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With the LifeWise and HSA Bank’s Healthcare Savings Account (HSA) program
, you purchase a high deductible catastrophic major medical program through LifeWise and set up a HSA with HSA Bank. There are no primary-care gatekeepers on the LifeWise
medical plan and you have the freedom to see specialists without referrals via their State wide PPO network. LifeWise offers a choice between a $1250 and $2500 deductible medical plan and you have
the option to make contributions to the HSA in amounts equal to the deductible you choose.
Benefit Summaries
Rates:
Providers:
Enrollment:
Coverage for individuals and families is available statewide to permanent Washington State residents, except those eligible for Medicare. Eligible family members include you, your spouse, and unmarried children under age 23 who are primarily dependent on you for support.
Need Help? 206.448.7878 or 800.987.8199
Enrollment Forms & Instructions Completed enrollment materials must received in our office on or before the 20th of the month will be effective on the first of the following month
(e.g., June 20th for July 1st effective date). Applications received on or before the 5th of the month will be effective on the 15th of that month (e.g. July 5th for July 15th effective date).
- Complete the LifeWise Health Plan of Washington Enrollment Application and select one of
the Share HSA plans. Be sure to include proof of residency information as requested. Only one application is necessary per family.
- Complete the HSA Bank Application and include a check for the amount described on the
application (setup fee ($22 or $25), check order ($12.50) and initial contribution (minimum $50)).
- Complete the Standard Health Questionnaire. A separate questionnaire must be completed for each enrolling family member unless:
- COBRA: The applicant has exhausted all COBRA or other continuation coverage. A copy of a HIPAA Certificate from the prior carrier is required.
- PROVIDER CANCELLATION: The applicant’s provider has left his or her prior plan’s network and is in this plan’s network.
- RELOCATION: The applicant has relocated within Washington State and the applicant’s prior plan is not available in the applicant’s new location.
- An individual losing group coverage through their employer and is not eligible for COBRA does not have to complete the Standard Health Questionnaire if they’ve had 24 months of uninterrupted active group coverage and apply within 90 days of specific qualifying events. (After June 10, 2004)
- An individual losing coverage due to the cancellation of their group conversion plan
does not have to complete a Standard Health Questionnaire. (After June 10, 2004)
The applicant must apply within 90 days of relocation, provider cancellation, or exhaustion of COBRA in order to have the Standard Health Questionnaire requirement waived.
- Submit your Enrollment Applications, Check (payable to HAS Bank), Standard Health Questionnaire, and Proof of Residency to:
R. L. Evans Company, Inc. Your Enrollment Application and Standard Health Questionnaire must include an original signature (faxed copy is
not acceptable).
600 Stewart St., Suite 1210
Seattle, WA 98101
Please note: In some situations, not all family members will qualify for coverage through the health
insurance carrier based on the Standard Health Questionnaire. If an applicant or any family member does not qualify for coverage from the health insurance carrier, within 15 business days they will be provided
with information on how to apply for coverage through WSHIP (Washington State Health Insurance Pool). Those family members who do qualify may still obtain coverage through the carriers they applied to.
FAQs – LifeWise
(see below for FAQ’s for HSA Bank)
- Eligibility
- Effective Date of Coverage
- Applying for coverage
- Standard Health Questionnaire
- Documentation
- Rates
- Enrollment denials
- WSHIP
- Pre-existing conditions
- Benefits
- Provider networks
Q. If I live out of the state for part of the year can I still be covered?
A. Yes, so long as you are a permanent resident of Washington state. Keep in mind that only emergency or urgent care outside of the state will be covered at the higher benefit level. All non-urgent and non-emergency care outside of the state will be covered at a constant 50% benefit level.
Q: Can state residents age 65 or older enroll on a LifeWise individual product?
A: Only non Medicare-eligible residents who are 65 years of age or older when their coverage will begin may enroll on one of these individual plans. Please note that people already on an individual plan when they reach age 65 may continue their individual coverage.
Q: Are single employee groups eligible?
A: Yes. Single employee groups are eligible for LifeWise Individual plans.
