Enrolling in an HDHP and opening an HSA mid-year may limit the amount of contributions you (or your employer) can make in the first year. If you have questions about this, talk to your tax advisor.