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Home > Benefits > 2014 HDHP & HSA > Q&A about the 2014 HDHP PPO & HSA

Questions and Answers about the 2014 HDHP PPO & Health Savings Account

The following questions and answers will help you better understand the HDHP (High Deductible Health Plan) PPO & Health Savings Account (HSA).

HDHP

Comprehensive Coverage

Are the types of services covered under this plan different than other IU medical plans?

No. The plan covers medical, prescription, behavioral health, and transplant services the same as other IU employee medical plans.  The difference is primarily in the deductibles and co-pays.

Are pre-existing conditions covered?

Yes.  IU-sponsored employee medical plans do not have any pre-existing condition limits on new enrollees or when an employee moves from one IU plan to another.

Is there any waiting period before certain services are covered?

No.

What if I enroll in the plan this year and don’t like it?

You can switch to another plan during the next Open Enrollment.  Any unused contributions in your HSA will remain in the account to use for health expenses, but you will not be eligible for IU contributions and you cannot make payroll contributions. When you are no longer covered under IU’s HDHP, you will then be responsible for the account maintenance fees on the HSA.  See Fee Schedule (PDF) for details.

Deductibles and Out-of-Pocket Maximums

What are the deductibles and out-of-pocket maximums for 2014?

For employee-only coverage, the deductible is $1,250 and the out-of-pocket maximum is $2,500. When one or more family members are covered the deductible is $2,500 and the out-of-pocket maximum is $5,000. There are separate deductibles and maximums for out-of-network services which are double the in-network amounts.

How does the deductible work in this plan?  I’ve read that it is different than the PPO $900 and $500 Deductible plans.

Yes, it is different in two ways.

1) The individual deductible only applies to an employee enrolled in employee-only coverage.  When you enroll one or more family members, you have one family deductible.  Deductibles paid by any of the family members are totaled as one sum. No family member receives benefits until the family deductible is met. This is in contrast to plans which have separate, individual deductibles for each family member.

2) The deductible does not apply to preventive care, including medical services and prescriptions; it does apply to all other medical services, non-preventive prescriptions, and behavioral health.

Since prescription drugs are subject to the deductible, how can I find out what I will pay for my prescriptions before the deductible is met?

Go to www.medco.com/iu and log in to view your prescription history or check with your pharmacy to find the full cost of the prescription you will pay until the deductible is met.

If I enroll my spouse, does each of us have an individual or family deductible?

The IRS defines “family” coverage as any coverage that includes one or more family members.  An employee and spouse together have one family deductible. The medical costs of both are combined under this one $2,500 deductible. For example, if the employee has $2,000 in claims and the spouse has $500, the deductible is met. Neither spouse has benefits paid until the $2,500 is met either by one or both combined.

After I have met the deductible, what is the co-insurance in this plan?

Once the deductible is met, there is a 20% in-network co-insurance on most services including medical, prescription, and behavioral health services.  The out-of-network co-insurance is generally 40%.

Are there different co-insurance costs for generic and brand drugs?

No.  There is 20% co-insurance when network pharmacies are used.  Because brand drugs are generally higher in cost, the 20% co-insurance results in a higher co-insurance for higher cost drugs.

How does the out-of-pocket maximum work?

The IRS defines “family” coverage as any coverage that includes one or more family members. The individual out-of-pocket maximum only applies to an employee enrolled in employee-only coverage.  When you enroll one or more family members, the lower individual out-of-pocket maximum does not apply to any family member, only the family deductible.  All expenses for covered services paid by any family member are totaled to one family out-of-pocket maximum.  All members have to pay co-insurance costs until the family out-of-pocket maximum is met, then there is no co-insurance cost for any family member.

What services does the deductible apply to?

The deductible does not apply to non-covered services nor to preventive care, which includes preventive medical services and preventive prescriptions. The deductible does apply to all other medical services, non-preventive prescriptions, and behavioral health. A list of prescriptions that are considered preventive can be found at www.medco.com/iu.  See Preventive Services (PDF) for examples of services that are considered Preventive when they are not performed as part of ongoing care for a diagnosed illness.

When I pay the full cost of non-preventive prescriptions before the deductible is met, do these costs apply to meeting the deductible and the out-of-pocket maximum?

Yes.  Medical, prescription and behavioral health costs for covered services paid out-of-pocket apply to the deductible.  Likewise, all costs for covered services apply to the out-of-pocket maximum. 

What costs don’t apply to the deductible or out-of-pocket maximum?

Costs for services or charges not covered or excluded under the HDHP PPO plan do not apply. These include amounts above the Maximum Allowable Amounts when Out-of-Network providers are used.

Can I use my TSB and HRA funds before the deductible is met?

No. You can use funds in the Health Savings Account component of the plan, but you cannot use TSB or HRA funds to cover the HDHP deductible. Funds in TSB and HRA accounts can only be used to pay for "limited" expenses: dental and vision and "post-deductible" medical and prescription expenses (expenses after the plan HDHP deductible is met).

Network Services and Providers

Which physicians and hospitals can I use?

The plan uses Anthem Blue Access in Indiana and Blue Cross & Blue Shield (“Blue Card” providers) in other states and overseas. (This is the same medical provider network that the PPO $900 Deductible and PPO $500 Deductible plans use.) You can still receive benefits if you use out-of-network providers, but you will have higher out-of-pocket costs.  See www.anthem.com or www.bluecares.com

Which pharmacies can I use?

Outpatient prescription drug benefits are through Express Scripts. These are the same pharmacies that the IU PPO plans use; therefore, if you switch from another IU-sponsored medical plan to the HDHP PPO & HSA Plan, you don’t have to change pharmacies. You can still receive benefits if you use out-of-network providers, but you will have higher out-of-pocket costs.  Most pharmacies are in-network; for example, CVS, Wal-Mart, Target, Kroger, K-Mart, Marsh, and Meier. (Note: effective January 1, 2013 Walgreens will no longer be an in-network pharmacy.)

Which behavioral health providers can I use?

You can use Anthem Behavioral Health providers, the same network the other plans use.  Go to www.anthem.com for a list of in-network providers.

If I enroll in this plan do I still get the benefit of Anthem’s preferential pricing when I pay out-of-pocket for network doctors, hospitals, therapists, and pharmacies?

Yes. Anthem has negotiated discounts with network providers and pharmacies. You receive the highest level of benefits when you use them.

 

Health Savings Account

Account basics

What is a Health Savings Account (HSA)?

The Health Savings Account is a special tax-advantaged bank account that can be used to pay for IRS-qualified health expenses for you and your family members.  The three main tax advantages to an HSA are:

1) No taxes taken on the contributions made to the account.  All contributions are made on a pre-tax basis via payroll deductions.

2) No taxes when the funds in the account are used for IRS-qualified health expenses.

3) No tax on account interest or investment earnings

Because this account offers tax-advantages, it is regulated by the IRS.  The IRS stipulates the maximum annual contribution amount that you can contribute to the HSA, the eligibility rules for being allowed to have an HSA account, as well as the list of expenses that the HSA can be used for. See the Health Savings Account Contributions and Using the HSA Funds sections of these Q&As for more details.

How does an HSA plan save me money?

An HSA plan may save you money through lower premiums, tax savings and money deposited into your account by the university can be used to pay your deductible and other out-of-pocket health expenses in the current year or in the future.

What are the tax benefits of the Health Savings Account?

