2018 HEALTH SAVINGS ACCOUNT (HSA) FREQUENTLY ASKED QUESTIONS

Transcription

1 HSA Overview 2018 HEALTH SAVINGS ACCOUNT (HSA) FREQUENTLY ASKED QUESTIONS 1. What is the Rimkus Consulting Group Health & Savings Plan? The Rimkus Consulting Group Health & Savings Plan is a Consumer Driven Health Plan. It is made up two components: a High-Deductible Health Plan (HDHP) and a Health Savings Account (HSA). Individuals covered by the Rimkus Consulting Group. Health & Savings Plan pay lower premiums for their health plan because the deductible is higher. Using a tax-advantaged HSA, you can set aside extra money that can be used to help satisfy the deductible. 2. What expenses are eligible for reimbursement? Typical expenses include: Medical expenses before and after you meet your health plan deductible Dental care services Vision care services Prescription services Certain medical equipment A more comprehensive list of eligible expenses is at this link: IRS Publication Medical and Dental Expenses 3. Who is eligible to open a Health Savings Account (HSA) Anyone who: Is covered under a qualified high deductible health plan (HDHP) Is not enrolled in Medicare* Is not covered by Tricare or have accessed VA benefits in the last 90 days* Cannot be claimed as a dependent on another person's tax return See the section on HSAs and Coordination with Flexible Spending Account for additional limitations. If your dependents are covered by Medicare or Tricare, and you are not, you can still open and contribute to an HSA at the family level. Expenses for all dependents are eligible for reimbursement. 1

2 4. What is a qualified High Deductible Health Plan? A qualified plan must have a deductible that is at least $1,350 for single coverage, $2,700 for family coverage, and must not contain any copayments for services before the deductible is satisfied. Rimkus Consulting Group s Heath & Savings plan is a qualified high deductible health plan. 5. At the end of the year, if I have a balance in my HSA account, will I lose those funds? No. The advantage of establishing an HSA is that funds continue to roll over each year. 6. If I am enrolled in my spouse s plan, am I eligible to establish and contribute to an HSA? You are not eligible for an HSA if you are covered by any other health plan that is not a qualified high deductible health plan. 7. If my spouse is enrolled in an HSA plan can we share the account? If both you and your spouse are enrolled in single coverage in a qualified high deductible health plan, then you must each have your own HSA. Contributions cannot exceed the Family limit total of $6,850 in 2018 between the two accounts. 8. I have a dependent age 26. Can I be reimbursed from my HSA for eligible expenses for this dependent? You may use HSA funds for anyone that qualifies as a tax dependent under IRS Code Section 152, even if they do not have qualifying HDHP coverage. As a reminder, though the Affordable Care Act now allows dependent children to remain on your health insurance plan until age 26, the IRS still views dependents for H.S.A. reimbursement purposes as those under the age 19 or 24 if a full-time student. 9. What happens to the money if I am no longer eligible to contribute to an HSA? If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses. 2

3 10. Can I reimburse myself for insurance premiums under the HSA account? You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. Health care continuation coverage (such as coverage under COBRA). Health care coverage while receiving unemployment compensation under federal or state law. Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). Life Events with a HSA 1. If I am having a baby this year what things do I need to consider as part of the enrollment process for adding the child to the HSA plan? You have 30 days from the date the baby is born to add them to the applicable insurance plans. If you are going from a single to family plan, your HSA contribution limits will change on the first day of the month that you elected family coverage. This will allow you to contribute more to your HSA on a pro-rated basis. 2. I currently do not have my spouse covered under my medical plan and need to add them mid-year due to them losing coverage under their employer s health plan (i.e., layoff). How can this impact my HSA by enrolling my spouse on the plan? You have 30 days from the date the coverage is terminated to add your spouse to the applicable insurance plans. If currently enrolled as Employee Only under the medical plan your HSA contribution limit will increase on the first day of the month that you elect family coverage (EE + 1 or more). 3. What happens to my HSA account if I get divorced? The HSA owned by one spouse may be divided or given to the other spouse by court judgment in a divorce. 3

