Health Savings Account
The HealthCare FSA is a tax-free account that allows a person to pay for essential health care expenses that are not covered or are partially covered by your medical, pharmacy, dental and vision plans. For more information regarding the FSA contact HealthSCOPE Benefits at 1-888-763-8232, press 2 then press “#” then press 3#.
The FSA is a use it or lose it account and the HSA/HRA rolls over from year to year, month to month. The FSA does allow up to $550 to roll over from year to year.
An HSA is a Health Savings Account that also receives tax-free contributions from PEBP but also allows the participant to make voluntarily contribute to their HSA through pre-tax payroll deductions. If you leave State Service the money will stay with you until it is spent by you. Not everyone is eligible for an HSA.
An HRA is a Health Reimbursement Arrangement with only PEBP contributions. You are not eligible to make your own contributions to this account. If you leave State services this money will go back to the State. Everyone on the CDHP/PPO plan is eligible for an HRA.
If I use funds from my HSA for medical expenses, can I claim them as a deduction on my income tax?
Verification of expenses is not required for HSAs. However, total withdrawals from your HSA are reported to the IRS on Form 1099-SA. You are responsible for reporting qualified and non-qualified withdrawals when completing your taxes. You are also responsible for saving all receipts as verification of expenses in the case of an IRS audit.
If I am enrolled in single coverage under the CDHP, can HSA funds be used for my spouse or eligible dependents that are not covered under my health plans?
An HSA allows you to withdraw funds for any reason. However, you would need to pay ordinary tax and an additional penalty of 20% on any funds that are withdrawn for an ineligible expense.
You are responsible for determining if an expense is an eligible medical expense and maintaining receipts for tax reporting and potential IRS audit purposes. At age 65, funds can be withdrawn for any reason and only ordinary tax applies.
What happens to my HSA if I am no longer an eligible individual? For example, if I change coverage from the CDHP to an HMO or EPO or if I enroll in Medicare?
In general, you must be a United States citizen, green card holder, or a United States resident to participate. An HSA cannot be opened without a verifiable United States residential address and a valid United States Social Security Number.
My spouse is a state employee with an HRA. I am a new employee and plan to enroll in the CDHP with an HSA, am I eligible to contribute to an HSA?
You can spend your HSA dollars on qualifying medical expenses for yourself, or anyone you claim as a dependent on your personal income tax — even if that person is not covered by your CDHP coverage. To help you know what is and isn’t eligible, take a look at a comprehensive Health Care Expenses Table. Please visit www.irs.gov for additional information.
HSA elections may be modified any time throughout the year. To modify your election, you may log into your E-PEBP Portal by clicking on the orange log in icon on the top right of the screen.
- From your portal homepage click on View HSA Contribution under Manage Account on the left side of the screen
- Members can make changes to their HSA contribution by selecting Add contribution
- From your portal homepage select Health Savings Account under Your benefits at a glance
- From here you will be able to look over your Plan Details and you can select Edit contribution
Yes, employees can contribute up to $3,650 in 2022 for self-only coverage or up to $7,300 for family coverage. If you’re 55 or older at the end of the year you can put in an extra $1,000 in “catch up” contributions. These amounts include the total amount you can contribute, including any employer provided amounts. These amounts are subject to change each year. Keep in mind that the HSA is tied to the CDHP and the participation period of 07/01 to 06/30, PEBP’s plan year, which is why ongoing contributions put in now would only go until the end of the plan year, in the event that a member changes their coverage for the next plan year.
Under the testing period, if you use the last-month rule, you must also remain an eligible individual (retain your same coverage under the CDHP or other high-deductible health plan) for the following 12 months. If you fail to remain an eligible individual (i.e., if you change coverage from the CDHP to the EPO or HMO or enroll in Medicare, etc.) any “extra” contributions you made as a result of the last-month rule must be included in your gross income. Also, a 20% additional tax applies to this amount. Your excess contributions are determined by the contribution limit divided by 12 months, compared to your time eligible.
The last-month rule states that if you are covered by an HSA-eligible health plan on the first day of the last month of a given year, you are considered an eligible individual for the entire year. In turn, you can then contribute to the HSA for that full year.
Example: If you enrolled in the CDHP on July 1, 2022, and retained coverage under that plan through December 1, 2022, you are covered per the last-month rule. This means you are considered an eligible employee for the entire year in 2022. This allows you to contribute up to the 2022 contribution limit. However, you must also take into consideration the testing period. The testing period is a major drawback to the last month rule. It means that you must remain eligible for the HSA until December 31st of the following year. The only exceptions include death or disability.
To be eligible to establish and contribute to an HSA on a pre-tax basis, the employee must meet the following criteria:
- The employee is covered under other medical insurance coverage unless that medical insurance coverage: (1) is also a High Deductible Health Plan as defined by the IRS; (2) covers a specific disease state (such as cancer insurance); or (3) only reimburses expenses after the Deductible is met,
- The employee can not be claimed as a dependent on someone else’s tax return unless the employee is Married Filing Jointly;
- The employee or the employee’s Spouse cannot have a Medical Flexible Spending Account (excludes Dependent Care or Limited Use Flexible Spending Accounts);
- The employee’s Spouse cannot have an HRA that can be used to pay for the medical expenses of the employee;
- The employee is NOT on COBRA;
- The employee is NOT enrolled in Tribal coverage;
- The employee is NOT enrolled in Medicare;
- The employee is NOT enrolled in TRICARE or TRICARE for Life;
- The employee is NOT retired.
A Health Savings Account is a tax-exempt account that you can use to pay or reimburse yourself for certain medical expenses you incur.
HSAs are employee-owned accounts, meaning the funds in the HSA remain with the employee and will carry over from one year to the next (i.e., will not be forfeited unless there is no account activity for a 3-year period then the funds will be considered abandoned per NRS 120A.500 and subject to forfeiture by the State). Contributions to the HSA grow tax free and are portable. When an employee retires or terminates employment, the employee keeps the funds in the HSA. The employee can continue to use the funds in the HSA for health care and other qualified medical expenses after employment ends.
There are limits on the amount an eligible individual can contribute to an HSA based on the employee’s coverage tier. For example, “self-only” or “family” coverage.
- Self-only coverage means an eligible individual (employee)
- Family coverage means an eligible employee covering at least one dependent (whether that dependent is an eligible individual (for example, if the dependent has Medicare) if that other person is claimed on your tax return and not claimed as a tax dependent on someone else’s return.
You must be an eligible individual to qualify for an HSA. Employees may not establish or contribute to a Health Savings Account if any of the following apply:
- The employee is covered under other medical insurance coverage unless that medical insurance coverage: (1) is also a High Deductible Health Plan as defined by the IRS; (2) covers a specific disease state (such as cancer insurance); or (3) only reimburses expenses after the Deductible is met;
- The employee is enrolled in Medicare;
- The employee is enrolled in Tricare;
- The employee is enrolled in Tribal coverage;
- The employee can be claimed as a dependent on someone else’s tax return unless the employee is Married Filing Jointly;
- The employee or the employee’s Spouse has a Medical Flexible Spending Account (excludes Dependent Care or Limited Use Flexible Spending Accounts);
- The employee’s Spouse has an HRA that can be used to pay for the medical expenses of the employee; The employee is on COBRA; or
- The employee is retired.