HSA Frequently Asked Questions

Health Savings Accounts (HSAs) provide tax-free dollars for qualified out-of-pocket health expenses for employees who are enrolled in a High Deductible Health Plan (HDHP).  Chard Snyder provides an HSA solution called HSA Advantage as well as providing services in partnership with Fifth Third Bank and The Bank of Kentucky. This means that the specifics of your HSA account may vary.

The following are general questions and answers about Health Savings Accounts. If you have additional questions regarding the specifics of your account please contact Chard Snyder or call the phone number on the back of your HSA debit card.  If you are an HSA Advantage participant, you will also find questions and answers about your account after you log in to the participant portal.

 

Frequently Asked Questions

 

What is a Health Savings Account?

A Health Savings Account (HSA) is a personal bank account created exclusively for individuals to pay for eligible health expenses and save for future healthcare expenses tax-free.

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Am I eligible to contribute to an HSA Account?

You are eligible as long as:

You are a participant in an eligible High Deductible Health Plan (HDHP)

You are not covered by any other health insurance plan that is not an HDHP

You yourself are not covered by Medicare

You yourself were not covered by Veteran’s services during the last three months

You are not active-duty military with Tricare coverage

You are not claimed as a dependent on another person’s tax return

You or your spouse are not participating in a full Flexible Spending Account (Limited Flexible Spending Accounts are allowed)

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Can I have an FSA and an HSA?

No. If you are participating in your own or your spouse’s full Flexible Spending Account, you cannot open or contribute to a Health Savings Account. You may have a dependent care account and an HSA and you may have a limited flexible spending account for dental and optical expenses only if offered by your company.  Note:  If you have previously opened an HSA Account and have decided to go back to an FSA, although you are not allowed to contribute to the HSA account, you may continue to use the funds for eligible expenses.

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Can I use the money in my HSA to pay for medical care for a family member?

Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse, or a dependent without tax penalty.

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How much may I contribute to my HSA?

Maximum annual contributions (deposits into your account) to your HSA account are determined by the IRS each year. In 2013 the limit for someone insured under a single plan was $3,250; the family limit was $6,450. For 2014 the limit for someone insured under a single plan is 3,300 and the family limit is $6,550. Keep in mind all tax dependents and spouses can use HSA dollars whether it’s a single or family plan.

Individuals who will be at least 55 years of age by the end of a tax year may also make “Catch Up” contributions of $1,000 above the maximum into the HSA.

The limits include all contributions being made to your account, whether by you, your employer, or someone else.

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What is an Eligible Expense?

Eligible expenses are defined by the IRS. The overall guiding rule for medical expenses is that the expense has to be for medically necessary purposes only. Cosmetic or optional expenses are not eligible. You may also use your HSA for long term care premiums, COBRA premiums, retiree medical premiums, and Medicare premiums (but not for Medigap plans).

Using funds from your HSA for non-eligible medical expenses can result in IRS penalties. It is your responsibility to determine whether an expense is eligible. Chard Snyder’s website and customer service department can help you.

Sample list of eligible expenses.

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Who decides if my expenses are "qualified medical expenses?"

You are responsible for that decision, and therefore should familiarize yourself with what types of medical expenses are considered to be qualified (as partially defined in IRS Publication 502). If you have specific questions about what expenses are allowed, call our customer service department. You should also keep your receipts in case you need to defend your expenditures or decisions during an audit.

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Can I pay my health insurance premiums with an HSA?

You can only use your HSA to pay health insurance premiums if you are collecting federal or state unemployment benefits, or you have COBRA continuation coverage through a former employer.

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When I make a withdrawal from my HSA account to pay for an eligible medical expense, do I have to pay taxes on the withdrawn amount?

No. As long as you use your HSA account only for eligible medical expenses, you will never have to pay taxes on the money.

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Who is responsible for ensuring that I am only using my HSA account for eligible medical expenses?

How you use your HSA account is solely between you and the IRS. You will want to save all receipts, invoices and statements that support withdrawals out of your HSA account in case you are audited.

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What if I am not sure about the eligibility of an expense?

You can visit our website (www.chard-snyder.com) or call customer service at 1.800.982.7715 or 513.459.9997 to verify expense eligibility.

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I have an HSA but no longer have HDHP coverage. Can I still use the money that is already in the HSA for medical expenses tax-free?

Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

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What if I do use my HSA account for purchases that are not eligible medical expenses?

If you use your HSA account for an expense other than eligible medical expenses you can subject yourself to significant IRS penalties. Inappropriate use of your HSA funds may also leave you without money to pay for your eligible medical expenses in the future. We advise saving your HSA money as much as possible the first year so that you can easily meet your deductible should you incur major medical expenses at a later time.

If you made an error and used money for an ineligible expense, you may attach that money to eligible expense receipts until the ineligible amount has been truly used by eligible expenses.

At age 65, your HSA dollars may be spent on anything without penalty, but you will be required to pay income tax on ineligible purchases. Eligible purchases will continue to be tax-free as usual.

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What happens when my employment is terminated or I resign?

The Health Savings Account is yours and will stay with you even after you have left your current employer. Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.

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What happens to the money in my Health Savings Account after I turn age 65?

You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, copays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. The one expense you cannot use your account for is to purchase a Medicare supplemental insurance or "Medigap" policy.

Once you turn age 65, you can also use your account to pay for things other than medical expenses. If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 20% penalty on the non-qualified withdrawal.

