Health Savings Account FAQs These questions and answers summarize the basic concepts of a Health Savings Account (HSA). It is not intended to provide all the information you need in order to make a decision on whether or not an HSA is right for you. You may want to consult your tax advisor. What is a Health Savings Account? A Health Savings Account (HSA) is an account that works in conjunction with a High- Deductible Health Plan (HDHP). The account allows you to put money aside and reimburse yourself for medical expenses on a tax-deductible basis (see the next question on how an HSA works). Unspent funds accumulate tax-free and roll over from year-to-year. (There is no use it or lose it rule as with flexible spending accounts.) You can setup an HSA at any financial institution that provides HSA services. As long as you are enrolled in, and covered solely by, a compatible High-Deductible Health Plan and meet the eligibility guidelines you can continue to contribute to your HSA. An HSA gives you the freedom to spend the funds today or save them for the future. The HSA is your account. You own it. You fund it. And you can take it with you wherever you go. How does an HSA work? Contributions you make to your HSA are tax-deductible. You contribute to the account during the year and deduct the contributions on your Federal income tax return. Funds you withdraw to pay for qualified medical expenses, as defined by Section 213(d) of the IRS Tax Code, are tax-free. If you use your HSA funds to pay for non-health related expenses, the amount will be taxable and you will pay an additional 20 percent tax penalty. The tax penalty does not apply if you are disabled, reach age 65 or die, but is treated as gross income for tax purposes. Who is eligible for an HSA? You are eligible for an HSA if you are covered only by a compatible High-Deductible Health Plan (HDHP). At Stanford, that is the Blue Shield HDHP. Other rules and restrictions apply, including: You are not covered by other health insurance You are not enrolled in Medicare (Part A and B) You are not listed as a dependent on someone else s tax return You do not participate in Stanford s health care Flexible Spending Account Your spouse is not enrolled in a health care Flexible Spending Account Web doc #41 Page 1 of 7 Rev. 09/2012
Where can I setup an HSA? Banks, credit unions and other financial institutions offer these accounts. Depending on the institution, your HSA may be a simple interest bearing account or investment account. Some institutions offer debit cards to make accessing your HSA funds easier. Checks or direct deposit services may also be available. Here is a partial list of banks that offer individual HSA services. These institutions are listed for your convenience only and are not endorsed by Stanford University. You may want to contact your bank and ask if they offer HSA accounts Bank of America 866-791-0250 www.bankofamerica.com/hsaaccts/index.cfm The Bancorp Bank 800-555-9316 mybancorphsa.mybankingservices.com/ Chase Bank 866-524-2483 www.chasehsa.com HSA Bank 800-357-6246 www.hsabank.com OptumHealth Bank 866-234-8913 www.optumhealthbank.com Stanford Credit Union 650-723-2509 or 888-723-7328 www.sfcu.org/personal/savings/hsa/ Sterling HSA 800-617-4729 www.sterlinghsa.com Wells Fargo Bank 866-884-7374 www.wellsfargo.com/investing/hsa Who is HealthEquity? Health Equity is Blue Shield s financial partner for Blue Shield members who want to setup an HSA. When you enroll in the Blue Shield High-Deductible Health Plan, you can setup an account with HealthEquity at the same time, if you are eligible. This gives you easy access to online tools and resources linked directly with your medical plan. You can also review medical and pharmacy claims, schedule payments to providers and reimbursements to yourself. If you set up a HealthEquity HSA, you have the option to enroll in an interest bearing or investment account. Additionally, the account offers a debit card to make accessing your HSA funds easy. Why would I choose HealthEquity instead of another financial institution? Setting up your HSA with HealthEquity offers two additional advantages: You can fund your account through pre-tax payroll deductions instead of putting money in the account on your own. This means your HSA contributions are made with pre-tax dollars, so you do not have to claim a deduction on your income tax return. Stanford will contribute $300 to your account when you cover yourself only in the Blue Shield High-Deductible Health Plan, or $600 when you cover yourself plus one or more eligible family members. This is only available if you open your HSA through HealthEquity. Web doc #41 Page 2 of 7 Rev. 09/2012
