Health Savings Account Program FAQs

ConsumerDirect options are available for groups with more than 50 employees

HSA Basics

1. What is a Health Savings Account?

2. Who can open an HSA?

3. What is a high-deductible health plan (HDHP)?

HSA Contributions

4. When can I start making contributions to my HSA?

5. How are HSAs funded?

6. How much may I contribute to my HSA each year? Is there a limit?

7. How do I contribute to my HSA?

8. What happens to my contributions if I'm only in my HDHP for part of the year?

9. Who can contribute to my HSA?

HSA Advantages

10. What happens to money left over in my HSA at the end of the year?

11. What makes an HSA triple-tax advantaged?

12. Is there any time when my HSA money is not tax deductible?

13. What happens to my HSA if I change my job or leave my health plan?

14. What happens to my HSA when I die?

Using an HSA

15. How do I set up my HSA?

16. When will funds from my HSA be available for withdrawal?

17. What are qualified health care costs?

18. Are health insurance premiums considered qualified health care costs?

19. What happens to the money in my HSA after I turn 65?

20. Are there administrative fees with an HSA?

21. Where can I invest the money that is in my HSA?

22. Where can I use my debit card?

23. Do I have to keep my receipts showing what I withdrew from my account?

24. Do I need to itemize on my tax return? What does the IRS require me to report on my taxes?

Your ConsumerDirect Health Plan

25. How does the aggregate (combined) deductible for the ConsumerDirect EPO and PPO HDHPs work?

26. Will I be covered for preventive care?

27. Are my prescription drug costs covered under the plan?

28. Will I have to pay out of pocket at the time of service?

Support from EmblemHealth

29. Where can I view my claims?

30. What kind of online support can I expect from EmblemHealth?


HSA Basics


1. What is a Health Savings Account?
A Health Savings Account (HSA) is an account you can put money into to save for certain future health care costs. HSAs are often described as health care 401(k)s. This is because these accounts are owned by you, roll over from year to year and move with you when you switch jobs or retire. What's different is that money in an HSA may carry triple tax benefits. Contributions, earnings and distributions are free from federal taxes and Social Security, and sometimes state taxes, when used for qualified health care costs.


2. Who can open an HSA?
Eligible individuals are defined in the Medicare Prescription Drug Improvement and Modernization Act (Medicare Act of 2003). This is the law in which Congress approved tax-advantaged HSAs. As stated by that law, eligible individuals:

  • Must be covered by a qualified high-deductible health plan (HDHP).
  • Cannot be covered by any health care plan that is not an HDHP. The exceptions are dental, vision and long-term care plan.
  • Cannot be enrolled in Medicare
  • Cannot be claimed as a dependent on another person’s tax return

3. What is a high-deductible health plan (HDHP)?
You must have coverage under an HSA-qualified HDHP to open and contribute to an HSA. Typically, an HDHP is a health benefits plan that calls for covered individuals to pay larger than normal deductibles before coverage begins. For example, an HDHP does not cover first-dollar health care costs. For 2015, the US Treasury and IRS rules set the amounts shown below as requirements for an HSA-qualified high-deductible plan:

  • Minimum annual in-network deductibles of $1,300 for individuals and $2,600 for families.
  • Maximum in-network out-of-pocket expenses of $6,450 for individuals and $12,900 for families (including deductibles and copays, but not including premiums).

Please note that these amounts may be adjusted once a year for inflation.


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HSA Contributions


4. When can I start making contributions to my HSA?
You can start making contributions to your HSA once your HDHP becomes effective.


5. How are HSAs funded?
HSAs are funded by you and/or your employer’s contributions to a savings account managed by a bank, insurance company or financial institution that is approved to hold these assets.


6. How much may I contribute to my HSA each year? Is there a limit?
Contributions can be made to your HSA each year that you're eligible, and your eligibility is determined by the effective date of your HDHP coverage. In 2015, you can contribute up to $3,350 for an individual and up to $6,650 for a family. These amounts are adjusted once a year for inflation.