When you enroll in the HDHP PPO & HSA, you get a triple tax advantage with your HSA:

  1. Your contributions—and all of IU's contributions—go into your HSA before taxes are withheld.
  2. The money you withdraw today, tomorrow, or in the future is not subject to taxes as long as you use it to pay for eligible healthcare expenses.
  3. The earnings on your HSA, if any, are also tax-free. (You can invest your savings in a variety of mutual funds when your HSA balance reaches $1,000 or more.)

What is the process for setting up an HSA?

If you choose to enroll in the HDHP PPO & HSA as a new hire or during Open Enrollment, IU will automatically send your application information to Chase bank to open an HSA for you. The application process includes the Customer Identification Process (CIP) of the USA Patriot Act. The CIP provision requires the bank to verify their customers’ identification.  The identification information needed includes the customer’s name, date of birth, address and ID number (SSN). 

If there are any inconstancies, Chase bank will contact you directly (by phone and by mail) and will request additional documentation in order to complete the CIP.  This may delay the opening of your HSA if not responded to promptly. Your campus HR office is available to assist you through this process.  

Once your HSA has been opened, Chase will automatically send you a debit/VISA card and additional information regarding your account.

How do I get a debit/VISA card for my HSA account?

Once your HSA account is set-up with Chase they will automatically issue one card in your name to your home address.  If you would like additional cards for other family members, you can go online to www.chasehsa.com, login to your account and go to the Customer Center tab and the Manage Account section.  From there click on the link “Request Additional Card”.  You may elect to have one additional card, at no cost to you.  If you want more than 2 cards, fees will apply.

Is it a debit card or a credit card?

Debit card. This card is attached to a deposit checking account and not to a credit account and may be used anywhere Visa is accepted. You may also make cash withdrawals from cash machines using your Chase card. The HSA debit card has a daily withdrawal limit of $1,000 at ATMs or for PIN-based purchases. Some ATMs may restrict the amount of a single withdrawal transaction and you may have to use the ATM more than once to reach the HSA daily limit. The daily signature-based purchase limit is $3,000 and the cash advance limit is $5,000.

What amount does the university contribute to my Health Savings Account?

When you enroll in IU’s HDHP & HSA plan, an HSA account is opened in your name at JPMorgan Chase bank. For 2014, IU contributes $1,250 for those enrolled in employee-only coverage or $2,500 when one or more family members are covered. As an option, employees can contribute up to the annual IRS maximums: $3,300 when enrolled in employee-only coverage and $6,550 when one or more family members are included.  Catch-up contributions of $1,000 annually are also an option for those who are age 55 and older. The IRS contribution maximums include both the IU contribution and the employee's contribution. Also see the Health Savings Account Contributions section of these Q&As.

What are qualified health expenses?

Following is a list of some items that are qualified expenses. This list is not all-inclusive, and is subject to change by the IRS.  After you open an HSA, you can use funds to pay for covered expenses that apply toward the HDHP annual deductible and co-insurance costs (e.g. medical services, prescriptions, mental health services, etc). You can also pay for qualified health expenses that your health plan might not cover, such as vision care (eyeglasses and contact lenses), dental and orthodontic services. Qualified health expenses also include long-term care premiums, Medicare premiums, Medicare co-pays, and COBRA premiums.  (Medigap premiums are not qualified expenses.)  Detailed information about qualified health expenses can be found in Section 213(d) of the Internal Revenue Code and IRS Publication 502 (PDF). A Summary of the Eligible HSA Expenses (PDF) is also available.

Examples include:

  • Diabetic supplies
  • Eye exams, eyeglasses, contact lenses and solutions
  • Hearing aids
  • Laser eye surgery
  • Orthodontia, dental cleanings and fillings
  • Prescription drugs
  • Physical therapy, speech therapy and chiropractic expenses
  • Specialized equipment and devices for disabled persons
  • Transportation expenses related to medical care
  • Weight reduction programs for physician-diagnosed obesity
  • Premiums: Long-Term Care, Medicare, COBRA (Medigap premiums are not eligible)

What expenses are not eligible?

Following is a list of some items that are non-qualified expenses. This list is not all-inclusive, and is subject to change by the IRS. Any HSA funds used for non-qualified expenses will be taxable. These distributions will also be subject to a 20% IRS penalty if you are under the age of 65, unless they are made after death or disability. Consult a tax advisor if you are in doubt about a particular expense. Detailed information about qualified health expenses can be found in Section 213(d) of the Internal Revenue Code and IRS Publication 502 (PDF).

Non-Qualified Medical Expenses include:

  • Advance payment for services rendered next year
  • Athletic club membership
  • Car insurance premium (medical portion)
  • Boarding school fees and child care
  • Commuting expenses of a disabled person
  • Cosmetic surgery and procedures (unless due to accident, birth defect, or disease)
  • Cosmetics, hygiene products, and similar items
  • Diaper service
  • Domestic help
  • Fitness programs/health club dues
  • Funeral, cremation, or burial expense
  • Illegal operations and treatments
  • Illegally procured drugs
  • Maternity clothes
  • Medigap Premiums
  • Over-the-counter medication (unless accompanied by a prescription)
  • Premiums for life insurance, income protection, disability, loss of limbs or sight, Medigap
  • Scientology counseling
  • Social activities
  • Special foods or beverages
  • Teeth-whitening services & products
  • Toothpaste and mouthwash
  • Travel for general health improvement
  • Tuition and travel expenses to send a special needs child to a particular school
  • Weight loss programs

Who will determine whether something is a "qualified health expense"?

The IRS will make this determination based on disbursements reported on your annual tax return. You do not submit records with your IRS return, but it is your responsibility to maintain records for all of your expenses in the event the IRS requests them. Specifically, the IRS requires that you must be able to show that:

  • The distributions were exclusively to pay or reimburse qualified health expenses,
  • The qualified health expenses had not been previously paid or reimbursed from another source, and
  • The health expenses had not been taken as an itemized deduction in any year.
 

Does the money in my account earn interest?

Yes, money kept in an FDIC-insured cash account earns interest.  Additionally, if your balance reaches $1,000 you have the choice to invest in various JPMorgan Chase investment funds. 

Can the unused funds in my account be rolled over each year?

Yes, all unused funds carry over from year to year. They stay in the account indefinitely until they are used.

What are the survivor benefits associated with my Health Savings Account?

Your Health Savings Account will pass to your surviving spouse or named beneficiary. If your spouse is the recipient, no taxes will be assessed if the funds are used for qualified health expenses. If someone other than a spouse is the beneficiary, that person will have to pay applicable taxes. If you are unmarried and do not have a named beneficiary, the money is disbursed to your estate and subject to any applicable taxes.

Beneficiary designations can be done online at www.chasehsa.com

What are the possible account fees?

Indiana University will pay the basic monthly account maintenance fees as long as you are an active employee on the IU HDHP PPO and HSA plans. The basic fee covers online account reporting, two debit/VISA cards, and the monthly investment account maintenance fee.

When you separate from the university or switch to a different IU medical plan, you will be responsible for all account fees (currently $2.50/month for the Chase HSA Cash Account and $2.50/month for the Chase HSA Investment Account). There are no transaction fees for using the card at an ATM or point of sale. However, additional fees do apply for things like insufficient funds, additional cards, checks, etc. A complete fee schedule (PDF) is available.

Eligibility

Who is eligible for this plan?

