Health Savings Account

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What is a limited-purpose Flexible Spending Account (FSA)?
This type of plan still allows you to participate in an HSA, and simply limits your FSA reimbursements to dental and vision expenses only (no medical).

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Who is administering our HDHP claims?

Starting in January 2017, employees on the High Deductible Health Plan have a choice between two administrators: CDS Group Health and Hometown Health. You can go to their secure website to review your claim status and other information. For CDS Group Health go to: cdsgrouphealth.com. For Hometown Health go to: hometownhealth.com



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What is a qualified High Deductible Health Plan (HDHP)?

In order to obtain an HSA, you must have a qualifying High-Deductible Health Plan (HDHP). An HDHP has a lower premium than conventional health plans, but has a high deductible that must be reached before the plan starts paying. Prescription drugs must be paid at contract price until the deductible is met.  HSA’s help pay for the medical expenses not covered by your HDHP— tax- free.



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What happens to the money in an HSA 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, co-pays 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; however, the coverage may not be a Medicare Supplement Policy. Medicare premiums for a dependent who has reached age 65 is not an eligible expense.

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How do I access funds in my HSA?
American Fidelity will send you a debit card to pay for your qualifying expenses. Funds are also accessible by completing a payment request form, requesting a check reimbursement or bank transfer. 

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Can I have and participate in an HSA if I am on Medicare?
No, Medicare participants are not eligible for the HSA. Even if you have waived coverage in Medicare Part B (medical) while you continue to be employed, you are still enrolled in Medicare Part A (hospital). If you had an HSA before you enrolled in Medicare, you can keep it; however, you cannot continue to make contributions to an HSA after you enroll in Medicare.

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In what bank will HSA contributions be deposited and will those funds be FDIC insured?
American Fidelity uses First Fidelity Bank, N.A. which has had FDIC insurance since July 1, 1981.

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Who will be the “bookkeeper” for my HSA?
You will be the bookkeeper. While the County will deposit their contribution and any pre-tax payroll deductions you decide to contribute, and American Fidelity is the custodian, it is  your responsibility to keep track of your deposits and expenditures and keep all of your receipts (necessary if the IRS audits you). It is also your responsibility to adhere to the regulations governing HSAs and payment of qualified medical expenses. American Fidelity does allow the option to scan receipts into their system and will save them for you should you ever be audited.

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Would dental and vision coverage be the same as they are now?
Yes.  All employees, regardless of which medical plan they are enrolled in, participate in the same self-funded dental and vision insurance plans.  You can pay for your portion of dental (other than cosmetic) and vision services from your HSA or your limited purpose FSA.

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I have a 25 year-old dependent on my health plan. Can I add them to the HSA/HDHP?
In 2010, Health Care Reform Law extended health plan eligibility to children of the covered employee until the child turns 26 years of age, so you can cover your 25 year-old on your HDHP medical plan.  However, the HSA is subject to IRS rules and guidelines, and since their definition of dependent is “up to age 24 if a full-time student,” you are not able to use your HSA funds to pay for out-of-pocket medical expenses for that dependent, even though they may be covered on your HDHP for medical expenses.

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Is the network of doctors for the HDHP the same as for the current PPO Plan?

Starting in January of 2017, individuals on the High Deductible Health Plan have a choice of two networks:  Saint Mary’s Hospital/Universal Health Network or Renown Hospital/Hometown Health Network.



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I want to cover my domestic partner on my HDHP. Can I use the HSA funds to pay for out-of-pocket expenses?

In most cases, you will not able to use your HSA funds to pay expenses for your registered Domestic Partner per IRS rules and guidelines. Please seek the advice of a tax accountant.



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Do I have to contribute to my HSA? Can I change my contribution amount at anytime?
You are not required to contribute to the HSA; however; it is a good way to save pre-tax dollars for medical expenses incurred in the future.  You can change/stop your contribution as often as you like via the Benefits and Payroll Tab in ESS.

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Can my employer contribute to my HSA?

Although it is not a requirement, Washoe County has agreed to fund a significant portion of the $2,500/individual and $2,700/family annual calendar year deductible in 2018 to help encourage participation. All employees enrolled on the High Deductible Health Plan effective January 1, 2018 will receive $2,000 contribution to their Health Savings Account. Anyone hired after January 1, 2018, will receive a pro-rated contribution to their Health Savings Account based upon their date of hire. The money in your HSA is your money and you may keep any County contributions when you change jobs or retire.



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How much does it cost to maintain my bank account with American Fidelity?

Currently, there is no cost to maintain your bank account with American Fidelity.  Upon separation from employment or transfer to another Washoe County health plan, you will be responsible for the $2 per month fee as applicable.



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Can I use my HSA to pay for medical services provided in other countries?
Yes, if the expenses are qualified medical expenses.

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I have a current FSA for medical and dependent care reimbursements. How will this impact my ability to join the HSA/HDHP plan?
You will need to spend all your FSA money by December 31, 2017 in order to contribute and have contributions made to your HSA account. While you can still enroll in a limited purpose FSA if you are participating in the HDHP/HSA, the limited purpose FSA is for vision and dental expenses only. You will still be able to have a dependent care reimbursement account.

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What is the difference between an FSA and an HSA?

