If you choose the High Deductible Health Plan, you are eligible to participate in the Health Savings Account (HSA) through Discovery Benefits. The HSA is a triple tax-advantaged account to help fund your out-of-pocket health care costs. For those making $60,000 or less, JHU will make a contribution to your HSA to help offset your higher deductible. You are eligible to contribute to your HSA on a pre-tax basis and unlike the FSA, the funds rollover from year-to-year. You own the funds forever and decide when you want to use them. You can use your HSA funds to pay for eligible medical, prescription, dental, vision, and other health care expenses that you incur today – or later in life.
Health Savings Account
In order to have a HSA account, you must be enrolled in the university’s CareFirst BlueCross BlueShield High Deductible Health Plan. To be eligible, you must meet the following requirements, as defined by the IRS:
- You are not covered by any other non-HDHP plan, such as a spouse’s plan.
- You are not enrolled in Medicare, TRICARE or TRICARE for Life.
- You cannot be claimed as a dependent on someone else’s tax return.
- You have not received Veterans Affairs (VA) benefits within the past three months, except for preventive care. If you have a disability rating from the VA, this exclusion does not apply.
- You are not covered by a traditional Health Care Flexible Spending Account (FSA) or Health Reimbursement Account (HRA). Alternative plan designs, such as a limited-purpose FSA or HRA, are permitted.
The HSA offers a number of unique features:
Account is Yours and is Portable
HSA funds are available as they accumulate in the account. Once your balance reaches $1,000, you can choose to invest it, allowing it to grow over time. Unused funds roll over from year-to-year and if you leave the university, you can take your HSA with you. Think if it as a savings tool for your short – and long – term future. You can choose to use the funds now for eligible expenses or set aside the funds on a pre-tax basis for later in life.
Triple Tax Savings
A health savings account is a tax-favored savings account created for the purpose of paying medical expenses. This account offers triple tax savings:
- Contributions to the account are tax-free.
- Funds, and any applicable dividends or interest, accumulate tax-free.
- Distributions used for qualified expenses are tax-free.
Pair with a Limited Purpose FSA
Due to IRS rules, you cannot participate in the general-purpose Health Care FSA if you elect an HDHP with an HSA. However, you can participate in the Limited Purpose FSA to maximize your savings and tax benefits. The Limited Purpose FSA can be used for eligible dental and vision expenses only.
For those making $60,000 or less, JHU will make a contribution to your HSA to help offset your higher deductible. The amount of the annual contribution will depend on your salary band as follows:
- < $40K band: $500 Single/$1,000 Family*
- $40 – $60K band: $250 Single/$500 Family *
*Family includes two or more individuals
The university contribution will be fully funded in the January following Annual Enrollment. If you are become newly eligible for coverage and elect the HDHP after Annual Enrollment, the university contribution will be prorated.
Employee Contributions are Pre-Tax
In 2020, you can contribute up to $3,550 per individual and up to $7,100 per family (including the JHU contributions) on a pre-tax basis. If you are 55 or older, you can make an additional catch-up contribution of $1,000.You can adjust your contribution amount anytime throughout the year via the benefits enrollment portal.
You have the ability to contribute to your HSA through pre-tax payroll deductions. Your deductions may be changed at any time throughout the year. To view or change your payroll deduction simply access the benefits enrollment portal by clicking on the myChoices Health & Life Enrollment tab from the Benefits & Worklife homepage. Select Life Events and then Health Savings Account (HSA) Contribution. From there you can adjust your contribution.
You also have the option to make direct deposits into your account with Discovery Benefits at any time throughout the year. These deposits would be on a post-tax basis but would be deducted on your taxes (no need to itemize).
Monitor your Funds and Manage Reimbursements:
Log into your Discovery Benefits account at www.discoverybenefits.com or use the Discovery Benefits Mobile app to monitor your balance and help manage your savings goals.
You are also able to request a distribution from your HSA within the Discovery Benefits site or mobile app. The process is simple and does not require documentation but you should always save your backup documentation for IRS purposes.
Invest your HSA
Once your account has reached a minimum balance of $1,000 you are able to invest your funds. Discovery Benefits offers a wide variety of mutual funds. Click here to learn more about investing in your HSA.