As stipulated by the IRS, to be eligible for Chase to open an HSA, you must:

  • be a U.S. citizen or resident alien age 18 or older with a U.S. address (not a PO Box); and
  • have a valid Social Security Number;

To receive tax-free HSA contributions you must:

  • have no other health coverage, as an employee or as a dependent, other than an HDHP.  Coverage that makes the employee ineligible includes a spouse's employer medical coverage,  TSB or Healthcare Flexible Spending Account (FSA), or Health Reimbursement Account (HRA) that covers the IU employee. (The employee may have certain IRS-allowed insurance, e.g., dental, vision, accident/disability, long-term care, per diem hospitalization, or specific disease coverage);
  • not be enrolled in a government-sponsored medical benefit such as Medicare Part A, B or D (those eligible but not enrolled still qualify); TRICARE, or have received VA medical services within the previous 3 months; and
  • not be eligible to be claimed as a dependent on anyone else’s tax return.

If you are ineligible for tax-free contributions, you can waive the HSA portion of the plan and be enrolled only in the HDHP plan.  If you are ineligible, and elect the HSA, you are responsible for reporting the ineligible HSA contributions on your annual tax return.  Consulting a tax advisor about reporting ineligible contributions is advised. 

Note: Domestic partners are eligible to be covered under an employee’s HDHP plan and the employee receives the university’s family HSA contribution; however, in accordance with IRS regulations, the tax-free use of the HSA funds for the health expenses of a domestic partner or the domestic partner’s child(ren) is not allowed unless they are also considered to be a tax dependent of the employee or a spouse.

Am I eligible for these plans if I am here on a J-1 Visa?

No. According to the U.S. Department of State, all J-1 Visa holders must have health insurance; however, the insurance policy cannot have a deductible that exceeds $500.  J-1 Visa holders are eligible for the IU $500 Deductible PPO plan and the IU Health Quality Partner Exclusive Provider Network plan (IUHQP).

Am I eligible for these plans if I am here on an H1-B Visa?

Maybe. As a H1-B Visa holder, you are eligible to enroll in any of IU’s medical plans, including the HDHP.  However, for the HSA plan, as stipulated by the IRS, you must qualify as a resident alien and have a valid Social Security Number in order to open an HSA account.

How is 'Resident Alien' defined?

According to the IRS:

You are considered a resident alien if you meet one of the following two tests for the calendar year:

The first test is the "green card test". If at any time during the calendar year you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been rescinded or administratively or judicially determined to have been abandoned, you are considered to have met the green card test.

The second test is the "substantial presence test". To meet the substantial presence test, you must have been physically present in the United States on at least 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count all of the days you were present in the current year, and one-third of the days you were present in the first year before the current year, and one-sixth of the days you were present in the second year before the current year.

For more details go to www.irs.gov/taxtopics/tc851.html.

Can I enroll in this plan if I have other insurance that pays medical expenses?

No. You cannot be covered, as an employee or as a dependent, under any other plans that can cover the expenses you incur to meet your HDHP deductible and still be eligible to make Health Savings Account contributions.  This includes your spouse’s employer medical coverage, Healthcare Flexible Spending Account (FSA), or Health Reimbursement Account (HRA), or be enrolled in a government-sponsored medical benefit such as Medicare Part A, B or D, TRICARE, or have received VA medical services within the previous 3 months. You cannot use a TSB Health Flexible Reimbursement account to pay for expenses that apply to the HDHP deductible.

However, you may have automobile, dental, vision, disability and long-term care insurance at the same time as an HDHP, and coverage for a specific disease (e.g., a cancer policy) or illness, as long as it pays a specific dollar amount when the policy is triggered.

 

My spouse has a flexible spending account (FSA, like the IU TSB plan) or HRA through her/his employer. Can I enroll in the HDHP PPO & HSA?

You can enroll in the HDHP medical, however, according to the IRS, you cannot contribute to an HSA if your spouse’s FSA or HRA can pay for any of your medical expenses before your HDHP deductible is met. Please note that unless your spouse’s FSA agreement specifically states it does not cover you, you are not eligible to enroll in the HSA plan.

If both spouses are enrolled in the HDHP PPO & HSA, but one spouse has other coverage, are both spouses eligible for an HSA? How much can each spouse contribute?

The following examples describe how much can be contributed under varying circumstances. Assume that neither spouse qualifies for "catch-up contributions." Please note that when a spouse has an HDHP plan with another employer, the university will not be able to assist in limiting contributions to statutory maximums. If a spouse exceeds statutory maximums, he or she is responsible for taking corrective actions and responsible for any tax consequences.

Example 1: Husband and wife are enrolled in the IU HDHP PPO & HSA with a $2,500 deductible. Husband has no other coverage. Wife has additional self-only coverage through her employer (IU or another employer) which has a $900 deductible. Wife, who has coverage that does not qualify as an HDHP, is not eligible to contribute to an HSA in her name. Husband may contribute $6,550 to his Health Savings Account (HSA) fund.  

Example 2:  Husband and wife are enrolled in the IU HDHP PPO & HSA with a $2,500 deductible. Husband has no other coverage. Wife has additional self-only HDHP coverage with another employer with a $2,500 deductible. Both husband and wife are eligible individuals to have and to contribute to their own HSA accounts. However, husband and wife are treated as having “family” coverage. The combined HSA contribution by husband and wife cannot exceed $6,550, to be divided between them by agreement.

Example 3: Husband and wife are enrolled in the IU HDHP PPO & HSA (employee/spouse coverage) with a $2,500 deductible. Husband has no other coverage. Wife also has family HDHP coverage with a $3,000 deductible. Both husband and wife are eligible individuals to have and to contribute to their own HSA accounts. The maximum combined HSA contribution by husband and wife is $6,550, to be divided between them by agreement.

Example 4: Husband and wife are enrolled in the IU HDHP PPO & HSA with a $2,500 deductible. Husband has no other coverage. Wife also has family coverage with a $200 deductible. Husband and wife are treated as having family coverage with the lowest annual deductible ($200). The $200 deductible does not meet the IRS requirement of a minimum annual deductible of $2,500 for ‘family’ coverage.  Thus, neither husband nor wife is an eligible individual and neither may contribute to an HSA. 

Example 5:  Husband and wife are enrolled in the HDHP PPO & HSA with a $2,500 deductible. Husband has no other coverage. Wife is also enrolled in Medicare. Wife is not an eligible individual and cannot contribute to an HSA. Husband may contribute $6,550 to an HSA.

What if I am only eligible part of the year?

If this is your first year of coverage under a HDHP and you start mid-year, you can contribute up to the full applicable federal limit; including a full catch-up amount if between ages 55–65, so long as you start your HDHP coverage no later than December 1 of that year. In this case; however, you will be subject to a testing period. The testing period requires that you maintain HSA eligibility for a period beginning on December 1 of the year you started and ending on December 31 of the next year.

If this is not your first year of the HSA and you stop your HSA eligibility mid-year, you are only allowed to contribute 1/12 of the applicable federal limit times the number of months you were eligible.

I am currently on COBRA continuation coverage; can I elect the HDHP PPO & HSA during open enrollment?

Yes, you may elect the Plan. However Indiana University will not make a contribution or open a Health Savings Account for you. If you choose to open an HSA, you will be entirely responsible for opening the account and all associated fees.

I am currently enrolled in the HDHP PPO & HSA, but plan to leave the university. Can I continue the HDHP PPO & HSA after I have separated from the university?

Yes, you may retain enrollment in the plan for up to 18 months through COBRA continuation coverage. The University will no longer make contributions to your Health Savings Account via pre-tax payroll deductions, but as long as you are enrolled in a HDHP, you are still allowed to put contributions into your Health Savings Account up to the IRS allowed maximum. Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.  

Can I use the money in my HSA to pay for health care for a family member?

