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What are the tax-favored accounts for health care expenses?

There are two tax-favored accounts available. Which you use will depend on what medical plan you choose. The two accounts are a Health Savings Account (HSA) and a Health Care Flexible Spending Account (FSA). The HSA is available to those people enrolled in an IRS-qualified high-deductible health plan. The only university medical plan that qualifies is the Healthy Savings Plan. The Health Care FSA is available to those employees enrolled in the Custom Network Plan or the PPO Plan, or those benefit-eligible employees who are not enrolled in any university medical plan. More information is available on the understanding your HSA and understanding your FSA webpages.

(Keep in mind that a Dependent Care FSA is different than a Health Care FSA. A Dependent Care FSA is available to every benefit-eligible employee, regardless of which medical plan you choose.)

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What is an HSA?

If you choose the Healthy Savings Plan and are not covered by another plan (including Medicare) or claimed on another’s taxes, you are eligible to set up a Health Savings Account (HSA) to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. The account is owned and managed by the employee/retiree, and funds remain in the account from year to year if not used for qualified (medical , dental, and/or vision) expenses. Penalties may apply when funds are withdrawn to pay for anything other than qualifying expenses. If you leave the university, the funds in the account go with you. Both you and the university can make pre-tax contributions to the account if you are an active faculty or staff member; retirees can make after-tax contributions to the account. The university makes an annual contribution to active employees' HSAs regardless of whether you make a contribution yourself, for as long as you are enrolled in the Healthy Savings Plan. If you change your insurance plan (to the Custom Network Plan or PPO Plan) in a given year, the university will stop contributions. While you will keep what's in your HSA, you will have to pay an administration fee to keep the HSA as-is. Learn more at Understanding your HSA.

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How do I open my account with Optum?

The enrollment process is different for employees and retirees.

For employees: During your enrollment period, by electing to enroll in the HSA, you will authorize the university to open an HSA on your behalf. Optum Bank will mail you a welcome packet to complete the set-up process.

For retirees: Your HSA will be an individual account, so you can choose to open an HSA anywhere that offers them after you’ve enrolled in the qualified Healthy Savings Plan. However, if you’d like an HSA with Optum Bank, contact them directly to open an individual HSA or enroll online at Optum Bank. Find contact information on the plan contacts webpage. Because your HSA will be an individual account (as opposed to a university-sponsored account), you will be responsible for any fees associated with the account.

Find details on the understanding your HSA webpage.

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Do I have to have health insurance to have an HSA?

Yes. To be eligible to open and contribute to an HSA, you need to be enrolled in a qualified high-deductible health plan (HDHP), per the U.S. Internal Revenue Service. Enrollment in the university’s Healthy Savings Plan qualifies you for an HSA, as long as you also meet the other eligibility requirements, which are specified on the HSA webpage.

You may keep an old HSA with contributions from previous years--including an HSA from a previous employer or from previous years with the university--even if you are not enrolled in a high-deductible health plan. But if you are not currently enrolled in an IRS-approved HDHP, you may not contribute to the old HSA, and you may be charged an administration fee.

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When will my HSA funds be available for claim reimbursement?

Once you have been enrolled in a Health Savings Account (HSA) for 30 days, the university will deposit your seed money within 7-14 days. Those who enroll during Annual Enrollment can expect to receive the university contribution in the third or fourth week of January. This applies to employees only; retirees do not receive university contributions.

Any funds that you have elected to contribute through pre-tax payroll deduction will be deposited into your HSA within 5-7 days of payroll. Any funds that you contribute outside of payroll deduction are contributed directly to Optum Bank.

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Who contributes to the HSA?

The employee/retiree and the employer may contribute a combined amount that equals up to the annual IRS annual limits. An additional catch-up contribution may be made if you are 55 years old or older. See the understanding your HSA webpage for details.

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Who owns the HSA?

The HSA is owned and managed by the employee/retiree. The minute the university's annual contribution is deposited in your account, it is yours to keep, even if you leave the university. (University contributions are made only for active faculty and staff members enrolled in the Healthy Savings Plan.) Likewise, any contributions you make with your own money are yours to keep.

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How do I submit a claim to Optum for reimbursement through my HSA?

For active employees: Employees manage their HSA accounts through the medical insurance administrator, UnitedHealthcare. After you have created your online account through the myUHC website, you can submit your claims electronically. You may also use your debit MasterCard to pay for qualified medical expenses at the time of purchase or when service is provided.

For retirees: Retirees manage their HSA accounts directly with Optum Bank, or their chosen HSA administrator. If you have an HSA with Optum Bank, you may pay for qualified medical expenses through use of a debit mastercard, online bill payment or direct reimbursement. You may set up an online account or call Optum’s toll-free number, both of which are listed on the plan contacts webpage.

Read more about HSAs on the Understanding your Health Savings Account (HSA) webpage.

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I have an HSA but I am moving to the PPO plan or Custom Network Plan. What happens to my account?

You can keep your HSA account and use the funds for eligible health expenses in the future, but the university will no longer deposit seed money. Additionally, you will be responsible for paying monthly maintenance fees or any fees that are necessary for closing your account or transferring your funds.

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Does the money in my HSA earn interest?

Yes, and tax-free. HSA accounts calculate, compound, and credit interest monthly based on the applicable rate for different tiers of the account balance. View the Optum Bank Health Savings Accounts page.

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Can I invest the money in my HSA?

Yes. Similar to an IRA, you may invest a portion of your account balance in mutual funds. Optum offers investment opportunities available through their Mutual Funds webpage.

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How much money can I contribute to my HSA?

The IRS sets maximum contribution limits each year, one limit for individual accounts and one limit for family accounts. Those enrollees age 55 or older can make an additional catch-up contribution each year. These limits apply to the combined total of what you and the university contribute. See the understanding your HSA webpage for details.

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What happens to the money in my HSA if I leave my job or retire?

The HSA is in your name. It is your account and goes with you if you leave employment with the university--including contributions made by the university. If you move to the Custom Network or PPO Plan, are on Medicare, or go to another employer that does not have a qualified high-deductible health plan, you can still use your HSA money for qualified medical expenses but will not be able to continue to make contributions.

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Does my HSA money roll over from year to year, or do I lose the money at the end of the year?

The money continues to accumulate from year to year. You don’t lose the money left in your HSA or the interest it has earned. It is your money.

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Can I take the money out of my HSA any time I want?

Yes. You can take money out any time tax-free and without penalty as long as it is used to pay for qualified medical expenses. If you take money out for other purposes, however, you will pay income taxes on the withdrawal plus a 20% tax penalty.

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If my spouse is on Medicare, can I contribute to an HSA?

Yes. As long as you are not enrolled in Medicare yourself and are still enrolled in a qualified high-deductible health plan like the Healthy Savings Plan, you can contribute to your HSA.

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What medical expenses qualify under an HSA?

Qualified medical expenses are those that would generally qualify for the medical and dental expenses income tax deduction as outlined in IRS Publication 502 Medical and Dental Expenses. See http://www.irs.gov/publications/p502/ for a current complete list.

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Can I have an HSA account if my spouse has a Health Care FSA through his/her employer?

You cannot have an HSA account if your spouse has a general purpose health care FSA through his/her employer under which money can be reimbursed for your eligible health care expenses. However, if your spouse is enrolled in a limited purpose FSA (limited to qualifying dental and vision expenses) you are eligible to contribute to an HSA.

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