CSEBO HSA Overview SANTA PAULA UNIFIED SCHOOL DISTRICT AUGUST 23, 2016
2 HSA Basics
3 Two Parts: Health Plan + Savings Account Tax-free savings for medical expenses HSA-qualified plan through CSEBO Works in conjunction with the HSA Office visits, prescriptions, deductibles, powered plan copays and coinsurance ALL count towards the Out of Pocket Maximum Different bank vendors depending on the carrier Preventive services covered at 100%
4 What is considered an HSA-qualified plan? Defined by the IRS 2017: Minimum Deductible: Single: $1,300 Family: $2,600 Maximum Deductible/Out-of-Pocket Maximum Single: $6,550 Family: $13,100
5 Choose your preferred network Lumenos HSA 709 DHMO HSA #7590
6 Why choose an HSA? Save now: HSA’s have lower premiums over traditional plans to decrease your monthly contributions HSA deposits are not taxed on the federal level However, you will pay California state taxes Save for the future: HSA funds roll over year to year You keep the money even if you change jobs or insurance plans Interest is earned tax-free Comprehensive and easy investment options Same doctors, same network, same pricing
7 NOT use it or lose it
8 Funds roll over every year Accounts grow over time as your unused funds roll over from year to year and earn tax-free interest and/or investment income
9 You own the account permanently Even if you leave SPUSD, change health plans or retire, HSA funds remain yours You can move funds to the HSA vendor of your choice (administration fees may apply)
10 Triple tax benefit Like an IRA or 401(k). An HSA is tax-free rather than tax- deferred. 1. Contributions are tax deductible 2. Earnings/Growth are 100% tax free 3. Withdrawals for qualified medical expenses are tax free
11 HSA Participation and Contributions
12 Eligible individuals Being eligible means that a person is able to make contributions into a health savings account.
13 Who is eligible? 1. Cannot be 2. Must have an claimed as a HSA-qualified 3. Must not have dependent health plan other coverage Cannot be claimed as a As defined by the IRS. Includes: Medicare, dependent on somebody Medicaid, Full purpose else’s taxes. FSA (including through a spouse) and other insurance coverage.
14 Permitted insurance coverage Accident Dental Vision Specified Disease Coverage Hospital indemnity if it pays a fixed cost per day, per admission, or other period Long Term Care Disability Worksite employee assistance programs (Optum)
15 Eligible for entire calendar year If an individual is eligible for the 2016 entire calendar year, January – Individual: $3,350 December (same as the IRS tax Family: $6,750 year), then he/she may contribute the full contribution maximum 2017 depending on his/her age and Individual: $3,400 coverage type Family: $6,750 If 55 and over can contribute an additional $1,000
16 How to contribute to your HSA Make pre-tax contributions through payroll deductions Payroll contributions can be changed at any time (please contact your District Administrator for more information) Make post-tax contributions directly to your HSA banking vendor Fully fund your HSA on day one (assuming you are eligible) Make contributions anytime after your HSA is open Can make contributions up until April 15 th for the previous tax year
17 How much should you contribute? Participants should do their best to plan their payroll contributions according to their medical spending needs and history. Best case scenario is to contribute the annual maximum per year. It is advised that you contribute at least an amount equal to your medical deductible Anthem: Single: $2,600 Family: $5,200 Kaiser: Single: $1,500 Family: $3,000
18 Who can contribute? You, the account holder Employers Please note, SPUSD is not contributing to HSA’s at this time Family members For example, parents may want to help their children that have recently graduated from college and are now on their own to fund their HSA accounts, assuming they are no longer being claimed as dependents on a parent’s tax return In this scenario, the son or daughter receives the tax deduction on their income taxes.
19 Flexible Spending Accounts & HSA’s
20 FSA & HSA interaction The SPUSD American Fidelity FSA runs on the same plan year as medical, October 1 st through September 30 th Using your FSA for medical, dental and vision expenses is considered “full - purpose” If you currently have an FSA, it would be considered full-purpose An FSA used for strictly dental and vision expenses is considered “limited - purpose” In order to contribute into the HSA, you must have a limited-purpose FSA
21 When can I contribute into the HSA if I have an FSA? If you have a $0 balance in your FSA as of September 30 th , you are eligible to contribute into your HSA starting October 1 st If you have a remaining balance with your FSA as of September 30 th , your plan requires a 70- day “grace period” to switch to a limited-purpose FSA In this scenario, you would be eligible to contribute starting January 1, 2017 Please refer to your plan documents and FSA administrator for more information (800) 325-0654
22 HSA Recordkeeping, Taxes & Penalties
23 Qualified HSA expenses Medical Dental Vision Broad set of expenses Any treatments that are Eye exams, copays, eye defined by the IRS, from preventive or diagnostic in surgery, etc. office visits to nature. prescriptions. https://www.irs.gov/publications/p502/ar02.html#en_US_2015_publink1000178885
24 OTC drugs no longer eligible As of January 1, 2011, over-the-counter medications and medical supplies are no longer a qualified HSA expense unless you have a prescription .
25 Adult children – age 26 rule Children who will not have reached age 26 by the end of the calendar year can be covered on their parents’ health plan even if: Not a full-time student Not living at home Not a tax dependent Married If the child is not a tax dependent, the parents cannot use their HSA money to pay for the adult child’s expenses. The adult child is an eligible individual with family HDHP coverage, so he/she can set up his/her own HSA and contribute the full family amount His/her parents can still contribute the family amount to their HSA. Remember. the adult child would get the tax deduction.
26 Domestic partners Domestic partners may be covered by one HSA-qualified family policy, but they would not be eligible for reimbursement out of each other’s accounts unless they meet the IRS definition of a “qualifying relative.” It is preferable for domestic partners to have separate HSA accounts to avoid a problem with reimbursement. If the domestic partner does not meet the definition of a “qualifying relative”, each spouse can set up his or her own account and contribute the full family amount since they have family HDHP coverage. https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220939
27 Taxes + 20% penalty HSA funds spent on ineligible expenses must be reported as income and are subject to an additional 20% penalty
28 Who keeps track of expenses? Your responsibility: Employer/HSA Administrator: You, the account holder are Not the responsibility of the responsible for keeping track of employer. your expenses. Not the responsibility of the HSA You do not need to send receipts administrator. to the IRS unless you are audited, Substantiation of claims is not so it is up to you to keep track of required the way is it with an FSA them. or HRA.
29 Form W-2: wage & tax statement SPUSD will send you a W-2 before the end of January, which will include in box 12, code W a combined amount for: Employer contributions (not applicable at this time) + Employee contributions through cafeteria (125) plan
30 Form 1099-SA: HSA distributions The HSA administrator will send a 1099-SA in January/early February Shows a combined total of distributions from your HSA Does not separate eligible expenses from ineligible expenses, that is your responsibility as the account holder. Must be filed with your taxes
31 Form 5498-SA: HSA Contributions Sent by the HSA administrator in May Not required to file with your taxes, for your records only Shows total HSA contributions between January 1 and tax filing deadline (usually April 15 th )
32 No need to itemize for taxes HSA contributions reduce a person’s taxable income – itemizing deductions is not required Do not need to file a Schedule A California does not allow for state income tax deductions
33 Form 8889: Health Savings Accounts You are responsible for filing form 8889 each year. The purpose of this form is to determine how much of your HSA contributions are eligible to be deducted from your gross income taxes and to determine if any taxes or penalties are owed to the IRS.
34 Lumenos HSA 709
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