4 4. I recently got married and now have stepchildren. How does this impact the HSA if I enroll them in the HSA plan? Adding stepchildren to your plan may allow you to increase your HSA contribution. 5. What happens if I lose my job or my hours are reduced where I am no longer eligible for medical benefits? If you elect COBRA benefits, you can use your HSA to pay for your COBRA premiums. 6. What happens if I suffer a disability? If you lose HDHP coverage under the Rimkus Consulting Group plan because you no longer work, you are ineligible to continue contributing to your HSA. You can use your HSA funds to make COBRA payments if you become eligible for COBRA coverage as a result of your disability. HSAs and Coordination with Health Care FSA 1. If I am currently enrolled in the Flexible Spending Account through Rimkus Consulting Group for health care expenses, am I eligible to establish and contribute to an HSA? If, at the end of the plan year, you have a balance in your Flexible Spending Account, you will not be eligible to establish and contribute to the HSA account unless you roll your balance into the Limited Purpose FSA plan. The Limited Purpose FSA plan will be used for dental and vision expenses only. 2. If I have a balance in my Flexible Spending Account at the end of the plan year, can I elect to forfeit the balance so that I may establish and contribute to an HSA? Yes, that is an option. However, you should consider rolling your balance over into the LImited Purpose FSA plan instead of forfeiting the balance. 3. If my spouse has a Flexible Spending Account through their own employer, am I eligible to establish and contribute to an HSA? 4

5 If your spouse s plan does not have a grace period and if it does not allow rollovers, then you may establish and contribute to an HSA at the end of your spouse s Flexible Spending Account plan year. If your spouse s plan has a grace period or allows a yearend rollover, then you will not be able to establish an HSA until the first day of the month following end of the grace period or the plan has the rollover feature, the first day of the new plan year in which the account balance is $0. Note: If you do not have HSA-compatible health coverage for an entire calendar year, you must prorate your HSA contributions to avoid tax penalties. An example follows: Annual Contribution Limit 12 Months X # of months eligible = Prorated Contribution $3,450 (individual) 12 Months X 4 = $1,150 $6,850 (family) 12 Months X 6 = $3,425 You can, however, contribute the maximum amount for that year provided you maintain coverage until December 31st. Remember to account for any Company contributions to your HSA when determining your contributions. 4. Can I continue my Flexible Spending Account for Dependent Day Care expenses if I enroll in the HSA plan? Yes. Retirement/Medicare Coordination 1. If I am enrolled in Medicare A and/or B, am I eligible to establish and contribute to and HSA? No, under IRS guidelines, this is not an option. 2. If I am enrolled in Medicare A and/or B, am I still eligible to enroll in the High Deductible health plan and receive benefits? Yes, the High Deductible health plan would be primary and Medicare would be secondary as long as you were actively employed with Rimkus Consulting Group. 5

6 3. What happens to the money in my HSA when I retire? If you retire before age 65, you can still use your HSA for medical expenses, such as COBRA premiums, long-term care premiums, etc. However, if you go to work for another employer that offers healthcare coverage you may not be eligible to use your HSA monies for payment of these premiums. If you are age 65 and older, you may continue to use your HSA funds to pay for qualified medical expenses; for instance, you may use your HSA to pay certain insurance premiums, such as Medicare Parts B and D, Medicare HMO, or your share of retiree medical coverage offered by a former employer. Funds cannot be used tax-free to purchase Medigap or Medicare supplemental policies. If you use your funds for qualified medical expenses, the distributions from your account remain tax-free, i.e., free from federal income taxes or state income tax (for most states). If you use the monies for non-qualified expenses, the distribution becomes taxable, but due to your age, exempt from the 20% penalty. Once you are enrolled in Medicare, you are no longer eligible to contribute to your HSA. If you reach age 65 or become disabled, you may still contribute to your HSA if you have not enrolled in Medicare. HSA Funding and Contributions 1. What is the maximum I can contribute into an HSA account? Total contributions by you and Rimkus Consulting Group. cannot exceed $3,450 for single coverage and $6,850 for family coverage for the 2018 calendar year. Note that there are proration rules if you are a mid-year new hire see Question 5 under this section. 2. If I am over age 55, can I contribute more than the standard maximum? Yes, there is a catch-up provision. You may contribute an additional $1000. If you turn 55 in 2018 you can contribute an additional $1,000 anytime in the year How soon will I have access to the funds contributed into the HSA? Under IRS guidelines, you will only have access to funds that have been deposited into your HSA account. 6