Q. Are children covered by medical child support orders required to be Washington state residents?
A. No. The residency requirement does not apply nor must they complete the Standard Health Questionnaire. And, the nine-month pre-existing condition waiting period will be waived. Please note that these children would receive out-of-area benefits for all services, with the exception of medical emergencies and accidental injuries.
Q: Does LifeWise accept applications for effective dates more than one month in the future?
A: Yes. Applicants may designate a first-of-the-month effective date of up to three months from the date of application.
Q: How do I apply for coverage?
A: You will find product information and forms on this Web site. Once you have selected the plan and rates you want, fill out the enrollment application and the Standard Health Questionnaire (if needed). Be sure to include the documentation requested on the application checklist.
Q: If I choose a $10,000 deductible plan, can I later change to a $500 deductible plan with the same benefits?
A: Yes, but you would have to complete the Standard Health Questionnaire, and acceptance to the new plan will depend on the results of that questionnaire. In addition, the pre-existing condition waiting period will apply because you are moving to a plan offering greater overall benefits and, as with all newly effective contracts, you will have a 12-month waiting period for organ and bone marrow transplant benefits. In all cases deductibles and benefit maximums will start over.
Q: If a member currently enrolled in a LifeWise Individual plan applies for a new plan and is not accepted, may he or she retain the existing coverage?
A: Yes.
Q: The tobacco use section on the application asks whether any tobacco products have been used in the past 12 months. Are nicotine patches considered tobacco products?
A: No. Lifewise is asking about tobacco products such as cigarettes, cigars, chewing tobacco and other like products.
Q: When does an applicant not need to fill out a Standard Health Questionnaire?
A: You don't need to fill one out if you are:
Applying for coverage due to relocating within Washington state to an area where your prior health plan isn't offered.
Applying for coverage because your health care provider (whom you have seen in the past 12 months) has cancelled from his or her prior insurance, and is contracting with Lifewise.
Applying for coverage after exhausting COBRA continuation coverage.
A newborn child or newly adopted child of an existing LifeWise individual enrollee.
You must apply for coverage within 90 days of relocation, provider cancellation or exhaustion of COBRA in order to have the Standard Health Questionnaire requirement waived.
An individual losing group coverage through their employer and is not eligible for COBRA does not have to complete the Standard Health Questionnaire if they’ve had 24 months of uninterrupted active group coverage and apply within 90 days of specific qualifying events. (After June 10, 2004)
An individual losing coverage due to the cancellation of their group conversion plan does not have to complete a Standard Health Questionnaire. (After June 10, 2004)
Q: Do current LifeWise enrollees have to fill out the Standard Health Questionnaire if they want to switch to another Individual plan?
A: Yes.
Q: If I have exhausted my state continuation of coverage, must I fill out the Standard Health Questionnaire?
A: Yes. However, in some cases the nine-month pre-existing condition waiting period may be waived.
Q. Who reviews the Standard Health Questionnaire sent to LifeWise?
A. LifeWise reviews each questionnaire. The questionnaire was developed by the Washington State Health Insurance Pool Board, which sets the rules and procedures to score and evaluate it.
Q. Would a different health plan score the Standard Health Questionnaire differently?
A. All health plans must score the questionnaire using instructions from the board of the Washington State Health Insurance Pool.
Documentation (accompanies application and Standard Health Questionnaire)
Q: Do all the family members have to show proof of residency or just the subscriber?
A: LifeWise requires proof of residency from the primary applicant.
Q: I haven't received a certificate of creditable coverage yet from my former carrier. How does this affect me?
A: A carrier must provide a certificate of creditable coverage within 30 days of termination of policy and at no charge to you. If your coverage starts before LifeWise has a copy of your proof of coverage, pre-existing conditions will apply. However, once they receive the document from you, they will apply the proof of coverage retroactively to your coverage start date.
Q: What is considered acceptable proof of prior coverage for someone who has just moved from a foreign country?
A: LifeWise will evaluate each situation separately. A health card, plan identification card or certificate issued by the national health plan is acceptable proof.
Q: When determining an enrollee's age for rate purposes, what is age based on-last birthday (current age) or nearest birthday?
A: Current age.
Q: Can a separate policy be written for the other family members if one adult smokes?
