Choose how to fund your health savings account
An HSA works much like any other bank account. To fund the account, PEBB will contribute a total of $700 for individual accounts or $1,400 for families of two or more per year, paid on a prorated monthly basis. You can make additional deposits and even set up automatic deposits into your account. Individuals can contribute up to $2,400 more, or families can contribute up to $4,850 more, to their HSAs per year. Subscribers age 55 or older can make additional "catch-up" contributions of $1,000 per year. You won't pay taxes on any of the payroll deductions you contribute to your account, and you can deduct any additional amount you deposit into your account from the adjusted gross income line of your income taxes. Money your employer contributes does not count as income on your taxes.
Others can contribute
Others, such as family members, can contribute to your account as well.
IRS limits how much you can put in
The IRS limits how much can go into your account per year. The IRS has set current limits for 2012 for annual HSA contributions at $3,100 for individuals and $6,250 for families. Remember, this limit is for total contributions. So as an individual, if your employer put $700 into your account, you could contribute up to $2,400 of your own money. Subscribers age 55 or older can contribute an additional $1,000 per year.
Use it like a medical debit card
You can use your account to pay for qualified medical expenses, either at the time of purchase or to reimburse yourself for medical expenses paid through another account. If you spend your HSA funds on qualified medical expenses, you never pay income tax on that money.
Spend only on qualified medical expenses
The IRS determines which expenses are qualified medical expenses, but the expansive list includes office copays, your deductible, prescription drug costs and many treatments that may or may not be covered by your insurance, giving you more flexibility to decide how to pay for your health care. Premiums, non-prescription medicine and other expenses do not count as qualified medical expenses. You can see the full list in IRS Publication 502 at irs.gov. Note: if you spend account funds on non-qualified expenses, you will have to pay the income tax on that amount, and if you're under 65, you also pay a penalty of 20 percent to the Internal Revenue Service.
Unspent money stays in your account
Money you don't spend from your HSA stays in your account for use on qualified medical expenses another day, even from one year to the next. You can even earn tax-free interest on your account as well as investment returns on a portion of your account.
HSA participation requires a qualified health plan
Health savings accounts can only be opened and/or funded when a member is enrolled in an IRS-qualified health plan, such as the UMP CDHP.
Lower premiums allow for more in your account
HSAs give members more control of their health care dollars. Many take the money not spent on higher health plan premiums and contribute it to their health savings account.
Out-of-pocket maximum limits your liability
With UMP CDHP, you are responsible up to your deductible amount for your covered health care expenses. After that, you and your health plan share responsibility for your covered health expenses until you've reached your plan's out-of-pocket limit. After that, your health plan pays 100% of your covered health expenses from network providers.
More control of your health care dollars
If you plan to spend your money on health care expenses that aren't covered by your health plan but are IRS-qualified medical expenses, such as orthodontia or fertility enhancement, HSAs make it possible to get a tax benefit from that health care spending.
Find a health dividend
Some years are better than others for our health. HSAs help members save money they didn't need to spend on health care expenses one year while protecting their accumulated savings in case of unexpected health care needs in future years.
Save for a rainy day
Because HSA contributions roll over year after year, with prudent usage and careful management, a health savings account can grow larger over time and will be there for you when you need it.
Setting up your account is easy. HealthEquity is the health savings account trustee for the UMP CDHP. After signing up for the UMP CDHP, HealthEquity will create your HSA and send your account materials by mail, including an HSA debit card for you to use to pay for your medical expenses. For more information about HealthEquity, visit their web page dedicated to PEBB members.
