2021 Health Savings Account (HSA)

Eligibility

All benefits-eligible Faculty, Exempt, Non-Exempt, SEIU and RAB employees who elect the High Deductible Health Plan and who are:

  • NOT a Research Fellow or a J-VISA holder.
  • NOT enrolled in Medicare, Medicaid or any other type health insurance that is not a qualified HDHP.
  • NOT a patient of Dartmouth Health Connect.
  • NOT being claimed as a dependent on another person's tax return.
  • NOT eligible to receive medical-expense reimbursement under a general-purpose Health Care FSA of a spouse or a parent.

The above IRS governed rules apply only while contributing to or receiving employer contributions to your HSA account.  If you have a balance in your account at year end and switch medical plans or leave Dartmouth, you can no longer contribute to your HSA account, but you may continue to use the funds in the account.

Dependents

While the Affordable Care Act (ACA) allows parents to add their adult children who have not reached age 26 to their health plans, the tax laws regarding HSAs have not changed and children ages 19 until age 26 must be considered a tax dependent in order for an adult child's medical expenses to qualify for payment from a parent's HSA. According to the Internal Revenue Service (IRS) definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or step sibling, or any descendant of these) who meet these three criteria:

  • Has the same principal place of abode as the covered employee for more than one-half of the taxable year, and
  • Has not provided more than one-half of his or her own support during the taxable year, and
    Is not yet 19 (or, if a student, not yet 24) at the end of the tax year, or is permanently and totally disabled.

One way around this is for an adult child to set up their own HSA. As long as they are covered on the family qualified HDHP, adult children can contribute up to the full family HSA amount into their HSA account. The dependent's contributions will not reduce the amount their parents can deposit into their accounts.

Key Benefits

  • The HSA provides a triple tax advantage: money goes in tax-free, grows tax-free, and is tax-free when used to pay for eligible medical expenses
  • You can increase or decrease your annual contribution amount any time during the plan year.
  • You have the option of using a Fidelity provided debit card, checkbook, or you may submit claims manually.
  • When you use the account, your HSA dollars will count toward your annual deductible and out-of-pocket maximums.
  • The money is always yours. Besides being free to choose when and how much of your HSA funds to use, any money left over at year's end is yours to keep.  You can even take your HSA dollars with you when you leave the plan, change jobs or retire.
  • Administration is easy with no stressful submission or substantiation deadlines.
  • The Dartmouth contribution to your HSA account is front loaded and can be used once your account has been activated. Your contribution is eligible for withdrawal as soon as it is contributed.

Other Considerations

  • Payments are not automatic. You decide when and how to use the money in your HSA account. Spend it during the year, save it for the future or open an investment account.
  • Consider consulting a tax professional when contributing to a Health Savings Account.
  • If you will be Medicare eligible in 2020, please see the HSA & Medicare enrollment section of our website.
    • ¹ HSA contributions and earnings are not subject to federal taxes and not subject to state taxes in most states. A few states do not allow pre-tax treatment of contributions and earnings. Contact your tax advisor for details on your specific location.

Understanding the Benefit

Participating in a Health Savings Account is a way of putting money aside tax-free throughout the year, and then later using those pre-tax dollars to pay for your health care that isn't covered by health insurance.

Fidelity has provided a number of important educational videos to help you get a better understanding of what a Health Savings Account is, how it works and how you can potentially save a lot of money by combining a low cost High Deductible Health Plan with a pre-tax Health Savings Account.

How to Use Your HSA

  1. Money comes out of your pay check each pay period, and goes into your HSA Account, reducing the amount of taxes you pay each pay period.
  2. As money goes into the account, you have the option to spend it, save it or invest it.
  3. You can use either a Fidelity HSA debit card or a Fidelity HSA check book to pay the doctor/hospital bill.
  4. If you ever leave Dartmouth, or if you change medical plans in the future, this money is still yours and goes with you. 
  5. You can use the money in the future while enrolled in non-High Deductible Health Plans.  But would not be able to contribute to the account.
  6. Always make sure that you save your invoices/receipts in case you are ever audited by the IRS.  You will be required to report both the amount contributed and/or the amount spent from your HSA account on your annual income tax return.
Last Updated

Share