7. How do I contribute to my HSA?
HSA contributions can be made by payroll deduction as part of your benefit plan. Contributions can also be made on a lump-sum basis at any time during the plan year. Contributions can be made as late as April 15 of the next year.


8. What happens to my contributions if I'm only in my HDHP for part of the year?
If you are an eligible individual during part of the tax year, you are treated as being an eligible individual for the whole tax year for purposes of computing the amount you can contribute to your HSA.


9. Who can contribute to my HSA?
Any eligible individual may contribute to an HSA. For an HSA set up by you, your employer or both, you and your employer may contribute. Eligible family members may also make contributions to an HSA for another family member.


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HSA Advantages


10. What happens to money left over in my HSA at the end of the year?
Any money left over in your account at the end of the year will carry over to the next. There's no “use it or lose it” rule with an HSA.


11. What makes an HSA triple-tax advantaged?
HSAs are considered triple-tax advantaged because:

  1. Employee contributions are tax-deductible.
  2. Interest and investment earnings on the account are tax-free.
  3. As long as funds are used for qualified health care costs, withdrawals are tax-free.

12. Is there any time when my HSA money is not tax deductible?
If you withdraw money for uses other than qualified health care costs, that money is treated as taxable income. If you withdraw money for nonqualified health care costs before you reach the age of 65, there's an additional 20 percent penalty of the amount withdrawn.


13. What happens to my HSA if I change my job or leave my health plan?
You own your accounts. If you change jobs or health plans, you keep your HSA. If you are no longer in an HDHP, you may no longer contribute to your HSA, but you may still take out funds from your account for qualified health care costs.


14. What happens to my HSA when I die?
If you're married, your spouse becomes the owner of the account and may use it as if it were his or her own HSA. If you are not married, the account will no longer be treated as an HSA upon your death. It will pass either to your beneficiary or become part of your estate. It will then be subject to any taxes.



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Using an HSA


15. How do I set up my HSA?
We have provided you with access to an online application to HealthEquity, an HSA administrator. However you can sign up with any HSA administrator of your choosing.


16. When will funds from my HSA be available for withdrawal?
As soon as funds are deposited, they are available for withdrawal. When you have a qualified health care cost, you may withdraw money from your HSA to pay back yourself or your health provider. But if you prefer to leave money in your HSA and let it grow, you may choose to pay for a health care cost with other funds.


17. What are qualified health care costs?
Qualified health care costs are defined by Section 9003 of the Affordable Care Act (ACA), which established a new uniform standard for health care costs. Qualified costs include, but are not limited to:

  • Doctors' visits
  • Hospital costs
  • Lab, X-rays and other diagnostic services
  • Prescription drugs
  • Over-the-counter drugs with a doctor’s prescription (except for insulin, where no prescription is needed)
  • Hearing aids
  • Wheelchairs
  • Organ transplants

You can get a list of IRS-qualified health care costs (IRS Publication 502) on the IRS Web site. Or you can call 1-800-829-3676.


18. Are health insurance premiums considered qualified health care costs?
In general, you may not use HSA money to pay for insurance premiums except in certain cases, including:

  • Any health plan coverage while receiving federal or state unemployment.
  • COBRA continuation coverage after leaving your job with a company that offers health coverage.
  • Qualified long-term care insurance.
  • Medicare premiums and out-of-pocket costs, including deductibles, copays and coinsurance for Medicare Parts A, B, C and D.

19. What happens to the money in my HSA after I turn 65?
You can continue to use your account tax-free for qualified medical expenses. When you enroll in Medicare, you can use your account to pay 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 health care insurance premiums. But you cannot use your account to buy Medicare supplemental insurance or a Medigap policy.

Once you reach age 65, you can also use your account to pay for things other than health care costs. If used for other costs, 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-health care costs must pay income tax and a 20 percent penalty on the amount withdrawn.