Flexible Spending Accounts (FSAs) allow you to contribute pre-tax dollars to an account managed by your employer. This money can be used for health care spending, but anything left over at the end of the year is forfeited. 

HSAs allow you to contribute pre-tax dollars into an account that is owned and managed by you, the employee. The money is used for health care expenses, but unlike an FSA, the unspent amount can remain in the account year after year and it stays with you in the event you terminate from your employer.



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How do I know if the HSA is a good choice for me?
You will need to consider your options carefully, and we encourage you to attend one of the many HSA training sessions that will be held throughout the Open Enrollment period.

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Do I have to use the HSA in conjunction with the HDHP?
Yes. In order to qualify for an HSA, the IRS dictates that the employee must be enrolled in a qualified HDHP. IRS regulations for 2018 require the HDHP to have a minimum  deductible of $1,350 for individuals and $2,700 for families. The premium for an HDHP generally costs less than a traditional health care plan, so the money that you save can be put in your HSA. You own and control the money in your HSA and decisions on how to spend the money are made by you.

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My spouse and I both currently work at Washoe County. Can we both have an HSA/HDHP?
Since you are covered as individual employees by Washoe County, you will have a separate $2,500 annual deductible if both enroll in the HDHP/HSA. It may be more cost effective for one spouse to enroll in the HDHP/HSA with the $2,500 deductible ($2,700 deductible for family coverage) and the other spouse to enroll in the current PPO or Premier HMO plan. Monies from the employee with the HSA account can be used for out-of-pocket medical expenses for family members regardless of whether or not they are on the same health plan.

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Can I roll the money from my HSA into an IRA?
No.  However, you are allowed to make a one-time transfer from an IRA to an HSA.  You are also allowed to rollover funds from an Archer MSA or an existing HSA to a new HSA.  We recommend that you seek advice from a financial expert before making any transfers or rollovers.

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Can I purchase long-term care insurance with money from my HSA?
Yes, if you have tax-qualified long-term care insurance.  However, the amount considered a qualified medical expense depends on your age.  See IRS Publication 502 for the amounts deductible by age.

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What is the maximum amount of pre-tax dollars that I can contribute to an HSA?

The IRS has set contribution limits of $3,450 for individuals and $6,900 for families for 2018. Individuals 55 and over may contribute an extra $1,000 to their HSA.

The County’s HSA are administered by American Fidelity, and employees can make pre-tax payroll deductions every pay period.  



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What happens to HSA funds when an employee is no longer covered by the qualifying High Deductible Health Plan leaves Washoe County, or turns age 65?

The HSA is owned by the employee; therefore, the funds remain in the account.  The employee can choose to use the funds for qualified medical expenses or save the funds for future medical expenses.



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What happens if I use the money in my HSA for expenses other than medical?
The expenditure will be taxed, and for individuals who are not disabled or over age 65, subject to a 10% tax penalty.  It is your responsibility to report this information on your income taxes.

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What if I contribute more than the employee contribution limit?

 The HSA contribution maximums are set up in payroll to not exceed the IRS limitations. If an employee’s contributions exceed the IRS limitation, the employee contribution amount will not be deducted from their paycheck.



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What happens if I spend more than I have in the account?
If you try to use your debit card for an expense that exceeds the available balance, your card will simply be declined at the time of purchase.

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Can I pay my health insurance premiums with an HSA?
In most cases, no. You can only use your HSA to pay health insurance premiums if you are collecting federal or state unemployment benefits, or if you have COBRA continuation coverage through a former employer.

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Who decides whether the money I’m spending from my HSA is for “qualified medical expense?”
You are responsible for that decision, and therefore should familiarize yourself with what qualified medical expenses are (at least as partially defined in IRS publication 502).  Also, keep your receipts in case you need to defend your expenditures or decisions during an audit.

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Can I stay on the HSA/HDHP when I retire from Washoe County?
 Yes. The High Deductible Health Plan with a Health Reimbursement Account (HRA) is another health plan option available to retirees.

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Do unused funds in an HSA roll over year after year?
Yes. The unused balance in an HSA automatically rolls over year after year.

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My spouse has a Flexible Spending Account or Health Reimbursement Arrangement through their employer. Can I still have an HSA through my employment with Washoe County?
No, the IRS does not allow you to have an HSA if your spouse’s FSA or Health Reimbursement Account (HRA) can pay for any of your medical expenses before your HDHP deductible is met.

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I am an active employee that has access to, but I am not utilizing, veteran’s benefits or Tri- Care. Can I enroll in the HSA/HDHP?

Yes, if you are a veteran who has not retired from the military and is not enrolled in Tricare, you can enroll in the HSA/HDHP. The only exception is for veterans with service-related disabilities. The Internal Revenue Code was amended recently to allow veterans receiving VA medical care for service-related disabilities to fund an HSA.



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What is a Health Savings Account?
Health Savings Accounts (HSAs) are another option when it comes to conventional health insurance. It is a tax-free savings account that gives you the power to decide how to pay for your medical care. You can pay for qualified medical expenses now or save for future medical expenses—all while earning interest on your money! Tax-free withdrawals can be made by the employee to pay for qualified medical expenses incurred by the employee, spouse, children or other dependents.