Frequently Asked Questions

Your Health Savings Account (HSA) coupled with a High Deductible Health Plan (HDHP) can help you save money on your medical expenses. By choosing the HSA Plan you can save significantly on your health care premiums.

General Information

A Health Savings Account (HSA) is an individually owned, tax-advantaged bank account that allows you to accumulate funds to pay for qualified health care expenses. To qualify, you must be covered under a qualified high-deductible health plan (HDHP) as defined by IRS regulations. The State Health Plan Savings Plan is a high-deductible health plan. You can contribute to your HSA through pretax payroll deductions.

You can pay for current qualified health care expenses or save the funds for retirement health care expenses. You are responsible for monitoring your account, as well as ensuring distributions are for qualified expenses and that contributions do not exceed limits set by the IRS. You must keep records and documentation of all health care expenses for which distributions are taken.

 

HSAs offer a triple tax advantage:

  • Contributions are 100 percent tax-deductible for the account holder.
  • Funds grow on a tax-deferred basis and funds are not taxed if used for an eligible expense.
  • After age 65, funds can be used tax-free for eligible expenses, including Medicare premiums, or taxed with no penalty for other expenses.

As you make contributions to your HSA, you can save the funds or spend the funds on current health care expenses. Unused funds and interest carry forward, without limit, from year to year. As the account holder, you own the account and can keep the account even if you change jobs or stop working.

To qualify for an HSA, you must meet the following requirements:

  • You must be covered by a qualified high-deductible health plan (HDHP), such as the Savings Plan
  • You must have no other health coverage, including a spouse’s plan that provides benefits covered by your HDHP. You can, however, have accidental, disability, dental, vision or long-term care coverage that provides benefits for a specific disease or illness, a fixed amount for hospital stays or liability coverage, such as workers’ compensation.
  • You are not enrolled in Medicare.
  • You do not receive health benefits under TRICARE.
  • You have not received Veterans Administration (VA) benefits within the past three months.
  • You cannot be claimed as a dependent on someone else’s tax return.
Yes. If you enroll in an HSA, you cannot also enroll in an MSA. However, you may enroll in a Limited-use MSA, which allows you to pay for dental and vision expenses only.

A Limited-use MSA is a Health Savings Account (HSA)-compatible MSA. The Limited-use MSA allows you to set aside money pretax to pay for things the Savings Plan does not cover, such as dental and vision care expenses. If you are enrolled in the Savings Plan and make contributions to an HSA, you are eligible to participate in a Limited-use MSA, which will help maximize your tax savings. The HSA can be used to pay all types of medical expenses incurred now or in the future; however, the Limited-use MSA can only be used to pay for current year dental and vision expenses.

Here’s a tip. Plan carefully to preserve the value of both accounts by using your HSA funds as a way to save and invest for future health care expenses, or large unexpected expenses. Use your Limited-use MSA to pay for routine vision and dental care expenses you incur each year.

First, you need to enroll in the Savings Plan and an HSA during open enrollment. To avoid losing money in your current MSA, make sure your MSA has a zero balance on December 31, 2019. You cannot contribute to your HSA in the new plan year if you have a balance in your MSA. Beginning January 1, 2020, you can carryover up to $500 of your MSA balance and convert it to a Limited-use MSA if you enrolled in the Savings Plan and HSA.

Enrollment and Contributions

You may enroll through MyBenefits when you enroll in the Savings Plan or you may go to schsa.centralbank.net and select the Open Your HSA Online button.

To open your HSA through Central Bank, you will need:

