HSA (Health Savings Account)
One very important requirement to open a Health Savings Account, is being enrolled in ISD 728's $3,000/$6,000 High Deductible Health Plan. To further determine whether or not you are eligible to participate in ISD 728's Health Savings Account (HSA), please review the HSA Eligibility Checklist.
If you are currently enrolled in the School District's $3,000/6,000 High Deductible Health Plan with HSA option, you may start, stop or change your payroll-deducted contribution to your HSA via the District's online enrollment system, HRIntouch. If you have HSA dollars at another financial institution and would like to transfer those dollars to Optum Bank to consolidate your HSA dollars, please complete the Transfer form. Information on where to send it is in the lower right corner of the form.
Federal regulations limit the amount that can be contributed to an HSA in a calendar year (January 1 - December 31). The combined employer and employee contributions for the 2023 calendar year cannot exceed:
- $3,850 for single coverage
- $7,750 for family coverage
- * An additional $1,000 is allowed if an employee (or spouse when family coverage is applicable) is aged 55 or over.
Optum Bank is the District's HSA administrator. The monthly administrative fee is $2.75 effective July 1, 2017. To avoid paying the administrative fee, the minimum cash balance in your HSA account needs to be $3,000 at the end of each month.
The Last Month Rule states that if you are covered by an HSA eligible health plan on the first day of the last month of a given year, you are considered an eligible individual for the entire year. This gives you the option to contribute the entire year’s contribution limit to your HSA, which is more than you would be allowed otherwise (pro rata by month).
For example, you could begin HSA coverage in November of a given year. Come December 1st, you are covered and, per the Last Month Rule, are considered an eligible employee for that full year. That allows you to contribute up to that year’s contribution limit, if you want, even waiting a few months to make a prior year contribution. Back up the truck and load up the HSA!
However, the Last Month Rule is a powerful tool that does bear risk and further responsibility.
Please visit www.irs.gov for more complete information.
The Testing Period states that if you use the Last Month Rule, you must remain an eligible individual (covered by HDHP) for the next 12 months, so through December 1st of the following year. If you fail to remain an eligible individual (change insurance plans, lose insurance plan, receive other health coverage) during that time, any “excess” contributions you made as a result of using the Last Month Rule will be taxed and penalized. If you contribute per the Last Month Rule and end your HDHP insurance before the Testing Period ends, excess contributions will be taxed and incur a 10% penalty.
In this case, “excess” contributions are amounts you contributed in violation of the Testing Period. Said another way, you contributed more based on the Last Month Rule, and the Testing Period required you to maintain HSA eligible insurance for one year. You did not fulfill this year, and you will have to subsequently recalculate what your contribution limit would have been and pay taxes/penalty on the difference. You can see this on the Form 8889 Instructions in Section 3, Line 18.
For single and dependent coverage, if an employee submits evidence of hardship, the School District, in accordance with IRS regulations, will contribute the remainder of the annual calendar year contribution for the plan year the employee has elected to participate in a high deductible plan with an HSA and stop all monthly contributions for the remainder of the calendar year or plan year in which the employee participates in a high deductible plan with an HSA whichever comes first. If an employee leaves the District prior to the end of the calendar year, any unearned contribution will be paid back to the District.
To learn more about HSAs, how they work, and what are eligible expenses, please click on the links below or go to www.Optumbank.com.
- HSA investing made easy - Learn how to invest part of your HSA in mutual funds
- Investing with an HSA - Discover how the investing feature works for an HSA
- Investing: Overview - Learn how to invest your HSA dollars in mutual funds
- HSAs: Part of your financial plan - Ways to include an HSA as part of your overall financial planning strategy
- Planning for retirement with an HSA - Learn how much you might need for medical expenses in retirement, and ways to plan ahead for it
- HSAs and adult children: For ages 18-26 - Learn about HSA eligibility when adult children are covered under their parents’ HDHP
- Additional videos and resources are available on the optumbank.com portal under the Resources tab.