Department of Management Services

Health Savings Account

What is an HSA?

A Health Savings Account (HSA) is an account associated with the high deductible HMO and PPO plans that allow you to use pretax dollars to pay your share of the cost for eligible medical, prescription, dental or vision care services not covered by your insurance plans. When you are eligible for an HSA and have completed the appropriate steps, the state contributes money to your account; you may also add your own pretax contributions to your HSA. The HSA differs from an FSA in three ways:

  • You must be in a high deductible HMO or PPO plan to contribute to an HSA.
  • Any unused HSA funds at the end of a year carry forward to the next year; you may also take unused HSA balances with you if you stop working for the state.

How the Health Savings Account Works

An HSA is like a personal savings account for healthcare, except it's all tax-free. Here's how it works if you enroll in a high deductible health plan (HDHP) and participate in an HSA for the entire calendar year: 

HSA Contribution Limits for 2018
  State Contributes Employee can add: Total Contributions
(from state and you)
Individual Coverage (employee only) up to $500/year up to $2,900/year tax-free up to $3,400/year
Family Coverage (employee + dependents) up to $1,000/year up to $5,900/year tax-free up to $6,900/year

  

  1. Pay for expenses while meeting deductible
  2. Pay coinsurance
  3. Pay for other healthcare like dental and vision not covered by HSA or other plans
  4. Save for future healthcare costs - next year or longer-term

Be sure to review the Chard Snyder Benefit Card page and frequently asked questions (Adobe PDF Document 160.91 KB) 

  

HSA Enrollment Required

When you sign up for a high deductible PPO or HMO, your new HSA Advantage™ account will be automatically opened for you. If additional information is needed during this process, Chard Snyder will contact you. Your account must be open before you can deposit or access money.

Contribute More - If You're 55 or Older

Federal rules allow "catch-up" contributions to a Health Savings Account - up to an extra $1,000 if you are 55+ or you will turn 55 any time during the plan year.

  

How much can I reduce my taxes using an HSA?

Money you set aside in the HSA is taken off the top of your pay before taxes. If you pay federal income tax and Social Security tax, this creates at least a 20% savings on most of the healthcare services you buy. The savings could be more - depending on your income tax rate. Even when you pay no income taxes, the Social Security tax savings is about 7.5% — or $7.50 for each $100 you spend.

  

More about Health Savings Accounts

If you enroll in an HDHP:

  • The state will make its tax-free contribution during the year on a monthly basis; you can do the same but you aren’t required to contribute. You decide what to contribute during Open Enrollment and can change the amount during the year.
  • You will receive a Benny® prepaid debit card you can use to draw on your account at any time for eligible expenses, up to the amount in your account at the time. You decide how and when to use available HSA funds.
  • You don't have to worry about "use it or lose it" rules because unused HSA account balances "carry forward".
  • Even if you change health options in the future, you can still use the money in your HSA. You won’t be able to make additional contributions, but you can use the account to cover eligible expenses.
  • Your account balance is yours if you leave your state job, and you can continue to use it tax-free for healthcare expenses or roll it over to another HSA.

As long as you use the money in your account for healthcare expenses the IRS considers tax-deductible, the money is tax-free. See IRS Publication 502 (Adobe PDF Document) for more information on eligible healthcare expenses.

  

Health Savings Accounts (HSAs) - Special Eligibility Rules

Employees who enroll in a high deductible PPO or HMO may open an HSA through the state plan as long as they or their covered dependents do not have:

  • Any other health insurance coverage, including through a spouse's employer or Medicare Part A or Part B.
  • A healthcare flexible spending account that covers medical expenses.

You may participate in an HSA if you have a limited purpose FSA or enroll in the supplemental cancer, hospital or intensive care policies available to you as a state employee.

See Enrollment for additional information.