Yes, you may use your HSA funds to pay for the qualified health expenses of you, your spouse* or a dependent without tax penalty even if they are covered under another health plan. 

*  A spouse means one by marriage, either opposite-sex or same-sex, legally entered into in one of the 50 states, the district of Columbia, or a U.S. Territory or a foreign county.  Spouses qualify for preferential federal tax treatment of health care benefits, but may not qualify for preferential state tax treatment depending on their state of residency.  In order to correctly apply state taxes, a same-sex spouse must be registered with the University.

While Domestic partners and their children are eligible for IU-sponsored health care plan coverage, registered domestic partnerships, civil unions or similar formal relationships recognized under state law are not recognized by the IRS for preferential tax treatment.  HSA funds cannot be used for the domestic partner's health expenses unless they qualify as the employee's tax dependent or spouse.

Who qualifies as a dependent?

A person generally qualifies as your dependent for HSA purposes if you claim them as an exemption on your Federal tax return.  Please see IRS Publication 502 for exceptions.

TSB Accounts

Download a PDF comparing the TSB-HealthCare Flex Plan Account and the HSA plans.

The University offers the TSB HealthCare Flex Plan account. Can I have both the TSB and an HSA?

Yes. However, when you enroll in HSA, Nyhart will administer your TSB as a “limited purpose” account. You can have a TSB account, but you cannot use the account to pay expenses that apply to your HDHP deductible.

You can use the TSB to pay for “limited” expenses: dental and vision and “post-deductible” medical expenses (expenses after the HDHP plan deductible is met).  Nyhart will administer your TSB as a limited account until you substantiate that you have met the deductible, after which time you can use the TSB to pay for medical expenses. The TSB debit card will continue to be available for point-of-sale transactions for dental and vision expenses only.  All medical and prescription expenses will need to be submitted as a claim for reimbursement.

Please adjust for this limitation when deciding your pledge for the year.

If both myself and my spouse work for IU, can I have the HSA and my spouse have the TSB Account?

No. If your spouse is enrolled in the TSB HealthCare Flex Plan account through IU or another employer, you are not eligible to contribute to an HSA.

What happens if I have money left in my TSB at the end of the plan year? Can I use the remaining balance during the grace period for medical expenses if I am enrolled in the HDHP PPO &HSA?

Due to IRS regulations, any money left in your TSB HealthCare Flex Plan account at the end of the calendar year is considered ‘other health coverage’ and has implications for your participation in the HSA.

In order to allow you to contribute to your HSA, your TSB account will become a “limited purpose” account during the grace period.  Only dental and vision expenses can continue to be incurred and reimbursed throughout the grace period.  All medical and prescription expenses will need to be submitted for reimbursement to Nyhart before December 31st of that calendar year. 

Can an employee use both the TSB HealthFlex Plan account and the Health Savings Account?

Yes, but it may or may not be advantageous:

    Using the TSB may allow you to maximize retirement savings by keeping money in your Health Savings Account where it earns interest/investment earnings

    The TSB has the advantage of being available on January 1 to budget for dental and vision expenses

    If you currently use the entire $2,500 in the TSB, you may potentially increase your savings by using both

Download a PDF comparing the TSB-HealthCare Flex Plan Account and the HSA plans.

Health Savings Accounts Contributions

How much does IU Contribute to my Health Savings Account?

For 2014, IU contributes $1,250 for those enrolled in employee-only coverage or $2,500 when one or more family members are covered.  The contribution is made as one deposit into the employee’s HSA account

When does IU make its contribution to my Health Savings Account?

For employees who elect the HSA plan during Open Enrollment, IU makes its annual contribution to your HSA account on the second paycheck in the month of January.  For 2014 that is January 17th for Bi-Weekly paid employees and January 31st for Monthly paid employees.

For new-hires, hired prior to September 1st, IU’s contribution is usually made with the first payroll after date of hire.  However, the timing is dependent on when the new-hire benefit elections are made and if elections are made prior to payroll deadlines.

Note:  Access to those contributions is dependent on when the HSA account has been established with JPMorgan Chase.

For new-hires hired on or after September 1st, no IU Contribution will be made for that calendar year.

How do I contribute to my Health Savings Account?

Your contributions are made through payroll deductions spread out equally over your payperiods (assuming a 12 month pay schedule). When you enroll in the HDHP PPO & HSA, you will have the opportunity to designate an annual amount between the minimum contribution of $300 up to the IRS statutory maximums: $3,300 when enrolled in employee-only coverage and $6,550 when one or more family members are included.  Catch-up contributions of $1,000 annually are also an option for those who are age 55 and older. The IRS contribution maximums include both the IU contribution and the employee's contribution.

When you leave the university, contact a tax advisor to learn if and how you can continue to contribute.

Can I contribute a lump sum amount to my HSA?

Yes and No.  The payroll system is not able to accommodate one-time lump sum deductions for the HSA contribution.  Any amount elected for the HSA will automatically be designated as an annual amount to be taken from paychecks over the course of the year.

However, you can make contributions to your HSA from sources outside of payroll.  You can transfer money from a personal account directly to your HSA; you can send a check to Chase along with the appropriate deposit form; or you can go to any Chase ATM and make a deposit.  Additional fees apply if you conduct transactions with a teller in a branch location. Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.

You are responsible for tracking your contributions to ensure you don't exceed the IRS annual contribution limits.

How do I change the contribution amount taken from my paychecks?

Complete the HSA Contribution Change form (PDF) and return the completed form to University Human Resource Services, ATTN: Records, Populars E165, 400 E. 7th Street, Bloomington, IN 47405, or scan and email to , or fax to 812-855-3409.

The contribution deducted from each remaining 2014 pay period will be automatically computed by the payroll system. The computation will take into account your new ANNUAL contribution request, subtract what you've already contributed, then divide by the number of remaining pay periods (assuming twelve months of pay periods). The number of remaining pay periods is determined by when the form is received and processing is completed. Pay calculations close approximately one week before pay is issued; forms received after a pay period closing are not processed until the following pay period.

You may not reduce your annual amount below what you have contributed to date as refunds are not an option. The annual contribution must be an amount between the minimum and maximum amounts.

Electronic signatures are accepted on this form.

Can I make contributions to my HSA outside of payroll deductions?

Yes, you can transfer money from a personal account directly to your HSA; you can send a check to Chase along with the appropriate deposit form; or you can go to any Chase ATM and make a deposit.  Additional fees apply if you conduct transactions with a teller in a branch location.

Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.

You are responsible for tracking your contributions to ensure you don't exceed the IRS annual contribution limits.

Do IRS maximum contributions include the university's contribution?

Yes, The IRS maximums are the combined total of IU contributions and the employee's contributions to their HSA account.

Example: Employee elects 'Employee Only Coverage.' The IRS maximum for the 2014 year for employee only coverage is $3,300. IU contributes $1,250 to the HSA account. The employee is then eligible to contribute up to $2,050 before reaching the IRS maximum. ($3,300 = $1,250 + $2,050)

What is the maximum contribution I can make to my Health Savings Account?

The amount you can contribute to an HSA is set by federal regulations and is adjusted annually for inflation. For the 2014 tax year, the maximum annual contribution amount is $3,300 if you have employee-only coverage, and $6,550 if you cover one or more family members. If you're 55 or older, you can also make an additional $1,000 “catch-up” contribution to your HSA.

The IRS maximums are the combined total of IU contributions, employee's contributions to their HSA account, spouse’s contributions to their own HSA (if applicable), and contributions made to an Archer MSA (if applicable). 

