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The IRS established Health Savings Accounts as a method to provide
individuals a tax advantage to offset their health care costs. In doing so, the IRS created eligibility criteria
to qualify for the account. To be
eligible for an HSA you:
- Must be
currently enrolled in an HSA-qualified health plan;
- May not be
enrolled in any other non-HSA qualified health plan;
- May not have, or
be eligible to use, a general purpose flexible spending account (FSA);
- Cannot be
claimed as a dependent on another person’s tax return;
- May not be
enrolled in Medicare, Medicaid, HIP or Tricare;
- Must not have
used VA benefits for anything other than preventive services in the past
three months.
Based on the above eligibility qualifications, enrolling in Medicare,
Medicaid or HIP 2.0 will disqualify you from having contributions into a Health
Savings Account (HSA). Once enrolled in any of these plans, you may not receive
or make any contributions into an HSA. For
more information about HSAs please see IRS Publication 969 at http://www.irs.gov/pub/irs-pdf/p969.pdf.
Although you can no longer make contributions to your HSA once you are
covered by Medicare, Medicaid or HIP 2.0 the money that has accumulated in your
HSA from past years remains yours to spend, tax-free, on eligible expenses,
including Medicare co-pays or deductibles, vision expenses and dental expenses.
If you are age 65 or over, you also have the option to withdraw the money for
any purpose and pay only the income tax without penalty. The same rules also apply if you receive
Social Security disability benefits and are enrolled in Medicare.
Please review the below information carefully as it relates to your
eligibility to qualify for an HSA.
Medicare
If you elect to receive Social Security Benefits at age 62 or older,
you will automatically be enrolled in Medicare Part A when you turn age 65. If
you wish to participate in the HSA, you should decline to receive Social
Security retirement benefits and waive Medicare Part A. Keep in mind that there
are potential consequences if you choose to decline or postpone your
enrollment. Additionally, if you decided
not to take Medicare when you first
qualify, please be advised that your Medicare Part A start date may backdate up
to 6 months when you apply for Social Security benefits. Please carefully research all of your
options before making your decision.
You can use funds in your HSA to pay for incurred eligible medical
expenses for your dependents (as defined by the federal regulations), even if
they are not covered under your medical plan, or have other coverage, such as
Medicare. However, keep in mind that if your spouse is on Medicare, she/he is
not eligible to contribute to an HSA in her/his name, regardless of whether or
not she/he is covered on your medical plan.
Medicaid and HIP 2.0
According to IRS
regulations, an individual who is enrolled in Medicaid is not eligible to make
or receive contributions into an HSA. There
are tax consequences to both the individual and the employer, if the employer
is also contributing to an HSA for the employee. Similar to Medicare, if your dependent(s) is/are
covered by Medicaid but you are not, you may continue to receive contributions
into your HSA. Eligibility is based on
the subscriber/account holder.
Update made to webinar schedule
The October 14 Open
Enrollment webinar from 9 to 10 a.m. has been rescheduled to October 15. The
time did not change.
The entire list of informational sessions, webinars and carrier fairs is posted on the Invest In Your Health website.
SPD Benefits Hotline/Contact Information
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More detailed information is available on the 2016 open
enrollment website: www.in.gov/spd/openenrollment.
Or, contact the Benefits Hotline toll-free at 1-877-248-0007
outside of Indianapolis or 317-232-1167 within the Indianapolis area. Benefit
specialists are available from 7:30 a.m. to 5 p.m. Monday through Friday,
Eastern Standard Time
Email: SPDBenefits@spd.in.gov
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