HIGH DEDUCTIBLE HEALTH PLAN / HEALTH SAVINGS ACCOUNTS
If you are currently enrolled in NMC’s High Deductible Health Plan (HDHP), you also have set up a Health Savings Account (HSA). In addition to the contributions that NMC is making to this account, many of you have also set up pre-tax deductions from your paycheck to increase the amount available to you to use for qualified medical expenses. Just a couple facts about your HSA Account:
- Your HSA is yours to spend or save as you choose, and there is no time limit on spending your HSA funds. They automatically roll over every year until you withdraw them to pay for qualified medical expenses.
- If you feel that you have enough now to cover your medical expenses but you feel it might be more difficult to do so in later years, you can add to your HSA money until you need it. This means you can deduct pre-tax from your paycheck now and leave it there for when you reach Medicare age.
- You can change the amount you are contributing to your HSA during the year, unlike a Flexible Spending Account (FSA), which has a set deduction amount for the full year. This means you can add more to it pre-tax if an unexpected expense occurs during the year, or you can lower or stop your deduction if you feel you have enough in your HSA account.
- If you or another person wants to contribute money to your HSA after taxes, you can take an above-the-line deduction on your taxes using IRS Form 8889.
- You cannot use your HSA dollars to pay for medical expenses incurred before you started your HSA account. If you enrolled in the HDHP January 1 and started your HSA that date, you can’t pay for services done in the previous December, just those January 1 and after.
- You cannot contribute any more to your HSA once you are no longer enrolled in an HDHP.
- You can add more to your HSA account right up until you file your taxes for the year, so if you haven’t reach your contribution limit, you can make a last-minute deposit and lessen your tax burden.
- Save your receipts for anything expenses you pay for using HSA funds, in case you have to prove that you spent the money only on approved expenses. Keep the receipts with your other tax documents each year.
- If you spend money from your HSA on anything other than a qualified medical expense, you must do the following:
- Claim the amount you spent as income on your tax form using Form 8889.
- Pay income taxes on this amount.
- Pay a 20% penalty on top unless you are 65 or older, disabled, or dead.
If you would like more information on your HSA, contact Carol Kasper in HR for Priority Health’s “Health Savings Accounts for Dummies” booklet, or click below to visit Priority’s webpage for more information and several links to help you best use this account to your advantage. Priority Health’s HSA webpage