Example: Employee elects 'Employee Only Coverage.' The IRS maximum for the 2014 year for employee only coverage is $3,300. IU contributes $1,250 to the HSA account. The employee is then eligible to contribute up to $2,050 before reaching the IRS maximum. ($3,300 = $1,250 + $2,050)

The maximums can be further affected by the number of months you are covered under an HDHP. Examples:

  1. If your HDHP was effective January 1st, and you maintain HDHP coverage for the entire plan year, the total amount you can contribute to your account is the full maximum contribution amount set by the IRS ($3,300 for employee-only or $6,550 for family coverage).
  2. If your HDHP coverage begins midyear, you may make a full year’s contribution to your HSA as long as you maintain your HDHP enrollment for 12 months.
  3. If your HDHP coverage ends, and is not continued through COBRA or through another employer’s HDHP plan, your maximum contribution amount is pro-rated based on the number of months your HDHP was in effect.

Details on the calculation of the IRS prorated maximum can be found in IRS publication 969 (PDF). If your contributions have exceeded the IRS prorated maximum, you must work with the account custodian (Chase bank) to resolve the excess contribution issue.  Excess contributions not withdrawn from the Health Savings Account are subject to a 6% excise tax until withdrawn. You should be aware of the reporting requirements for excess contributions as detailed in the instructions for IRS Form 8889.

Caution: if this is your first year of HSA eligibility the amounts above may be reduced if you fail to meet a testing period. If you are an existing HSA owner, the amounts above may be reduced if you fail to maintain your eligibility for the full tax year.

Please contact your tax advisor if you have additional questions.

What happens if I contribute more than the IRS annual maximum?

You are responsible for tracking your contributions to ensure you don't exceed the IRS annual contribution limits.

If your contributions have exceeded the IRS maximum, you must work with the account custodian (Chase bank) to resolve the excess contribution issue.  Excess contributions not withdrawn from the Health Savings Account are subject to income taxes and an additional 6% excise tax until withdrawn. You should be aware of the reporting requirements for excess contributions as detailed in the instructions for IRS Form 8889.

Please contact your tax advisor if you have additional questions.

What happens if I don’t withdraw my excess contributions prior to April 15th of the following year?

You must pay a 6% excise tax on any excess contribution and on any earnings of the excess contribution. If in the next year you decreased your maximum contribution by the amount of your excess contribution made the year before, you do not have to pay the 6% excise tax again.  However, for as long as you leave the excess contribution in, you will need to pay an annual 6% excise tax on this amount and its earnings.

Please contact your tax advisor if you have additional questions.

What are catch-up contributions?

If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000.  For example, if you have employee-only coverage, you can contribute up to $4,300 for 2014 (the contribution limit for employee-only coverage ($3,300) plus the additional contribution of $1,000.)

If you are an eligible individual for only part of the year, all contributions (including the catch-up contribution) would be pro-rated based on the number of months that you are an eligible individual.  For example: you turned age 65 in July and enrolled in Medicare.  You have the HDHP coverage at the employee-only level and you are eligible for the additional catch-up contribution of $1,000.  Your contribution limit would be $2,150 for 2014 ($4,300 / 12 months x 6 months of eligibility).

If my spouse is age 55 or older, am I eligible to make the catch-up contribution?

No. HSA accounts are individual accounts, not joint accounts. The primary accountholder must be the individual who is age 55 or older in order to make the catch-up contribution. If your spouse has their own HSA and is an eligible individual, they can contribute a separate catch-up contribution to their own HSA.

Do I have to continue to fund my account each year?

Each year that you elect to participate in the HSA plan, you must make the minimum contribution of $300. You are not required to contribute to your account above the minimum.

You are not required to continue participation in the IU HDHP PPO & HSA each year.  You may change to any other plan offered by the university. Be aware, however, w hen you are not enrolled in the IU HDHP you cannot contribute to the Health Savings Account component of the plan, but you can continue to use existing funds for qualified health expenses.

What happens during the year if I have a qualified family status change?

You will be able to continue contributing to the Health Savings Account; however, the maximum amount you are permitted to contribute will be the greater of the maximum annual HSA contribution based on your HDHP coverage on the first day of the last month of your tax year or the amount that results when you prorate appropriately for the number of months you were enrolled in each coverage level.

Details on the calculation of the IRS prorated maximum can be found in IRS publication 969 (PDF).

I am age 65 and covered under an HDHP, can I still contribute to my HSA?

As long as you have not enrolled in Medicare Part A or B you are an eligible individual and may contribute to your HSA. Once you enroll in Medicare you may no longer contribute to your HSA. For most individuals this means you will no longer be eligible when you turn 65. You lose eligibility as of the first day of the month you turn 65. For example, if you turn 65 on July 21, you are no longer eligible to contribute to an HSA as of July 1. Your maximum contribution for that year would be 6/12 (you were eligible the first six months of the year) times the applicable federal limit (remember to include the catch-up amount in the federal limit).

Special Note: If you are drawing your social security benefits, your enrollment in Medicare Part A will be automatic and you will no longer be eligible to make contributions to an HSA.  But enrollment in Medicare part A is not automatic if you are just turning age 65.  You would need to take action and enroll in Medicare benefits if you want to receive that coverage. However,as long as you maintain group coverage (like on an IU medical plan) you can enroll in Medicare at a later time without penalty. If you have delayed enrollment in Medicare and are now ready to enroll, be aware that Medicare will date the effective date of Medicare Part A either back 3 months or to your 65th birthday, whichever is most recent.  That may mean your eligibility to make contributions to your HSA will be prorated for the year.

I am collecting my social security benefits and covered under an HDHP, can I still contribute to my HSA?

No. Once you begin collecting your social security benefits, the Social Security Administration will enroll you automatically in Medicare.  Once enrolled in Medicare you may no longer contribute to your HSA. You lose eligibility as of the first day of the month you are enrolled in Medicare. For example, if you enrolled in Medicare on July 21, you are no longer eligible to contribute to an HSA as of July 1. Your maximum contribution for that year would be 6/12 (you were eligible the first six months of the year) times the applicable federal limit (remember to include the catch-up amount in the federal limit).

Using Health Savings Account Funds

Am I required to track the expenditures made from my HSA?

Yes, the individual who establishes the HSA is required to maintain a record of the expenses sufficient to demonstrate that the distributions were for qualified health expenses.

Who will determine whether something is a "qualified health expense"?

The IRS will make this determination based on disbursements reported on your annual tax return. You do not submit records with your IRS return, but it is your responsibility to maintain records for all of your expenses in the event the IRS requests them. Specifically, the IRS requires that you must be able to show that:

  • The distributions were exclusively to pay or reimburse qualified health expenses,
  • The qualified health expenses had not been previously paid or reimbursed from another source, and
  • The health expenses had not been taken as an itemized deduction in any year.

After you open an HSA, you can use funds to pay for covered expenses that apply toward the HDHP annual deductible and co-insurance costs (e.g. medical services, prescriptions, mental health services, etc). You can also pay for qualified health expenses that your health plan might not cover, such as vision care (eyeglasses and contact lenses), dental and orthodontic services. Qualified health expenses also include long-term care premiums, Medicare premiums, Medicare co-pays, and COBRA premiums.  (Medigap premiums are not qualified expenses.)  Detailed information about qualified health expenses can be found in Section 213(d) of the Internal Revenue Code and IRS Publication 502. A Summary of the Eligible HSA Expenses (PDF) is also available.

When can I use my Health Savings Account funds?