If you setup your HSA during Open Enrollment, you will receive Stanford s contribution starting with your first paycheck in January. The contributions will be in 24 equal installments during the year. You also decide how much of your own money you want to contribute, and can change that amount at any time. Whether you contribute or not, you will receive Stanford s contribution. If you decide to setup a your HealthEquity HSA after Open Enrollment ends, the amount Stanford contributes will be prorated based on the number of pay periods remaining in the calendar year after you setup your account. You must be an active employee or on a non-personal leave to be eligible to receive Stanford s contribution. VA doctors are not eligible to receive the Stanford contribution. Each year during Open Enrollment, you will need to choose a new contribution amount for your HealthEquity HSA in order to contribute money and continue to receive Stanford's contributions for the following plan year. If you do not make a choice, re-, the contribution amount for the current year will end December 31 How do I contact HealthEquity or get more information? HealthEquity Member Services is available to answer your questions 24 hours a day, every day at 877-857-6810. You can also find information online at www.healthequity.com/stanford. How soon can I setup my HSA? With HealthEquity: You can setup your account during Open Enrollment on MyBenefits at www.benefits.stanford.edu. With any other financial institution: Depending on the financial institution, you can setup your account as early as the effective date of your coverage in the Blue Shield High-Deductible Health Plan, or any day thereafter. You can use your printed enrollment summary or your enrollment confirmation statement from the benefits enrollment site as evidence of enrollment, and then work with your bank to setup your HSA. Will it cost me anything to setup an HSA? If you setup your HSA with HealthEquity, there are no account or set-up fees while you are employed by Stanford and enrolled in the Blue Shield High Deductible plan. Other financial institutions may charge fees. For additional questions, contact HealthEquity at 877-857-6810. Who owns the HSA? You do. There is no use it or lose it rule as with a Flexible Spending Account. Can I rollover the money from my bank s HSA to Health Equity? Yes. For more information, call HealthEquity Member Services at 877-857-6810. Do I have to claim Stanford s contributions to my HealthEquity HSA on my income tax? You do not have to claim contributions you receive from Stanford as gross income on your annual tax return. Web doc #41 Page 3 of 7 Rev. 09/2012
How much can I contribute to an HSA? For 2012, the maximum contribution set by the IRS for an individual account is $3,100; $6,250 for family coverage. For 2013, the maximum contribution for an individual account is $3,250; $6,450 for family coverage. Catch-up Contributions If you are age 55 or older, you can make an additional catch-up contribution of $1,000. My spouse and I are both over age 55. Can both of us make catch-up contributions? Your Health Equity HSA will be in your name. If you both want to make catch-up contributions, then you must establish separate accounts. Does my HSA contribution have to be made in equal amounts each month? You can contribute the total amount in a lump sum at the beginning of the year, or you can choose to contribute in any amount or frequency you wish. Your account trustee/custodian (for example, bank or credit union) can impose minimum deposit and balance requirements. HSAs have a contribution deadline similar to an Individual Retirement Account (IRA). To claim contributions for the current tax year (January to December), the deadline is April 15 of the following year. Do I need to keep any records when I use my HSA? Although some financial institutions track the use of the HSA for you, it is a good idea to keep your own records. It is your responsibility to track the use of your HSA. The IRS may require you to show proof of your expenditures. We recommend you designate a place to store all your receipts so they are available when you need them. Is an HSA the same as a health care Flexible Spending Account (FSA)? There are some similarities, but here is what makes an HSA different from an FSA: You choose which financial institution you want to use, and setup the account yourself. Your HSA rolls over each year. There is no use it or lose it rule, so you can accumulate funds for future health expenses. Your HSA is portable. It is your own account, so you use the same account from one employer to the next. Interest or investment earnings on the HSA funds are tax-free. You can spend the funds on non-health purposes, although those funds will be taxed and additional penalties apply. Web doc #41 Page 4 of 7 Rev. 09/2012
