UNDERSTANDING YOUR OPTIONS HSAs and PCAs
It s that time of the year; time to review your health coverage options. We know sometimes it's overwhelming. But don t worry. We re here to help YOU understand all your options and help you make the right choice for you and your family.
THE BASICS This year, you ve got two medical plan options both offer an account to help cover your outof-pocket health care expenses. One plan includes a Health Savings Account (HSA) and the other includes a Personal Care Account (PCA).
OVERVIEW So what s the difference? An HSA is an account that you own. It goes where you go-wherever life takes you. A PCA is an employer-owned account that is available only as long as you are enrolled in USAA s medical plan.
FUNDING Who puts money into these accounts, and how? The HSA is owned and funded by you with tax free funds! Everyone can make direct contributions to their account. For employees, money is deducted from your paycheck before it is taxed and deposited into your HSA. As your HSA balance grows, you can use that money for eligible expenses. We call this, fund as you go. The PCA is funded every January 1 by USAA, and you may use those funds right away for eligible expenses.
ELIGIBLE EXPENSES What expenses are eligible with these accounts? HSAs can be used to cover medical, prescription, dental and vision expenses. HSA funds can be used to cover eligible expenses for your tax dependents PCAs cover medical and prescription expenses. PCA funds can be used for eligible expenses for dependents covered on your plan
TAX ADVANTAGES AND INVESTMENT OPTIONS What else should I know about HSAs? HSAs have tax advantages. Your HSA contributions are pretax, and withdrawals are taxfree if used for qualified medical expenses. You ll also earn interest on your balance and have the option to invest your HSA funds. Interest earnings and investment growth are also not taxed. We call this triple tax savings.* PCA account contributions are not considered taxable income, and there are no investment options with your PCA funds. * Review annual enrollment guides for IRS contribution limit details
FUNDS EXPIRATION Will my unused account funds expire? At the end of the year, any unused HSA funds roll over. And there is no limit on how much rolls over. Plus, all your HSA funds go with you if your employment status or health coverage ever changes. PCA funds roll over each year too. You must remain enrolled in USAA s medical plan to access PCA funds
What happens to my current PCA balance if I choose the HSA Plan Option? You will not lose your PCA balance You will not lose your PCA balance it stays in your account. You will be able to use your remaining PCA dollars for medical and prescription expenses after your out-of-pocket expenses have reached $1,300 for an individual or $2,600 for a family in 2017.
COMPARISON Now that you know a lot more about these accounts, let s look at them side by side. HSA PCA You own the account X USAA contributes X All funds available on January 1 X Medical and Rx expenses Dental and Vision expenses X Triple tax advantages X Investment options X Account stays with you if you drop medical coverage X
ACCOUNT USAGE We ve made it super easy! Your account balance is available any time on the CYC portal, mobile app, or by calling customer service. When you need to pay for an eligible service, you can use your payment card and funds are deducted from your account. Or, you may submit a claim online or on the mobile app. You should always hang on to your receipts as documentation for eligible expenses. While documentation isn t required for HSA expenses, it might be required for the PCA. It is easy to submit documentation by uploading it online to the CYC portal or by using the mobile app.
FSA Sidebar How does the Health Care Flexible Spending Account (FSA) work with these accounts? With the PCA, the FSA functions as usual allowing you to put aside pre-tax funds for use on eligible medical, prescription, dental and vision expenses. With the HSA, it works a little bit differently. After you have met your 2017 out-of-pocket expenses of $1,300 for a single and $2,600 for a family, it switches to full purpose and covers eligible medical, prescription, dental, and vision expenses.
WHY WOULD I WANT AN HSA AND AN FSA? Depending on your financial situation, and predicted health care expenses, it might make sense to take advantage of having two tax-free accounts. But, keep in mind that the FSA is limited to dental and vision prior to you meeting your deductible.
CHOOSING THE RIGHT ACCOUNT So, how do you decide? HSA ELIGIBILITY Because HSAs offer so many tax advantages, there are some eligibility rules. You are ineligible to open an HSA if you are covered by Medicare, Tricare, or by any other health insurance plan that is not HSA-qualified, such as a plan offered by your spouse s employer. Additionally, beginning on January 1, 2016, you are ineligible if, in the past three months, you have received Veteran s Administration benefits that were not connected to a service disability. PCA ELIGIBILITY PCAs do not have any eligibility requirements.
PLAN DESIGN If you ve determined that you are HSA qualified, you should next look at your health care spending. HSA Plan Options have lower premiums & a lower deductible. That means you pay less for coverage. The deductibles and maximum out-of-pockets are also different for the HSA Plan Option and the PCA Plan Option. So to figure out which plan type is best for your specific situation, do the math! ALEX on myusaabenefits.com is your personal assistant to help with the calculations.
If you ve done the math and are still on the fence, here are a few more questions to ask yourself. Are you looking to build a nest egg for your future health care needs with tax-free funds? If your answer is YES, then an HSA is a great savings vehicle. Are you looking for additional tax advantages? An HSA may be right for you.
TAX ADVANTAGES Because everyone s financial situation is unique, if you have any questions about how HSA tax advantages can impact your personal situation, consult with your tax advisor.
We ve covered a lot of differences between HSAs and PCAs, but the main advantages to remember about HSAs are: 1. Because HSAs always stay with you, no matter where life takes you, you never lose a single dollar from your account. 2. HSA offer interest earnings, investment options and triple tax savings, making them a great vehicle to build savings for future health care needs.
We re proud to bring YOU convenient options that put you in control of how you and Your family pay for health care.