20. Are there administrative fees with an HSA?
Your HSA administrator will provide you with the details regarding any account set-up fee and monthly maintenance fee for your accounts.


21. Where can I invest the money that is in my HSA?
Once your account is opened, you will get more information about your investment choices.


22. Where can I use my debit card?
You can use your debit card at any place or store that offer qualified health care services.


23. Do I have to keep my receipts showing what I withdrew from my account?
Yes, you should keep your receipts with your tax records.


24. Do I need to itemize on my tax return? What does the IRS require me to report on my taxes?

You do not have to itemize HSA costs to get the tax deduction. But you need to fill out IRS form 8889, along with your income tax return. This form tells the IRS your total withdrawals from and deposits to your account during the year.


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Your ConsumerDirect Health Plan


25. How does the aggregate (combined) deductible for the ConsumerDirect EPO and PPO HDHPs work?
To understand how an aggregate (combined) deductible works, it is important to define who will receive benefits for covered services:

  1. A single member with no dependents or
  2. A family member with dependents

If you are a single member with no dependents, you must meet your plan's individual deductible once per plan year before benefits begin. If you are a family member with dependents, the sum of your family’s out-of-pocket costs are used to meet your health plan's aggregate (combined) deductible. This means there is one family deductible that must be met once per plan year before benefits begin for anyone in the family.

Let’s take as an example the ConsumerDirect EPO plan. It has an individual deductible of $3,000 and a family deductible of $6,000. The plan pays 80 percent of the allowable costs for covered services and the remaining 20 percent is paid by the member.

  • For individual (i.e., self-only) coverage: Once a member with single coverage (individual) meets his or her deductible of $3,000, the plan covers 80 percent of the allowable costs for covered services and the individual pays the remaining 20 percent.
  • For family or multi-person coverage: A member who has a family plan that includes coverage for his or her dependents has a deductible of $6,000. The $6,000 deductible can be met either by one family member or the aggregate (combined) costs of the entire family before any one family member will receive benefits for covered services. For example, a family of four with a $6,000 deductible will use the expenses of all four of the family members toward meeting the once a year deductible. Or, one member can have a claim that is $6,000 and meet the family deductible. Once the deductible is met, the plan covers 80 percent of the allowable costs for covered services and the remaining 20 percent is paid by the member.

Preventive services are not subject to the deductible and are covered in full.


26. Will I be covered for preventive care?
HDHP plans cover in-network preventive care services as defined by the Affordable Care Act. That means your annual physical, screenings and vaccines; mammograms, GYN exams and well-baby care are not subject to the plan's deductible, coinsurance or copays.


27. Are my prescription drug costs covered under the plan?
Until you meet your deductible, you will pay the cost of your prescriptions at the plan's discounted amount. (Of course, you may pay yourself back for these costs from your HSA.) Once you meet the deductible, there may be a copay or coinsurance amount set by your specific plan. See your Benefits Summary for details.


28. Will I have to pay out of pocket at the time of service?
If you see an EmblemHealth in-network doctor, the practitioner will bill EmblemHealth directly. EmblemHealth will then send you and the doctor an explanation of benefits (EOB) that will tell you the amount due to or paid to the doctor.


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Support from EmblemHealth


29. Where can I view my claims?
You can view your claims by logging on to the myEmblemHealth member portal of www.emblemhealth.com. The myEmblemHealth member portal also lets you check your deductible and benefit information.


30. What kind of online support can I expect from EmblemHealth?
Visit EmblemHealth’s Web site at www.emblemhealth.com, where a link is available to make it easy for you to access your personal health and benefits information and services. Once you get a Personal Identification Number (PIN), you can log onto EmblemHealth’s secure member site myEmblemHealth to:

  • Track claims activity
  • Order new debit cards
  • Check HSA activity
  • Access valuable health information