You can use your funds as soon as they are deposited in the account. Remember this is different from the TSB plan, where the entire pledge is available on January 1. Health Savings Account funds only become available for use after they are deposited. 

Caution: funds can only be used for expenses incurred after the HSA was established with JPMorgan Chase.

How can I access my Health Savings Account funds?

Once contributions are made to your account, you can access your funds in several different ways:

  • Use your HSA Debit/Visa card at Retail locations Use the Chase HSA debit/Visa card at doctors' offices, pharmacies and other locations where debit/VISA cards are accepted.
  • Use your HSA to pay bills online Use the HSA account to pay for your healthcare bills online. Enroll in the Online Bill Payment feature, set up payees and schedule one-time or repeating payments. You can even set yourself up as a payee to send yourself a reimbursement.
  • Use your HSA Debit/Visa card at an ATM Immediately get cash or reimburse yourself for qualified medical expenses by using the HSA debit card at participating ATMs. No claim forms are required, but always retain the receipts for qualified medical expense transactions for tax purposes.
  • Use the Transfer feature of your HSA to reimburse yourself Use the HSA account to reimburse yourself for healthcare bills that you paid out of another account or with cash. Enroll in the Online Transfer feature, set up your transfer account and send yourself one-time or repeating payments.
  • Write a check from your HSA For an additional fee you can choose to purchase a checkbook from Chase to access the funds in your HSA.

Can I use my account funds for services I received before I enrolled in the HDHP PPO & HSA?

No.  You can only use your savings for expenses incurred after your HSA is established with Chase.

Is there a time restriction on when I may use the funds in the account?

No, you may reimburse yourself for an expense with future contributions or past contributions and there is no time limit on this. The only restriction is that the service must have occurred after the HSA account was opened (and you were enrolled in the HDHP plan).

I understand that I can reimburse myself from my HSA for qualified health expenses that I pay out-of-pocket but is there a time limit? Do I need to reimburse myself in the same year?

You have your entire lifetime to reimburse yourself. As long as you had your HSA established at the time the expense was incurred, you save the receipt and it was not otherwise reimbursed, you can reimburse yourself for the expense from your HSA even years later.

Is there a minimum reimbursement amount I can request from my Health Savings Account fund?

No.

Is there a maximum amount I can use or withdraw from my account?

You can only withdraw an amount equal to the balance in your account. Check your balance online or at the ATM prior to withdrawing funds to avoid Insufficient Funds fees. Additionally, the HSA debit card has a daily withdrawal limit of $1,000 at ATMs or for PIN-based purchases. Some ATMs may restrict the amount of a single withdrawal transaction and you may have to use the ATM more than once to reach the HSA daily limit. The daily signature-based purchase limit is $3,000 and the cash advance limit is $5,000.

Can I use my Health Savings Account fund to pay for medical services provided in other countries?

Yes.The debit cards can be used anywhere Visa is accepted. However, if you use it for cash advances internationally it will be subject to the cash advance fees and any foreign currency exchange fees.

You are responsible to verify that the expense is considered a qualified medical expense under Section 213(d) of the Internal Revenue Code and IRS Publication 502.

Can I use the money in my HSA to pay for health care for a family member?

Yes, you may withdraw funds to pay for the qualified health expenses of you, your spouse* or an IRS-qualified tax dependent without tax penalty. This is true even if they are not covered on your HDHP plan.

Please note that the healthcare reform law has made it possible for parents to keep children up to age 26 on their health plans if they have no other coverage – even those who are married and living away from home. However, HSA funds can only be spent on family members who qualify as true tax dependents.

* A spouse means one by marriage, either opposite-sex or same-sex, legally entered into in one of the 50 states, the District of Columbia, or a U.S. territory or a foreign country.  Spouses qualify for preferential federal tax treatment of health care benefits, but may not qualify for preferential state tax treatment depending on their state of residency.  In order to correctly apply state taxes, a same-sex spouse must be registered with the University.

While Domestic partners and their children are eligible for IU-sponsored health care plan coverage, registered domestic partnerships, civil unions or similar formal relationships recognized under state law are not recognized by the IRS for preferential tax treatment.  HSA funds cannot be used for the domestic partner's health expenses unless they qualify as the employee's tax dependent or spouse. 

What if my health expenses are more than my Health Savings Account balance?

You will have to pay, out-of-pocket, the difference between your expenses and your Health Savings Account balance. Check your balance online or at the ATM prior to withdrawing funds to avoid Insufficient Funds fees.   As additional funds are deposited into your HSA account you can then reimburse yourself for those prior expenses.

What happens if I cancel my high deductible health plan (HDHP)?

When your HDHP coverage ends, you are no longer eligible to make Health Savings Account contributions. However, the money in your HSA is yours until you spend it*.  As a result, you may keep your HSA with Chase and continue to use the funds to pay for qualified expenses. When you are no longer an active employee on the IU HDHP plan, you will then be responsible for the HSA account maintenance fees (see Fee Schedule (PDF)).

If you are eligible again, i.e., enrolled in a HDHP, you may make additional contributions to your HSA.  Please remember that you are responsible for tracking your personal contribution limit (including coordination of contributions should your spouse also contribute to an HSA) and contact your tax advisor if you have additional questions about your specific situation.

*Note, if you term your HDHP coverage during a tax year, your maximum contribution for that year is prorated based on the number of months that you were enrolled in an HDHP plan.  

What are my options if I withdraw my money from my Health Savings Account in error?

You can return the money to the account if there is clear and convincing evidence that the withdrawal was a mistake. You can contact JPMorgan Chase and request a Return of Mistaken Distribution form. This money must be repaid by April 15th of the year following the error. There is fee for this service.

I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for health expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified health expenses incurred after the account was opened. These expenditures are tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds except that you cannot use the funds for expenses incurred before the HSA was opened.

What happens to the money in the Health Savings Account fund after I turn age 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, co-pays, and co-insurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or "Medigap" policy. IU's Blue Retiree Plan is not a Medigap policy and thus the HSA funds can be used to reimburse yourself for those premiums.

Once you turn age 65 you can also use your account to pay for things other than qualified health expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-health expenses must pay income tax and a 20% penalty on the amount withdrawn.

Can I borrow against the money in my HSA?

No. You may not borrow against it or pledge the funds in it. For more information on prohibited activities, see Section 4975 of the Internal Revenue Code.

 
Health Savings Account Recordkeeping

What kind of records do I need to keep?

You must keep records sufficient to show that:

  • The distributions were exclusively to pay or reimburse qualified health expenses,
  • The qualified health expenses had not been previously paid or reimbursed from another source, and
  • The health expenses had not been taken as an itemized deduction in any year.

Do not send these records with your tax return.  Keep them with your tax records.

What if my health expenses are more than my Health Savings Account balance?

You will have to pay, out-of-pocket, the difference between your expenses and your Health Savings Account balance. Check your balance online or at the ATM prior to withdrawing funds to avoid Insufficient Funds fees. As additional funds are deposited into your HSA account you can then reimburse yourself for those prior expenses. 

What are my options if I withdraw my money from my Health Savings Account in error?

You can return the money to the account if there is clear and convincing evidence that the withdrawal was a mistake. You can contact JPMorgan Chase and request a Return of Mistaken Distribution form. This money must be repaid by April 15th of the year following the error. There is a fee for this service.

Do I have to keep receipts showing what I withdrew from my account?

Yes, you should keep your receipts. If you exceed your deductible, you may need the receipts to send to Anthem for reimbursement. If you are audited by the IRS, you will need to justify your expenditures.