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Can I use my HSA to pay for medical expenses incurred before I set up my account?

No. You cannot reimburse qualified medical expenses incurred before your account was established.

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Can couples establish a joint account and both make contributions to the account, including catch-up contributions?

Joint HSA accounts are not permitted. Each spouse should consider establishing an account in their own name. This allows both to make catch-up contributions when each spouse is 55 or older.

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Can couples open separate accounts?

If both husband and wife are eligible to contribute to an HSA, they are both eligible to establish separate HSAs. In fact, if both spouses want to make "catch-up" contributions when they are age 55+, they must establish separate accounts.

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If my spouse and I are both 55 or older, can we both make "catch-up" contributions?

Yes, if you are both eligible individuals and both have established HSAs in your own names. If only one of you has an HSA, only that spouse can make a "catch-up" contribution.

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When will I receive my new HSA MasterCard® Debit Card?

Your HSA debit MasterCard® will be mailed to the address you provided on your banking application within 7-14 business days after your account has been set up.

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Do I receive a monthly account statement?

Yes, statements are available via paper or email, and your account balance can be checked 24/7 through the bank website or customer service phone numbers below.

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How can I check my account balance?

You can check your account balance on your monthly statement, by calling Chard Snyder or your bank or by visiting your account online.

HSA Advantage customers:
Call 800-982-7715 Monday through Friday 8AM – 9PM ET or login here.

Fifth Third Bank customers:
Call 888.350.5353.  Automated banking is available 24 hours and representatives are available 8AM - 11PM CT or log in at www.53hsa.com

Bank of Kentucky customers:
Call Bank of Kentucky Customer service at 800.869.4340 or 859.372.9755 8AM - 5PM ET to speak to a representative. For 24-7 automated service you can use the Better Banking Line at 1-800-811-8225 or log in to your account at www.bankofky.com/hsa

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What is the best way to pay for prescriptions and medical visits?

First, remember that you must always show your insurance card for purchases so the discounted carrier rate is applied and the expense is credited toward your deductible by your insurance company. The discounted rate for prescriptions is provided at the cash register, so use your debit card for maximum convenience. Do not pay for medical visits at the time of the visit. With HDHP insurance coverage, you have no co-pay and will be billed for the visit at the discounted carrier rate later. You will receive a bill from your doctor or hospital AND an EOB (Explanation of Benefits) from your insurance company. Make sure the EOB matches your bill, then write your HSA debit card # on the paper invoice and mail it back or write a check.

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Does my HSA have to have money in it before I use it to pay a provider?

Yes, this is a personal bank account in your name. Your card is a debit card, not a credit card. Like a checking account, the funds must be in your account before you can pay for an expense. Your bank may charge overdraft fees and other charges so please look at your bank rules carefully.

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What if funds are not available in my HSA when I incur an eligible medical expense?

If you do not have enough money in your HSA to pay for an eligible medical expense you will need to pay for the expense by some other means. Once the money is in your HSA account, you can withdraw the amount that you paid and reimburse yourself.

Providers are often willing to implement a payment plan that coincides with your scheduled HSA deposits. You can reimburse yourself any time during your lifetime that you want to as long as you have the receipt!

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What happens to the balance in my HSA at the end of the year?

Unused contributions in your HSA will accumulate year after year tax-free until you need them.

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Do I need to re-enroll each year?

Yes. Your company will advise you when you need to do this and provide you with the necessary forms.

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How do I make new deposits to my HSA?

If you are in a corporate plan you will normally make deposits through payroll deductions coordinated by your HR Department.

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What tax forms will I receive with my HSA?

You will be receiving two tax forms on an annual basis. The 1099-SA will provide you with a summary of the distributions (withdrawals) from your HSA and the 5498-HS will provide you with a summary of the contributions (deposits) that have been made. The 5498 does not come out until the spring after the year you have filed taxes for, but serves as a check-and-balance item. If it does not reconcile you can submit correctional paperwork to the IRS.

All HSA accountholders need to complete Form 8889-SA with your taxes. This form can be obtained from the Chard Snyder website, the IRS website (www.IRS.gov) or from your tax consultant. In order to fill this form out accurately, you will need your W-2, 1099-SA, and the following spring you will receive a verifying 5498-HS from your bank.

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Do I have investment options available to me on my HSA balances?

Yes. You may check with Chard Snyder or your bank to see what options are available.

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When can I begin using my HSA to pay eligible expenses?

As soon as your account is opened and there is money in it, you can use the account for eligible expenses incurred any time after your account opening date. Expenses incurred prior to your account opening date are ineligible for reimbursement from your HSA.

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Who can help me with my HSA questions?

Chard Snyder Customer Service: 800.982.7715 8AM - 9PM ET

Bank of Kentucky Customer service: 800.869.4340 or 859.372.9755 8AM - 5PM ET

Fifth Third Bank Customer Service: 888.350.5353 8AM - 11PM CT

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Where is additional information on HSAs in general?

Please explore the rest of the Chard Snyder website for more information and additional forms related to your account. The IRS site is also a great additional source of information on HSAs.

Location of IRS Q&As:

http://www.irs.gov/irb/2004-02_IRB/ar09.html

http://www.irs.gov/irb/2004-33_IRB/ar08.html

IRS Publication 969

IRS Publication 502

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FSA Eligible Expenses and Items