7 4. Can I roll over funds from an IRA? Yes. You are allowed a one-time transfer of funds from an IRA to an HSA. The transferred amount, when combined with other HSA contributions for the year, may not exceed your maximum annual contribution limit. The transfer must be a direct transfer from the trustee of your IRA to the custodian or trustee of your HSA, Optum Bank. Also, after making such a transfer, you must continue to participate in a qualifying HDHP for 13 consecutive months, beginning in the month of the IRA-to-HSA transfer. If you do not, you will be subject to income taxes and a 10% penalty tax on the transferred amount, except in the case of death or disability. 5. If I am a new hire and enroll in the HSA plan will I still receive the HSA employer contribution into my account? Yes, the employer contribution to the HSA is prorated, effective the first of the month following 30 days of employment (i.e., if your hire date is July 15, the employer contribution will be effective September 1. You would receive 4 months of the employer contribution. The employer contribution is paid monthly on the last pay period of the month. 6. I am a new hire starting after January 31 and want to enroll in the Rimkus Consulting Group. Health & Savings plan. Can I contribute the maximum annual amount to the HSA? If you do not have HSA-compatible health coverage for an entire calendar year, you must prorate your HSA contributions to avoid tax penalties. You can however, contribute the maximum amount for that year provided you maintain coverage until December 31 st of that year. 7. What happens if I have a Qualifying Life Event? If you begin the year with family coverage and switch to single coverage in July of that year, the IRS contribution limit is prorated based on the number of months of HDHP coverage in each of the tiers (e.g., 6 months of family HSA contributions and 6 months of single HSA contributions.) If you begin the year with single coverage and switch to family coverage, you can make the full family HSA contribution for the year as long as you have family coverage under your high deductible health plan through December 31 st of that year. 7

8 8. If I become married during the year, thus have a Qualifying Life Event, will I receive a pro-rated employer contribution since I moved from an Individual to Family coverage? Yes, you will receive additional employer contributions into your account as a result of moving from Individual to Family (Employee Plus One or More). The contribution amount will change the first of the month following your coverage status change. 9. If I have an HSA account from a prior employer, can I roll those funds into the HSA account I establish through Rimkus Consulting Group? Yes, that is an option. However, that is not required. You can own more than one HSA account. Contributions cannot exceed the calendar year limit for all accounts combined. 10. Can I change my employee HSA contributions outside the Open Enrollment window? Yes, you can increase, decrease or stop your HSA employee contributions anytime throughout the year. Services and Reimbursements 1. When I use the health plan for prescriptions, are there discounts applied to my prescriptions? Yes, the Rimkus Consulting Group. pharmacy program is through United Healthcare. They have negotiated discounts with the major chain pharmacies. All discounts are not the same, so you may want to compare costs at different pharmacies for your up to 30- day supply prescriptions to lower your out of pocket costs. 2. What services are applied towards the health plan calendar year deductible? All covered medical and pharmacy services are applied towards the deductible with the exception of any services categorized as preventive care under the Plan. HSAs and Taxation 1. If I decide to close my HSA account, are there any tax consequences? 8

9 There are no tax penalties for closing your HSA. However, if you use HSA funds for other than qualified medical expenses, those distributions will be subject to ordinary income tax, and in some cases, a 20% penalty. You may close your account without incurring tax penalties as long as you: Use the funds in your account for qualified medical expenses Transfer your funds to another HSA custodian 2. Are the contributions made into my account by Rimkus Consulting Group. taxable income to me? No, they are not. 3. If I take a distribution from my HSA account and it s not for medical, dental or vision expenses, when will the penalty be applied? The penalty will be applied and due when you file your annual tax return. 4. Am I able to invest dollars in my HSA account? Yes, once you have an accumulated balance of $2,000 you may utilize the investment option feature offered by Optum Bank. 5. When I take distributions from my HSA account, do I have to report those on my annual income tax? Yes, you will complete Form 8889 with your annual tax return. 6. If I have questions about my HSA who can I contact? For health insurance related information, please contact United Healthcare. For HSA account information contact Optum Bank. Benefit vendor contact information is located in your Benefit Guide. 9