  1. Your driver’s license, address, Social Security number and birth date
  2. The name, address, Social Security number and birth date of all beneficiaries. Beneficiaries may be added/changed any time after account opening
You may contribute to your HSA via pretax payroll contribution. You may make a post-tax deposit to your account by transferring funds from your checking account at another bank or by using mobile check deposit. You’ll receive the post-tax benefits when you file your annual taxes.
Yes. You can change your contribution to your HSA at any time, but no more than once a month. To change your pretax payroll deduction amount through the MoneyPlus, contact your employer.
The IRS establishes annual contribution limits for individuals and families based on the level of health insurance coverage. The IRS also includes special rules that allow individuals ages 55 to 65 to make catch-up contributions. Anyone can make contributions to an HSA of an eligible individual. Excess contributions, if not withdrawn in a timely manner, may be assessed an excise tax of 6 percent.
Individuals between ages 55 and 65 are allowed to contribute an additional $1,000 per calendar year. A married couple may make two HSA catch-up contributions, so long as both spouses are at least age 55 and a separate HSA is established in the name of each spouse.
Anyone can contribute funds to your HSA. For example, family members or any other person may make contributions on behalf of an eligible individual.
You can make a one-time contribution from an IRA to your HSA, subject to the maximum annual contribution limits and provided it is a direct IRA to HSA transfer.
Yes. You can rollover amounts from your other HSA(s). While there are no transfer feeds from Central Bank, you should check with other bank custodians for details about their fees.
You must report the excess amount as gross income on your income tax return and an excise tax of 6 percent will apply. You can withdraw excess contributions by contacting Central Bank and the 6 percent excise tax will no longer apply. Note that fees may apply.
No. A spouse must open a separate HSA. However, your spouse may have access to your account by becoming an authorized signer on the account.
Yes. Annual contributions should be made by your tax filing deadline. For most individuals, this date is April 15 of the following year.
Yes. You can invest your funds once your account balance reaches $1,000. You have a variety of investments from which to choose, or you can self-direct funds with a registered representative by contacting the bank custodian, Central Bank. Investments are not guaranteed and may lose value, including the loss of principal. Investment products and services are not a deposit, not FDIC insured, not insured by any federal government agency, not guaranteed and may go down in value.
You can no longer make pretax contributions to your HSA through MoneyPlus. However, the HSA funds are available to you and can be used to pay for qualified health care expenses.

Distributions from your HSA

Yes. As long as the qualified health care expense occurred after you opened the HSA, you can pay for the expense or reimburse yourself with HSA funds. Keep copies of your itemized receipts and insurance plan explanation of benefits (EOBs) to verify your funds were used for qualified health care expenses, not paid for by another source or taken as an itemized deduction for a prior tax year.

Qualified expenses are defined by the IRS as amounts paid for the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting a structure or function of the body, as well as for transportation primarily for and essential to such care. Qualified expenses generally do not include insurance premiums, but do include premiums for long-term care insurance, COBRA coverage, health care coverage while receiving unemployment compensation, or Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare Supplement (Medigap) policy).

See IRS Publication 502 and IRS Publication 969 for more information.

Yes. You can use HSA funds to pay for qualified health care expenses for yourself, your spouse or dependent even if they are covered under another health plan. Generally, people qualifies as your dependents if you claim them as an exemption on your federal income tax return. Be sure to consult a qualified tax advisor for further information about your personal situation.

HSA funds can be spent on current year expenses or saved for future expenses to pay for qualified medical, dental, vision and prescription drug expenses as defined in IRS Publication 502. Funds used for non-health care expenses are subject to income tax and, if you are under age 65, are subject to a 20 percent IRS penalty.

For a list of qualifying expenses, visit www.irs.gov or Central Bank’s website.

When you open an HSA, you will receive some exclusive features designed to make paying and tracking your qualified expenses seamless and user-friendly. You will receive a Mastercard® debit card for each payment and the opportunity for free online Bill Pay. You will also have access to your account statement online.
Contact Central Bank for assistance in returning the funds to ensure it is not reported as a current year contribution.
HSA funds used for something other than qualified health care expenses are considered part of your gross income and are subject to applicable income tax and a 20 percent tax penalty. Funds used after an account holder’s death or disability or after age 65 are not subject to the 20 percent penalty.

Yes. Individual account holders must file IRS Form 8889 with their annual tax return to report contributions and distributions from the account. Central Bank, the bank custodian, will send two tax forms to you:

  • Form 5498-SA to report the contributions and rollovers made during the previous calendar year; and
  • Form 1099-SA to report the total amount of distributions from the HSA.
Yes. If you designate your spouse as the beneficiary, the account will be treated as your spouse’s HSA after death. If your spouse is not the beneficiary, the account stops being treated as an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. If your estate is the beneficiary, the value is included on your final income tax return. You can also designate a trust as the primary or contingent beneficiary.