Health Savings Account (HSA)
A health savings account (HSA) is a tax-favored savings account which can be used to pay for qualified medical expenses. Qualified medical expenses include things like deductibles, coinsurance, prescription medications, contacts, dental braces, travel and lodging expenses, Medicare premiums, etc. (Visit IRS Publication 502 for a detailed list).
HSAs offer Triple Tax Savings:
- Tax free payroll contributions from the employee and The University of Alabama.
- Tax free earnings will accumulate, if the HSA funds are invested.
- Tax free distributions, when and if HSA funds are used to pay for qualified medical expenses.
In 2019, The University of Alabama will also contribute “seed money” to help pre-fund your HSA. You must enroll in the High Deductible Health Plan (HDHP) and open your HSA account to receive this money! If you enroll in the HDHP, enrollment in the HSA is not automatic, you must also elect the HSA benefit in order to open an HSA account.
|Annual Employer Contribution|
|Tier:||UA Seed Money:|
|Employee Only||$400 per year|
|Family without a Spouse||$800 per year|
|Family with a Spouse||$800 per year|
Employee HSA contributions are tax-free via payroll deduction. The amount you can contribute to your HSA depends on: 1) the type of HDHP coverage you have (single or family); 2) your age (under or over age 55); 3) the date you become an eligible individual; and 4) the date you cease to be an eligible individual. See IRS Publication 969 for additional details.
Employees have two main contribution methods:
- Payroll Deduction based on BenefitFocus elections during Open Enrollment or each month.
- Direct Deposit through the TASC online portal. If you deposit funds on a post-tax basis through TASC, you can recoup the tax savings at the end of the year with an above-the-line deduction.
The IRS has established annual pre-tax contribution limits for 2019:
|Annual Contribution Limits|
|HSA Contribution Limit||$3,500 per year||$7,000 per year|
The annual contribution limits set by the IRS are a combination of both employee and employer contributions. See the following examples:
|UA Seed Money||$400||$800|
|+ Employee Contribution||+ $3,100||+ $6,200|
|= Annual Contribution Limit||= $3,500||= $7,000|
Employees that enroll in the HDHP and HSA will receive a debit card from TASC. Just like the FSA FlexCard, the HSA card enables you to access your Healthcare Savings Account money at the point of sale, therefore, eliminating the need to complete and submit paper claim forms. When you use your card for qualified medical expenses, please be sure to save your receipts in the event you are audited by the IRS and must verify the eligibility of your purchases. You will be able to use your card to pay for coinsurance, dental and vision expenses, prescription drug expenses and many other eligible items.
Current Healthcare FSA or Dependent Care FSA participants who elect to participate in the HSA should retain their current card. The 2019 HSA election amounts will be loaded automatically onto the card. If your card expires in 2019, you will have a new card mailed to you.
In order to enroll and “activate” an HSA account with TASC, employees must:
1. Enroll in the HDHP and Health Savings Account via BenefitFocus.
2. TASC will complete the identity verification process required by The Patriot Act. If an employee does not pass The Patriot Act’s Identity Verification process, TASC will contact the employee via email for backup documentation. Documentation may include a copy of a Social Security card, recent utility bill, or driver’s license. The employee will have 30 days to supply this documentation, or their HSA will be permanently closed.
3. Receive a “Welcome!” email from TASC with instructions to register for an online account and accept the Terms & Conditions. You must register and accept the Terms & Conditions before you can access your HSA funds.