2021 City of Hutchinson Benefit Guide FINAL - 11-20-20

18 Health Savings Account-Pairs with HDHP When you are enrolled in a Qualified High Deductible Health Plan (QHDHP) and meet the eligibility requirements, the IRS allows you to open and contribute to an HSA Account. What is a Health Savings Account (HSA)? An HSA is a tax-sheltered bank account that you own to pay for eligible health care expenses for you and/or your eligible dependents for current or future healthcare expenses. The Health Savings Account (HSA) is yours to keep, even if you change jobs or medical plans. There is no “use it or lose it” rule; your balance carries over year to year. Plus, you get extra tax advantages withan HSA because: • Money you deposit into an HSA is exempt from federal income taxes • Interest in your account grows tax free; and • You don’t pay income taxes on withdrawals used to pay for eligible health expenses. (If you withdraw funds for non-eligible expenses, taxes and penalties apply). Are you eligible to open a Health Savings Account (HSA)? Although everyone can enroll in the Qualified High Deductible Health Plan, not everyone is eligible to open and contribute to an HSA. If you do not meet these requirements, you cannot open an HSA. • You must be enrolled in a Qualified High Deductible Health Plan (QHDHP) • You must not be covered by another non-QHDHP health plan, such as a spouse’s PPO plan . • You are not enrolled in Medicare. • You are not in the TRICARE or TRICARE for Life military benefits program. • You have not received Veterans Administration (VA) benefits within the past three months. • You are not claimed as a dependent on another person’s tax return. • You are not covered by a traditional health care flexible spending account (FSA). This includes your spouse’s FSA. 2021 HSA Contributions You can contribute to your Health Savings Account on a pre-tax basis through payroll deductions up to the IRS statutory maximums. The IRS has established the following maximum HSA contributions: FOR THE 2021 TAX YEAR: • $3,600 Individual • $7,200 Family • If you are age 55 or older before the end of 2021, you may contribute an extra $1,000 catch up contribution.