Transcript Health Care Presentation March 1, 2006

H EALTH S AVINGS A CCOUNTS
101
Ball State University
P RESENTATION D ISCLAIMER

The intent of this presentation is only for
educational/informational purposes and should not be
construed as offering legal or tax advice

Individuals that consider enrolling in a qualified High
Deductible Health Plan, or opening a Health Savings
Account (HSA), should familiarize themselves with the
rules of the insurance and the account

Management of an HSA is the sole responsibility of the
accountholder with regard to eligibility, contributions,
distributions, and tax reporting
W HAT IS A H EALTH S AVINGS A CCOUNT
(HSA)?
Special account owned by you to pay and save for
current and future qualified medical expenses on a
tax-free basis
Used in conjunction
with a qualified “High
Deductible Health Plan” (HDHP)
 Qualified HDHP’s do not cover 1st dollar medical expenses
except for preventive care
 All covered benefits, including Rx drugs, must apply to the
HDHP deductible
Goal is to reduce money spent on health care by
placing more responsibility on you (consumer-driven)
W HO IS E LIGIBLE FOR AN HSA?
Any individual that:
Is covered by a qualified HDHP
Is not covered by any other non-qualified
HDHP
 Specific disease or illness insurance, accident,
disability, dental, vision and LTC is allowable
Is not enrolled in Medicare and/or drawing
Social Security benefits
Is not claimed as a dependent on another
person’s tax return
 Spouses can establish their own HSAs, if eligible
W HO IS E LIGIBLE FOR AN HSA?

Is not covered by Tricare (until Tricare offers an
HSA qualified HDHP)

Has not received any VA health benefits in the
last 3 months

Does not have an FSA that is not specified as
“limited-purpose” or “post-deductible”

Does not have an HRA (Health Reimbursement
Arrangement) that is not suspended or used
solely for retiree health expenses
HSA C ONTRIBUTION R ULES

Contributions can be made by you or by others
on your behalf

Your contributions can be made on an aftertax basis and taken as an “above-the-line”
deduction on your tax return, or

You can make pre-tax contributions through
payroll deductions

You can deposit your funds with the
trustee/custodian of your choice
HSA C ONTRIBUTION

RULES
Ball State offers two trustee/custodian choices for
pre-tax payroll direct deposit:

ASB/Mellon – New Jersey

HSABank – Sheboygan, WI

New! – Effective July 1, 2011
HSA C ONTRIBUTION R ULES

You own the contributions within the HSA as soon as
the funds are deposited

Your employer has no more control over your HSA
than they do over your personal checking account

You can make a once-in-a-lifetime transfer from a
traditional or ROTH IRA to your HSA

The distribution must be made directly by the IRA trustee to the HSA
trustee

The distribution is not included in your income and not deductible

The distribution amount is subject to the contribution limits
applicable for the year of the transfer
HSA C ONTRIBUTION R ULES

For 2011, the maximum amount that can be contributed to
an HSA is:

$3,050 (self-only coverage)

$6,150 (family coverage)

Individuals who are age 55 or older can make “catch-up”
contributions of $1,000 each year

A full year’s contribution (plus the “catch-up” if applicable)
may be made to your HSA when you first become eligible

However, if you make the full contribution and do not remain
eligible during the “testing period”, you will be subject to
taxes and penalties
N EW THIS YEAR !!!
EMPLOYER HSA CONTRIBUTIONS

Effective January 1, 2012, Ball State will begin “seeding,” or
contributing to employee HSAs

Seeding will done on a calendar year basis due to tax concerns

Employees must open an account with HSABank in order to
begin receiving the seed

Ball State will pay the monthly maintenance fee for the
HSABank accounts

Ball State is currently looking at an alternative contribution
“vehicle” for employees in the HDHP who do not meet HSA
eligibility requirements
E MPLOYER HSA CONTRIBUTIONS
HSA Qualified Plan
Individual
Coverage
Jan. 1 – June 30
Individual
Coverage
July 1 – Dec. 31
Employee &
Child(ren)/Family
Coverage
Jan. 1 – June 30
Employee &
Child(ren)/Family
Coverage
July 1 – Dec. 31
Bi-Weekly
Contribution
26-Pays
Bi-Weekly
Contribution
18-Pays
Monthly
Contribution
12-Pays
Monthly
Contribution
10-Pays
$29.46
$38.30
(10 Pays)
$63.83
$76.60
Maximum 2012 CY
University
Contribution
$574.50
$14.73
$23.93
(8 Pays)
$31.92
$38.30
$73.84
$96.00
(10 Pays)
$160
$192
$1440
$36.92
$60.00
(8 Pays)
$80
$96
HSA D ISTRIBUTION R ULES

Distribution is tax-free if taken for “qualified medical
expenses” (QMEs)

There is no definitive list of expenses; a partial list is provided in
IRS Publication 502 (available at www.irs.gov)

Expenses must be incurred on or after your HSA is
established

If your HDHP coverage is effective on the 1st day of the month,
you can establish your HSA as early as the 1st day of the same
month

If your HDHP coverage is effective any day other than the 1st day
of the month, you cannot establish your HSA until the 1st day of
the following month
HSA D ISTRIBUTION R ULES

Funds may be used for medical expenses of your
spouse or any of your IRS dependents, even if these
individuals are not covered by the HDHP*

You can still use the funds for QMEs, even if you no
longer have HDHP coverage

Funds roll over each year; there is no “use it or lose
it” like with FSAs

There is no time limit on using the funds
*Funds cannot be used for same-sex domestic partners
HSA D ISTRIBUTION R ULES

You may reimburse prior years’ expenses as long as
they were incurred on or after the HSA was established

If you enroll in Medicare you can use your account to
pay Medicare* premiums, deductibles and co-pays


If you are not 65, you cannot use your HSA funds to
cover Medicare premiums for your spouse
If you use your account to pay for non QMEs, the
amount is included in your income (taxed) and is
subject to a 20% penalty
*You cannot use your HSA to purchase Medigap
HSA D ISTRIBUTION R ULES

Once you turn 65, you can use your account to pay
for items other than QMEs…like a cruise or new car!
It will be taxed, but the 20% penalty will not apply*

Mistaken HSA distributions can be returned

Mistaken distributions must be repaid by April
15th of the year following the year in which the
mistake was or should have been discovered –
the mistake has to be clearly a mistake, not just
an emergency
*This also applies if you become disabled
H SA PAPERWORK : HOW TO HANDLE IT


The key to success is ORGANIZATION!

An HSA is a tax benefit, so if faced with an IRS audit, you’ll
have to prove that you used the funds for QMEs

Keeping good records will also help make sure you’re always
paying the right amount
We recommend that you keep everything in one
location

Shoe box, file folder, desk drawer, under your mattress, etc.

Receipts, medical bills and EOBs (Explanation of Benefits)
should be kept along with your tax records for the year
(don’t send them in with your tax return!)
W HAT S HOULD I D O N EXT ?

Research, research, and research…make an
informed decision
Q UESTIONS ?
Please contact the
Payroll and Employee Benefits Office
(PEB) at 285-8461
www.bsu.edu/payroll
Email: [email protected]