Do I pay for the full doctor s office visit when I go to the doctor? You are responsible to pay the amount your insurance has contracted to pay your doctor, typically a discounted rate, until your deductible is met. You can use your HSA for this expense. It is best to have your doctor s office put the charge through to Blue Shield first so you receive credit toward your deductible and know exactly what to pay. Some doctors may require you pay up front, but most bill your insurance, then bill you once Blue Shield processes the claim. Make sure you do not pay more than your portion shown on Blue Shield s Explanation of Benefits (EOB), which you receive from Blue Shield after your expense has been processed. What medical expenses can be paid from an HSA? Some examples of qualified medical expenses include: Unreimbursed medical expenses including chiropractic visits and acupuncture for yourself and your dependents. Dental expenses, including braces for you or your dependents. Vision expenses, including Lasik eye surgery. Out-of-pocket expenses such as your deductible and copays. Medical insurance premium if you are unemployed and collecting federal unemployment benefits, or if you have COBRA continuation coverage through a former employer. Long-term care expenses and insurance. You can find a complete list of allowable expenses for an HSA by checking IRS Publication 502 available online at www.irs.gov/pub/irs-pdf/p502.pdf. Can I use my HSA for over-the-counter medicines and drugs? Only prescribed medicines or drugs (including prescribed over-the-counter medicines and drugs) and insulin (even if purchased without a prescription) are considered qualifying overthe-counter (OTC) medical expenses. Most other OTC medicines and products are not eligible for reimbursement. You can find more information about changes the IRS made to OTC medicines on the IRS Web site at www.irs.gov. Type over the counter medicines and drugs in the search field. Can I use my HSA funds for my domestic partner or same-sex spouse? The HSA is a federal program and covered by the Family Protection Act. This Act does not recognize domestic partnerships or same-sex marriages even if the state of residency does. For example, in California you can cover your domestic partner on the Blue Shield High- Deductible Health Plan, and you can contribute to the HSA up to the family maximum. However, note that you will be taxed if you use your HSA funds for your domestic partner s expenses (even if qualified). The only way a domestic partner can be recognized for federal tax purposes is if the partner qualifies as a legal tax dependent. Web doc #41 Page 5 of 7 Rev. 09/2012
Can my domestic partner or same-sex spouse set-up his or her own HSA? Yes. As long as your domestic partner or same-sex spouse is covered by the Blue Shield High- Deductible Health Plan, he or she can open and fund an individual HSA. Can I use my HSA funds to pay for my child(ren) s medical expenses? The money in your HSA can be used to pay for qualified medical expenses of any family member who qualifies as a dependent on your tax return. What happens to my HSA if I change medical plans or leave Stanford University? Your HSA is portable, which means you can keep your HSA even if you: Change jobs Change your medical coverage Become unemployed Move to another state Change your marital status We strongly encourage you to check with your financial institution to find out if any of these changes might impact your ability to contribute to or access funds tax-free from your HSA. What happens to my HealthEquity HSA contributions when I leave Stanford? Your pre-tax contributions (and Stanford's) stop the date your benefits eligibility ends. Because you own the account, you're eligible to withdrawal unused funds from the account to pay for eligible expenses. If you plan to enroll in the Blue Shield High Deductible Health plan through COBRA, you may be eligible to contribute directly to your Health Equity HSA (or establish a HealthEquity HSA if you're newly enrolled in the Blue Shield High Deductible plan). Under a directrelationship with HealthEquity, monthly administrative fees may apply. For assistance with questions related to maintaining, contributing or establishing a HealthEquity HSA after you leave Stanford, call HealthEquity Membership Services at (877) 857-6810. I m retired. Can I still contribute to my HSA? Yes, if you are covered by the Blue Shield High-Deductible Health Plan and are not enrolled in Medicare. Web doc #41 Page 6 of 7 Rev. 09/2012
What happens to my HSA when I enroll in Medicare? You are no longer eligible to contribute to your HSA, but you can continue to withdraw the funds and use them to pay for expenses such as Medicare premiums and out-of-pocket expenses (including Part A and Part B deductibles, copays and coinsurance, and long-term care insurance premiums). You also can use these funds to pay medical expenses for your spouse and your dependent children. If you are age 65 or older and still working We recommend that you contact Social Security to understand how long you can defer Social Security payments and Medicare Part A in order to continue contributing to your HSA. What happens to my HSA if I die? If you are married, your spouse becomes the owner of the account and can use it as his or her own HSA. If you are not married, the account will no longer be treated as an HSA. Instead the account will pass to your beneficiary or become part of your estate. You can find additional information on Health Savings Accounts in the IRS Publication 969 at www.irs.gov/pub/irs-pdf/p969.pdf. Web doc #41 Page 7 of 7 Rev. 09/2012