Do I need to file claims with an HSA?

No. You pay qualified expenses using your HSA debit card or HSA check. If you use another form of payment (e.g., cash or a personal check), then you can reimburse yourself by getting money from an ATM or transferring funds online. If requested by the IRS, you must be able to show that the withdrawals were exclusively for health expenses.

Who will keep track of when I have hit the deductible and am eligible to pay medical expenses out of my TSB?

Anthem tracks your deductible. You will need to monitor the Explanation of Benefits (EOB) statements sent by Anthem after every medical transaction. This statement will list the cumulative charges applied towards your annual deductible. Once you meet the deductible ($1,250 for single coverage and $2,500 when one or more family members are covered) you will need to send this statement to Nyhart as proof that you have satisfied the deductible. After Nyhart receives this information from you, they will allow payment of medical expenses out of your TSB. The TSB debit card will continue to be available for point-of-sale transactions for dental and vision only.  All medical and prescription expenses will need to be submitted as a claim for reimbursement.

How can I keep track of my account balance?

You can track your HSA account activity online at Chase’s secure Web site anytime day or night.  Information on how to access this site will be made available in the welcome packet sent to you after enrollment in the plan.   You can check your account balance, look at transaction activity or download account statements.  You can also setup the Online Account Alerts service to automatically notify you when certain activities occur. Additionally, you can contact Chase HSA Member Services at 1-866-566-7101 anytime, 24 hours a day, 7 days a week.

It is your responsibility to review your account on a periodic basis.  Contact Chase HSA Member Services immediately if you notice any discrepancies in your account activity.

What happens if I lose my debit card?

Call Chase HSA Member Services immediately at 1-866-524-2562.  A replacement card fee may apply.

What do I do if I forget my PIN?

Go online to www.chasehsa.com, login and reset your PIN or contact Chase HSA Member Services at 1-866-566-7101 for additional assistance.

What happens if I incur bank fees (e.g. insufficient funds fee, checkbook fee, non-Chase ATM withdrawal fee)?

Amounts withdrawn from an HSA for administration and account maintenance are not treated as a taxable distribution and will not be included in the HSA owner’s gross income. Chase will report amounts withdrawn from the HSA to pay HSA administration and account maintenance fees on Form 5498-SA in the fair market value (FMV) of the HSA at the end of the taxable year.

Tax Implications

Will Chase ask me to substantiate that my withdrawals are for health expenses?

No. Chase will send you and the IRS a 1099-SA form at the end of the tax year to report distributions from your account and form 5498-SA in May to report contributions made to your account. You will file form 8889 with your 1040 federal tax filing. If the IRS requests substantiation, you must provide it or pay taxes and penalties on unsubstantiated withdrawals.  Specifically the IRS requires that you must be able to show that:

  • The distributions were exclusively to pay or reimburse qualified health expenses,
  • The qualified health expenses had not been previously paid or reimbursed from another source, and
  • The health expenses had not been taken as an itemized deduction in any year.

Can I use my Health Savings Account to pay for non-health related expenses?

The HSA is designed to provide tax-free contributionsto be made and used only for qualified health expenses.

If you are age 64 or younger, you can use the account for non-qualified purposes, however, IRS regulations stipulate that these withdrawals will be subject to income tax and an additional 20% tax penalty will apply.

If you are age 65 or older, you can use the funds in your HSA account for non-qualified purposes without penalty but would be responsible for paying income taxes on the amount used.

How does the HSA affect my taxes?

Contributions may be made either directly by you to your HSA or by payroll deduction. Either way, your contributions are not subject to federal income tax, FICA (Social Security and Medicare) tax and for most states, state income tax. If you make your contributions through payroll deductions, the amount is taken from your payroll before taxes are calculated. If you make deposits directly to your account you may take an above the line deduction when filing your annual tax return. "Above the line" means you reduce your taxable income regardless of whether you itemize or use the standard deduction on your income tax form. You may deduct the contribution amount, subject to the maximum annual contribution limits from your taxes, at filing time.

Is tax reporting required for an HSA?

Yes. IRS form 8889 must be completed with your tax return each year to report total deposits and withdrawals from your account.

You do not have to itemize to complete this form.

 

Do I need to itemize on my tax return? What does the IRS require me to report on my taxes?

No, you will not need to itemize on your return.  However, the IRS requires that you complete and submit the Form 8889 with your tax return. On this form you will report all employer contributions to the account (including your contributions made by payroll deduction).  In addition, you will report your qualified distributions.  Please contact your tax advisor to discuss your specific situation.

Income Tax Filing

When you file your federal income tax return, you have to include your HSA information. You should use IRS Form 8889 to report your HSA contributions (including those made on your behalf, and IU's contributions). It should also be used to report any distributions from your HSA. You will need to file this form with your Form 1040 or Form 1040 NR.

To assist you, you will receive a W-2 statement from the University, a Form 1099-SA and Form 5498-SA from JP Morgan Chase. For advice about tax matters consult your personal tax advisor or the IRS help line at 1-800-TAX-1040 (800-829-1040).

What is Form 1099-SA?

This form is used to report all withdrawals (distributions) from the HSA to the Internal Revenue Service (IRS). Chase files a copy electronically with the IRS and sends you a statement copy for your records. Chase mails this form to account holders in January for the prior year if you have elected to receive mailings from Chase. You can also access your tax statements on-line.  Go to www.chasehsa.com, log into your HSA and select the Statements tab.

What is Form 5498-SA?

This form is used to report all contributions made to the HSA in a given tax year to the Internal Revenue Service (IRS). Chase files a copy electronically with the IRS and sends you a statement copy for your records. Chase mails this form to account holders in May for the prior year if you have elected to receive mailings from Chase. To help you when filing your annual taxes, you can find your annual contribution details online.  Under the Transactions tab, go to the YTD Tax Year Summary.  You can also find this detail in your Year End Summary statement.  Go to www.chasehsa.com to access your information online.

My HSA deduction is shown in Box 12 of my W-2 as Code W.  Why is it designated as an employer contribution when I have contributed the money to the account?

Consistent with applicable IRS guidelines, HSA deductions reported on your W-2 in Box 12 includes contributions made by the employer and employee contributions made through a section 125 cafeteria plan as a pre-tax salary deferral.  When you prepare your taxes at year-end, you are required to complete an addition tax form.  Form 8889 and instructions are available at www.irs.gov.  You will report the figure in Box 12 on line 9 of Form 8889 (as of 2013).

Can I use the money in my HSA to pay for health care for a family member?

Yes, you may withdraw funds to pay for the qualified health expenses of you, your spouse or a dependent without tax penalty. 

I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for health expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified health expenses incurred after the account was opened. These expenditures are tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds except that you cannot use the funds for expenses incurred before the HSA was opened.

What happens to the money in the Health Savings Account fund after I turn age 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, co-pays, and co-insurance under any part of Medicare.  If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums.  The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or “Medigap” policy.

Once you turn age 65 you can also use your account to pay for things other than qualified health expenses.  If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties.  Individuals under age 65 who use their accounts for non-health expenses must pay income tax and a 20% penalty on the amount withdrawn.

Can I borrow against the money in my HSA?

No. You may not borrow against it or pledge the funds in it. For more information on prohibited activities, see Section 4975 of the Internal Revenue Code.

Is there a time restriction on when I may use the funds in the account?

No, you may reimburse yourself for an expense with future contributions or past contributions and there is no time limit on this.  The only restriction is that the service must have occurred after the HSA account was opened (and you were enrolled in the HDHP plan).

