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).

 

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 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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Who can use my HSA account?

You, your spouse and your tax-dependents

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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 2012 the limit for someone insured under a single plan is $3,100; the family limit is $6,250. 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 Medical Expense?

Eligible medical expenses are defined by the IRS. The overall guiding rule is that the expense has to be for medically necessary purposes only. Cosmetic or optional expenses are not eligible.

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

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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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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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How do I pay for my eligible medical expenses out of my HSA?

Options include HSA Debit MasterCard®, check, withdrawal from your account via ATM, or online bill pay.

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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. Checks (if ordered) will be mailed within 10 - 14 days.

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What other information will I receive?

Upon enrolling for your HSA, you will receive a welcome letter from Chard Snyder and then a welcome letter from your bank. These letters contain important information you need to keep including passwords and how to access your account.

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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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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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What if my medical service provider does not accept MasterCard®?

You can write a check, withdraw from an ATM, or use an online bill-payer if you have one. However, you are responsible for keeping receipts, proving that every dollar spent was for eligible expenses.

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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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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 from your bank 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 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 8-8 ET

Bank of Kentucky Customer service: 800-869-4340 or 859.372.9755 8-5 ET

Fifth Third Bank Customer Service: 888-350-5353 8-11 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

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