A: Yes.
Q: If an applicant is denied enrollment, is he or she told why?
A: Yes, if an applicant is determined to be eligible for coverage through the Washington State Health Insurance Pool. LifeWise mails a copy of the questionnaire to the applicant with a letter listing each condition marked and the scores it received within 15 business days of receiving the complete application.
Q: If someone is denied coverage by LifeWise and obtains coverage from the WSHIP plan, can he or she ever return to private market coverage?
A: Yes. An enrollee on the WSHIP plan may apply for private insurance coverage at any time. However, the person must complete the Standard Health Questionnaire, which determines eligibility for coverage on private plans.
Q: If a parent with children applies for coverage and the parent is not eligible based on the answers to the Standard Health Questionnaire, what happens to the eligible children?
A: The children may be covered, as long as the parent marked "yes" on the application when answering the question "If one or more family members is not accepted for coverage, I authorize LifeWise to enroll those who are eligible in the program I have selected." The children would automatically become subscribers under separate contracts at the lowest subscriber rate (assuming all children are under 25 years of age).
Q: What is the Washington State Health Insurance Pool (WSHIP)?
A: The Washington State Health Insurance Pool (WSHIP) was created by the Washington State Legislature. It provides health coverage to Washington residents who cannot find adequate commercial health coverage due to their health conditions, or because they reside in a county where commercial individual coverage is not offered.
Q: Is WSHIP the high risk pool?
A: WSHIP is sometimes referred to as "the high risk pool," but that label is not correct. WSHIP was created by the Washington State Legislature. It provides health coverage to Washington residents who cannot purchase commercial health coverage due to their health conditions, or because they reside in a county where commercial individual coverage is not offered.
Q: How do I contact WSHIP?
A:
Benefit Management, Inc.
P.O. Box 1090
Great Bends, KS 67530
Phone: 1-800-877-5187
Fax: 620-792-7053
www.wship.org
(8:00 am - 5:00 pm PST)
www.onlinehealthplan.com/oasys/wship
Q: Who can apply directly to WSHIP?
A: Only those people who live in counties where no individual insurance is offered may apply directly to WSHIP, or those who have been denied coverage from a private insurer (denial letter from a carrier required)
Q: Is there a pre-existing condition waiting period on the LifeWise Individual plans?
A: Yes. The pre-existing condition waiting period is nine months. However, under certain circumstances the waiting period may be reduced or waived completely. For details, please contact us.
Q: Does an adopted child new to the contract have to fulfill the nine-month pre-existing condition waiting period?
A: The adopted child must enroll within 60 days of the adoption to avoid the nine-month pre -existing condition waiting period. The newly adopted child will not need to complete the Standard Health Questionnaire. However, if the 60-day period for enrollment is not met, the child may qualify for a waiver under other criteria.
Q: What is the difference between a 63-day break-in-coverage as it applies to pre-existing conditions and the 90-day rule in which you don't have to complete the Standard Health Questionnaire?
A: If you have a 63-day break-in-coverage, you must complete the Standard Health Questionnaire and your previous coverage will not be credited to the waiting period. If, within the last 90 days, you 1) exhausted COBRA, 2) your provider has left your current plan, or 3) you've moved to an area in Washington where your current coverage is not available, you do not have to fill out the Standard Health Questionnaire. But, if the time lapse is between 64 and 90 days, the prior coverage will not be credited toward your pre-existing condition waiting period.
Q: Do LifeWise's Individual plans include maternity benefits?
A: All but the catastrophic Individual plans include maternity benefits.
Q. Is pregnancy considered a pre-existing condition?
A. Yes. However, prenatal care (maternity-related services received before, but not including, labor and delivery) is not subject to the nine-month pre-existing condition waiting period. Delivery and post-partum care for the mother are subject to the waiting period.
Q: Do the plans include pharmacy benefits?
A: All of the Individual plans include limited pharmacy benefits, except the Share MSA plans.
Q: Diabetic supplies and organ transplant anti-rejection drugs are not limited by the $5,000 maximum in the prescription plan. Do they count toward the $5,000 maximum?
A: No.
Q: Do enrollees have coverage outside of the country?
