A Health Savings Account (HSA), is a custodial account established to receive tax-favored contributions on behalf of eligible active employees enrolled only in a qualified high deductible health plan (as defined below) to pay for qualified medical expenses. The IRS regulates HSA plans, so many of the plan design features below are a result of those regulations.
|Account Balance||Four Things to Know about HSA's|
|Account Funding||HSA Checklist|
|Additional Resources||High Deductible Health Plan|
|Contributions||HSA Reference Guide|
|Contribution Limits||How FSA's Affect Eligibility|
|Dept of Treasury||IRS Website|
|Eligible Expenses||Publication 502|
|Enrollment Process||Publication 969|
Amounts are contributed to an HSA on a pre‐tax basis, earnings on those contributions accumulate tax free and distributions are not subject to tax if they are used to pay for eligible medical expenses for employees and their dependents. Contributions made in one year do not have to be used to pay expenses in that year and may be carried over to pay eligible medical expenses at anytime in the future. Similarly, expenses in any year do not have to be reimbursed during the year that they were incurred. Dartmouth is offering the ability for employee's to make contributions through a voluntary payroll deduction.
To be eligible to contribute to the HSA, you must meet all the following criteria:
• You must be enrolled in a high-deductible health plan (HDHP);
• You may not be covered by a health plan that is not a HDHP;
• You as the employee may not be enrolled in Medicare, however your spouse may be on Medicare;
• You may not be claimed as a dependent on another person's tax return; and
• Neither you nor any member of your household (IRS Dependents) may be enrolled in a Medical Flexible Spending Account (FSA), including an employer contributed plan.
To participate in the HSA, Dartmouth employees must be enrolled in the College's high deductible health plan. Our high deductible health plan is with Cigna and has the following plan design:
• An annual deductible of $2,500 for individuals and $5,000 for families;
• No deductible for qualified preventive care;
• Prescription drugs are subject to the deductible;
The annual HSA contribution limit is the statutory maximum contribution.
• For calendar year 2014, the maximum contribution limit is as follows:
– Individual Maximum $3,300
– Two‐person or Family Maximum - $6,550
• Catch-Up Contribution - Individuals age over the age of 55 and not enrolled in Medicare are eligible to make an additional "catch‐up" contribution of $1,000 per year. In this case, the maximum contribution limit is as follows:
– Individual Maximum $4,300
– Two‐person or Family Maximum - $7,550
• Having an FSA in the prior year can also affect your contribution limit. Please see the section titled "How FSA's Affect Eligibility" to see how this may affect your contribution limit.
You can use the money in the account to pay for any "qualified medical expenses" permitted under federal tax law. This includes most medical care and services, dental, and vision care. You can pay for expenses of your spouse and IRS dependent children even if they are not covered by your HDHP. For more details about qualified medical expenses, please refer to IRS Publications 969 and 502.
Funds have to be available in the account in order for the participant to be reimbursed for eligible expenses. You can authorize Fidelity's debit card provider, PNC Bank, Delaware to issue a HSA debit card or request a checkbook for your Fidelity HSA. The debit card and check book can be used to pay a provider directly for eligible expenses. All record keeping for tax purposes is the responsibility of the employee.
Funds will be initially deposited into a FDIC insured interest bearing checking account. Once the account value is greater than $2,500, the participant will be given the opportunity to invest the excess in their choice of a variety of funds with varying degrees of risk, offered by Fidelity.
Employees enrolled in an HSA may only be reimbursed for out-of-pocket health expenses up to the current balance in their account and will need to wait until deposits into the account create a sufficient balance to be fully reimbursed.
If an active employee enrolls in the HSA, they are not eligible to participate in an employee or employer contributed Medical FSA plan at the same time.
In accordance with IRS regulations, if an employee enrolls in the HSA and had a Medical FSA (with grace period) in the previous calendar year, they will not be able to begin their HSA contributions until April 1. Also, they will only be able to contribute 9/12ths of the maximum annual limit. The maximum contribution for those who participated in an FSA (with grace period) in the previous year are as follows:
• Individual Maximum is $2,475 or $3,247.50 for eligible "catchup" participants
• Two-person and family Maximum - $4,912.50 or $5,662.50 for eligible "catchup" participants
Participants who are required to wait until April 1st to contribute will not be allowed to incur or submit for expenses until after April 1st.
Dartmouth College will pay the administrative fees for all active employees who participate in the plan. Once the employee terminates or retirees, the fee will be the responsibility of the employee.
If you are no longer covered by an HSA eligible health plan but still have funds in your Fidelity HSA, you can still use the funds in your account to pay for qualified medical expenses federally tax free. The funds in your HSA remain in your account until used.
You may expect the following as part of the HSA enrollment process:
• Elect the Open Access High Deductible Health Plan through FlexOnline.
• While enrolling in benefits through FlexOnline, select the Health Savings Account Option (not to be confused with the Health Care Flexible Spending Account - this is the Medical FSA).
• Your enrollment will then be processed by the Benefits Office and Fidelity Investments.
• You will be contacted by Fidelity and asked to open an account through www.netbenefits.com. Until you open an account with Fidelity, you will not be eligible to make contributions to your HSA.
• Once your account is opened, notify the Benefits office of your enrollment at email@example.com or by phone at (603) 646-3588. Fidelity will also notify benefits if you miss this step.
• Your annual contribution amount will then be divided evenly over the remaining pay periods in the calendar year (please keep this in mind when electing large amounts at year end). These deductions are pre-tax.
Please note that some questions, such as eligibility and tax questions may best be answered by a qualified tax accountant or consultant. When contacting the Benefits Office or Fidelity, some questions may be referred to these types of specialists.
If you have account or investment questions, please contact FidelityWebsite: www.fidelity.com
If you have questions regarding your election form or paycheck deductions
Phone: (603) 646-3588
Fax: (604) 646-1108
Office of Human Resources Office 6042,
7 Lebanon Street, Suite 203,
Hanover, NH 03755
Last Updated: 2/14/14