Investment Options

When can I begin making investments?

You will need to have an HSA Cash Account balance of at least $1,000 to open an HSA Investment Account, as your initial investment must be $1,000 or more.

Are there any fees associated with the Investment Account?

While you are an active employee on IU's HDHP plan, the university will pay the account maintenance fee for the investment account.

Mutual fund investment selections are offered without front-end or back-end loads, however some funds have fees for early redemption. There is a $10.00 transaction fee per call for mutual fund trades and Automatic Investing requests that you place with a registered representative over the telephone. There are no fees for fund trades done online.

What investment options are available?

Choose from a wide range of JPMorgan and American Century mutual funds. Your investment choices include a variety of funds - asset allocation, fixed income and equity mutual funds – all supporting a range of investment objectives and time horizons. You can review the full list of investment choices online or request an investment guide by contacting a Chase customer service representative.

How do I invest in mutual funds?

You can purchase, exchange and redeem mutual funds on the Chase HSA Member website. There is no trading fee. You can also contact Chase's dedicated registered representatives to place a trade. However, a fee will apply for trades placed by phone.

How do I direct where my initial transfer is invested? Can I direct future transfers to investments?

The initial $1,000 transfer will be directed to the JPMorgan Prime Money Market Fund and can be re-allocated to any of the available mutual funds you choose the business day after the Investment Account is open. After the initial transfer is made, you can establish elections so that future transfers to investments are distributed to your selected funds.

How long does it take to transfer funds or make a trade?

All transfers and trades requested and accepted before 3:30 PM Eastern time during normal trading days will be processed at the close of that day. The transfers will be posted to your account the next business day.

Can I make deposits directly into my HSA Investment Account?

No, you can only make deposits to the HSA Cash Account. Once funds are available in the HSA Cash Account, you can transfer funds to the Investment Account on the Chase HSA Member Website.

Can funds in my HSA Investment Account be used to pay for eligible health expenses?

If you want to use HSA Investment Account assets to pay for health expenses, you must first redeem mutual funds and transfer the required balance to the HSA Cash Account. HSA Investment Account funds cannot be accessed using a debit card or check.

How often will statements and transaction confirmations be provided?

You will receive a monthly on-line statement for your HSA Investment Account. If you would like paper statements, you may order them through Chase for a monthly fee. When there is transaction activity, you will also receive a trade confirmation.

How do I manage my HSA investment account balances?

You can manage your investment account on the Chase HSA Member Website which provides access to investment balances and investment activity. You can also contact one of their registered representatives.

Are my investments protected against loss?

No, an investment in a mutual fund is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing. Investors should carefully consider the investment objectives, risks, charges and expenses of the fund. Please carefully read the prospectus, which contains this and other important information before you invest money.

Get more information about the Investment Service by clicking on the Investments tab on the HSA accountholder website or by contacting a JP Morgan Institutional Investments Inc. registered representative at 1-866-774-7129.

Leaving the University

What if I don’t use all my contributions before I leave the university?

When leaving the university, you take the money with you, and:

  • Continue to use the money tax-free for qualified health expenses, or
  • pay taxes and IRS penalties for other expenses (If you are over age 65, you pay taxes, but have no penalty)

What happens to my account funds if I leave my job or switch to a non-HDHP plan?

When your HDHP coverage ends, you are no longer eligible to make Health Savings Account contributions. However, the money in your HSA is yours until you spend it*.  As a result, you may keep your HSA with Chase and continue to use the funds to pay for qualified expenses. When you are no longer an active employee on the IU HDHP plan, you will then be responsible for the HSA account maintenance fees (see Fee Schedule (PDF)).

If you become eligible again, i.e., enrolled in a HDHP, you may make additional contributions to your HSA.  Please remember that you are responsible for tracking your personal contribution limit (including coordination of contributions should your spouse also contribute to an HSA) and contact your tax advisor if you have additional questions about your specific situation.

*Note, if you term your HDHP coverage during a tax year, your maximum contribution for that year is prorated based on the number of months that you were enrolled in an HDHP plan.

What is the maximum contribution I can make to my Health Savings Account?

The amount you can contribute to an HSA is set by federal regulations and is adjusted annually for inflation. For the 2014 tax year, the maximum annual contribution amount is $3,300 if you have employee-only coverage, and $6,550 if you cover one or more family members. If you're 55 or older, you can also make an additional $1,000 "catch-up" contribution to your HSA.

The IRS maximums are the combined total of IU contributions, employee's contributions to their HSA account, spouse's contributions to their own HSA (if applicable), and contributions made to an Archer MSA (if applicable).

Example: Employee elects 'Employee Only Coverage.' The IRS maximum for the 2014 year for employee only coverage is $3,300. IU contributes $1,250 to the HSA account. The employee is then eligible to contribute up to $2,050 before reaching the IRS maximum. ($3,300 = $1,250 + $2,050)

The maximums can be further affected by the number of months you are covered under an HDHP.

Examples:

  1. If your HDHP was effective January 1st, and you maintain HDHP coverage for the entire plan year, the total amount you can contribute to your account is the full maximum contribution amount set by the IRS ($3,300 for employee-only or $6,550 for family coverage).
  2. If your HDHP coverage begins midyear, you may make a full year's contribution to your HSA as long as you maintain your HDHP enrollment for 12 months.
  3. If your HDHP coverage ends, and is not continued through COBRA or through another employer's HDHP plan, your maximum contribution amount is pro-rated based on the number of months your HDHP was in effect.

Details on the calculation of the IRS prorated maximum can be found in IRS publication 969. If your contributions have exceeded the IRS prorated maximum, you must work with the account custodian (Chase bank) to resolve the excess contribution issue. Excess contributions not withdrawn from the Health Savings Account are subject to a 6% excise tax until withdrawn. You should be aware of the reporting requirements for excess contributions as detailed in the instructions for IRS Form 8889.

Caution: if this is your first year of HSA eligibility the amounts above may be reduced if you fail to meet a testing period. If you are an existing HSA owner, the amounts above may be reduced if you fail to maintain your eligibility for the full tax year.

Please contact your tax advisor if you have additional questions.

I am currently enrolled in the HDHP PPO & HSA, but plan to leave the university. Can I continue the HDHP PPO & HSA after I have separated from the university?

Yes, you may retain enrollment in the plan for up to 18 months through COBRA continuation coverage. The University will no longer make contributions to your Health Savings Account via pre-tax payroll deductions, but as long as you are enrolled in a HDHP, you are still allowed to put contributions into your Health Savings Account up to the IRS allowed maximum. Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.

I am currently on COBRA continuation coverage; can I elect the HDHP PPO & HSA during open enrollment?

Yes, you may elect the Plan. However Indiana University will not make a contribution or open a Health Savings Account for you. If you choose to open an HSA, you will be entirely responsible for opening the account and all associated fees.

What are the fees?

Indiana University will pay the basic monthly account maintenance fees as long as you are an active employee on the IU HDHP PPO and HSA plans. The basic fee covers online account reporting, two debit/VISA cards, and the monthly investment account maintenance fee.

When you separate from the university or switch to a different IU medical plan, you will be responsible for all account fees (currently $2.50/month for the Chase HSA Cash Account and $2.50/month for the Chase HSA Investment Account). There are no transaction fees for using the card at an ATM or point of sale. However, additional fees do apply for things like insufficient funds, additional cards, checks, etc. A complete fee schedule (PDF) is available.

 

Page updated: 17 January 2014
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