A health savings account (HSA) is a voluntary tax-favored savings account available only to individuals enrolled in a qualified HDHP (High Deductible Health Plan). HSA’s are individual savings accounts, but the money in the account may only be used to pay for qualified medical, dental, and vision expenses. Qualified expenses include things like deductibles, coinsurance, prescriptions, contacts, orthodontia, travel and lodging expenses, Medicare premiums, etc. Visit IRS Publication 502 for a detailed list. Contributions are deposited into the account by you and/or the University and limited to a maximum amount each calendar year, per IRS regulations. Any unused money in the account automatically rolls over to next year and is yours to keep. Click here to watch an informational video about HSAs.
New Vendor for Health Savings Accounts
Effective Jan. 1, 2022, UA transitioned to a new vendor, PayFlex, to serve as third-party administrator for all HCFSAs, DCFSAs, and HSAs beginning in Plan Year 2022. PayFlex currently manages UA’s COBRA continuation coverage and administers all tax-favored accounts for UAB and UAH.
All HSA plan participants began receiving a new debit card from PayFlex in December 2021. New contributions for Plan Year 2022 will be deposited into your PayFlex account. When enrolling, you determine how much money you want to contribute to your health savings account. The money is then withheld from your pay before taxes are calculated, thus providing you with more value for your dollar. HSA participants will be able to use a special debit MasterCard® to pay their eligible HSA expenses incurred by the eligible individual and any eligible IRS tax dependents. You will also be able to manually file for reimbursement from your account or make withdrawals up to your current account balance.
Questions? PayFlex Contact Information: 1-844-729-3539 (TTY: 711), Monday-Friday 7:00 a.m. – 7:00 p.m. CT, and Saturday 9:00 a.m. – 2 p.m. CT.
HSA Trustee Transfer Form
The University completed a one-time, voluntary bulk transfer of HSA funds in January 2022. Participants were required to authorize TASC to close current HSA and liquidate entire HSA account balance (including any investments) before transferring funds to PayFlex. The deadline to complete this bulk transfer authorization was Dec. 1, 2021. Participants who missed this deadline may request a manual transfer of funds. To request a transfer, participant must fill out the Trustee Transfer Form to request TASC to distribute money to PayFlex. Once the form is submitted to TASC, the participant should not use their TASC HSA card again. It will take 4-6 weeks turnaround time for TASC to liquidate account and mail check to new custodian, PayFlex.
As a tax favored benefit plan, the HSA must meet certain criteria as outlined by the IRS. Employees must be enrolled in the BCBS HDHP to be eligible to participate in the HSA. If you are claimed as a dependent on someone else’s taxes or are covered by any other health insurance policy that is not an HDHP, including Medicare, you are not eligible for an HSA. If you participate in a healthcare FSA or HRA through your employer or spouse’s employer, you are not eligible for an HSA. This account can be used by you and your eligible IRS tax dependents to pay for qualified medical, dental or vision expenses.
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.
HSA Employer Contributions
The University of Alabama provides “seed money” once per year 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 Contributions:
|Tier:||UA Seed Money:|
|Employee Only||$400 per year|
|Family without a Spouse||$800 per year|
|Family with a Spouse||$800 per year|
HSA Employee Contributions
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 PayFlex online portal. If you deposit funds on a post-tax basis through PayFlex, 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:
|HSA Contribution Limit (< 55 years old)||$3,600 per year||$7,200 per year|
|HSA Contribution Limit (55 years or older; $1,000 catch-up contribution)||$4,600 per year||$8,200 per year|
The annual contribution limits set by the IRS are a combination of both employee and employer contributions. See the following examples:
|UA Employer Contribution (Seed Money)||$400||$800|
|+ Employee Contribution||+$3,200||+$6,400|
|= Annual Contribution Limit||= $3,600||= $7,200|
The PayFlex debit MasterCard® is the easiest and best way to access the money set aside in your HSA account 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 save your receipts in the event you are audited by the IRS and must verify the eligibility of your purchases. However, for any charges paid for with a method other than the debit card, you must send a Request for Reimbursement form with appropriate documentation to PayFlex. Your annual HSA election amounts will be loaded automatically onto the card per pay period. If your card expires during the year, PayFlex will mail new card to you.
How to Enroll in an HSA
In order to enroll and “activate” an HSA account with PayFlex, employees must:
1. Enroll in the HDHP and Health Savings Account via BenefitFocus, either during annual Open Enrollment or within 30 days of date of hire or another qualifying life event.
2. PayFlex will complete the identity verification process required by The Patriot Act. If an employee does not pass The Patriot Act’s Identity Verification process, PayFlex will contact the employee via mail to request backup documentation. Documentation may include a copy of a Social Security card, recent utility bill, or driver’s license. The employee will receive three, separate mailed letters over a 90-day period to supply this documentation, or their HSA will be permanently closed.
3. Receive a “Welcome!” packet from PayFlex with instructions to register for an online account. The online portal is available at: https://www.payflex.com. Additional information can be found in the HSA Participant Reference Guide.
5. Accept all Terms and Conditions Agreements, including:
- HSA Custodial Agreement and Disclosure Statement,
- Designated Representative Agreement,
- Electronic Disclosure, and
- Patriot Act Requirements (only if applicable, and you will receive an email with questions to verify your identify)
6. After registration and acceptance of all Terms and Conditions, then you will be able to access the funds in your HSA account. If you do not accept the Terms and Conditions, your account will continue to accrue a balance but you will be unable to use the funds.