Understanding your health savings account (HSA)

To be eligible for an HSA:

• You must be covered by a qualified high-deductible health plan (UM Healthy Savings Plan) on the first day of the month.
• You may not be covered by another health plan (including any part of Medicare).
• You may not be claimed as a dependent on someone else's tax return.
• You, or your spouse, may not be enrolled in a general-purpose health care flexible spending account.

Retirees do not enroll in an HSA through the university. Any retiree who meets the eligibility criteria described above may enroll in an individual HSA. If you’d like to open an individual HSA with Optum Bank, visit the plan contacts webpage to locate contact information for Optum Bank. Since your HSA will not be a university-sponsored group HSA, you will be responsible for any fees associated with the account.

If you are an active faculty or staff member (as opposed to a retiree), the university contributes annual seed money to your HSA in one lump sum.

The amount of the University contribution you receive will depend on when you enroll in the HSA. In addition, it will be based on your coverage level as of January 1 of the plan year, or the effective date of the HSA enrollment, if later. A change in coverage level during the plan year will not result in additional employer contributions.

You are not required to contribute any funds in order to receive the university's seed money. However, you do have to complete HSA enrollment with the account administrator in order to receive the seed money. Find the form in the forms and guides section on this webpage.

HSA contributions are limited by the Internal Revenue Service (IRS) and pertain to both your contribution and the university's contribution.

• 2024 IRS Limit: $4,150 for an individual or $8,300 for a family.
• 2025 IRS Limit: $4,300 for an individual or $8,550 for a family.

If you are married, and your spouse is also contributing to an HSA, the total contributed between the two of you (including employer contributions) cannot exceed the family limit. University contributions are made for employee accounts only; the university does not contribute to retiree HSAs.

If you are 55 years old or older, the IRS allows you to contribute an additional $1,000 under a catch-up provision.

Special note for active employees over age 65 who delay Medicare enrollment (Medicare and You handbook, pg. 20):

To avoid a tax penalty, you should make your last HSA contribution the month before your Part A coverage begins. Premium-free Part A coverage will go back (retroactively) 6 months from when you sign up for Part A or apply for benefits from Social Security, or Railroad Retirement Board (RRB) benefits, but no earlier than the month you turn 65.

• If you apply for Medicare during your initial enrollment period (IEP) or during the 2 months after your IEP ends, you should make your last HSA contribution the month before you turn 65.
• If you wait to enroll in Medicare less than 6 months after you turn 65, you can avoid a tax penalty by stopping HSA contributions the month before you turn 65.
• If you wait to enroll in Medicare 6 or more months after you turn 65, you can avoid a tax penalty by stopping HSA contributions 6 months before the month you apply for Medicare.

In order to comply with the USA PATRIOT Act, the account administrator is required to verify the identity of each HSA account holder. Please be aware that you must complete the screening process, also known as “vetting”, before your account can be opened.

If you do not pass the screening process, the account administrator will contact you requesting additional information. If you do not provide the requested information within 75 days your HSA election will be cancelled and you will not receive the university's contribution.

For Employees

Once you enroll in the Healthy Savings Plan and elect an HSA, the university alerts the account administrator that you have enrolled in the HSA. The account administrator will mail an HSA welcome packet to you. Your HSA administrator will send your welcome packet and debit card in separate envelopes.

Employees who were enrolled in a university HSA in previous years do not receive a new welcome packet.

For retirees

Once you enroll in the Healthy Savings Plan, contact Optum Bank directly to set up your individual HSA. Contact information is on the plan contacts webpage.

If you are a new retiree and are currently in an HSA as an active employee, you will keep your same account, but it will be changed to an individual HSA rather than the university-sponsored group HSA.

If you were enrolled in an FSA in one calendar year (let's call it Year One) and will be enrolled in an HSA in the next calendar year (Year Two), you will need to take special action.

In order to make or receive HSA contributions at the beginning of Year Two, your previously held Health Care FSA account must have a zero balance before the end of Year One. Therefore, it is recommended that you submit claims for eligible healthcare expenses by December 24 to assure those claims will be processed before the end of Year One.

The minute money is deposited in your HSA, it is yours to keep forever. There are no requirements to use your HSA funds by the end of each year (unlike a flexible spending account, in which funds must be spent by the end of each year).

Furthermore, your HSA stays with you even if you separate from the university. And even if you are no longer eligible to contribute to your HSA, you can still use the funds that are in it. For example, individuals covered by Medicare may not contribute to an HSA, but they can use funds from an HSA that they had in years prior to enrolling in Medicare.

You can view your HSA balance, check that your university contribution has been deposited, and see your transactions by creating an online HSA account with the administrator. To find your HSA administrator, visit the Plan Contacts webpage. For new HSA enrollees, the welcome packet sent to you by the HSA administrator will provide instructions for establishing your online account.

For employees (as opposed to a retiree), once you have been enrolled in your HSA for 30 days, the university will deposit your seed money into your HSA within 7-14 days. Those who enroll during annual enrollment can expect to receive the funds in the third or fourth week of January.

Any funds that you have elected to contribute through pre-tax payroll deduction will be deposited into your HSA within 5-7 days of your paycheck date.

If you are an employee, you may change your pre-tax payroll contribution amount at any time during the year by completing and returning the HSA enrollment/change form. Find the form in the forms and guides section on this webpage.

If you are a retiree, you will make your contributions directly to your HSA plan administrator.

You can decide how to utilize your account funds. You may use your debit card to pay for eligible expenses, or authorize Optum Bank to pay for eligible expenses automatically when your claims are processed. You may also reimburse yourself from your HSA for any personal funds you spent on eligible expenses.

Your HSA funds may be used to pay for all IRS Section 213(d) expenses including:

• Medical
• Prescription drugs
• Dental
• Vision

While the university HSA contribution may be earned only by the primary subscriber to the Healthy Savings Plan, it can be used for any qualifying member of the subscriber's family.