A: Yes. Benefits for services received outside the U.S. are provided at a constant 50% level, except for medical emergencies or accidental injuries. Benefits are not provided for treatment or drugs considered experimental or investigational by U.S. medical standards.
Q. How are mammograms covered?
A. Mammograms are covered under the diagnostic imaging benefit, and are subject to the calendar year deductible and coinsurance. They are not covered as part of preventive care benefits.
Q. When is the organ and bone marrow transplant 12-month waiting period waived?
A. All new enrollees must satisfy the 12-month waiting period for organ and bone marrow transplants. LifeWise does not credit time for prior coverage, even if the coverage was with another Premera program.The exceptions: (1) an enrollee needs a transplant due to an accidental injury occurring on or after the effective date of coverage on the plan; or (2) the transplant is required due to a congenital disease or congenital anomaly of a child who has been covered with us since the date of birth or date of adoption.
Q. Will LifeWise reimburse enrollees for drugs purchased in Canada?
A. Yes, benefits are based on LifeWise's allowable charge for drugs purchased in Canada or anywhere else outside the U. S. if the medications are approved by the U.S. Food and Drug Administration and meet the contract's definition of "prescription drug"; and, the drug and the condition being treated are not excluded by the enrollee's contract.
Q. Does a newborn automatically have coverage and at what point does the parent have to fill out an application for the newborn?
A. On plans that cover maternity care, newborn care is provided automatically for a period of 21 days following birth if the mother is enrolled and receiving obstetrical care benefits. Because the automatic coverage is tied to whether the mother is receiving maternity benefits, coverage is not automatic on the catastrophic plans (which provide no obstetrical coverage). If you wish to provide coverage for the newborn beyond the 21-day period, you must submit an enrollment application within 60 days of birth. If you apply after the baby is 60 days old, the newborn may be eligible to enroll but you must complete the Standard Health Questionnaire for the baby who will also be subject to the nine-month pre-existing-condition waiting period.
Q. Do the LifeWise plans include 24-hour coverage for employers?
A. The plans are not specifically 24-hour coverage plans, although benefits will be provided for work-related conditions in situations where the enrollee is not entitled to receive Worker's Compensation or similar occupational benefits. LifeWise Individual plans are not substitutes for any federal- or state-mandated occupational coverage that employers are required to provide for their employees.
Q. Are the prescription drug and medical deductibles separate?
A. Yes, they are separate, and amounts credited toward one deductible cannot be used to satisfy the other deductible.
Q. How can I find out if my doctor is in LifeWise's network?
A. Use the link that is available on this Web site.
The following responses have been provided by releases from the Department of Treasury, Legal Council, and Analysis of the Legislative Text. HSA Bank is providing these responses as reference material only and shall not be liable for the validity of the responses found below.
- What Are HSAs and Who Can Have Them?
- What tax-implications are there?
- How Can An HSA Be Established?
- Contributions to HSAs
- Distributions from HSAs
- How insurance policies work with the HSA
- Information Reported by Trustees and Custodians
- Investing in Brokerage
- Helpful Hints
What Are HSAs and Who Can Have Them?
1. What is an HSA?
An HSA is a tax-exempt trust or custodial account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which
contributions are made to an HSA, is covered under a high-deductible health plan. A number of the rules that apply to HSA are similar to rules that apply to an IRA. Thus, if the individual is an
employee who later changes employers or leaves the work force, the HSA does not stay behind with the former employer, but stays with the individual. However, because HSAs differ from IRAs
in some important respects, taxpayers cannot use an IRA as an HSA, and cannot combine and IRA and an HSA in a single account.
2. Who is eligible to establish an HSA?
An “eligible individual” can establish an HSA. An “eligible individual” means, with respect to any
month, any individual who: (1) is covered under a high-deductible health plan (HDHP) on the first day of such month; (2) is not also covered by any other health plan that is not an HDHP (with
certain exceptions for plans providing certain limited types of coverage); (3) is not entitled to benefits under Medicare (generally, has not yet reached age 65); and (4) may not be claimed as a
dependent on another person’s tax return.
7. Can a self-insured medical reimbursement plan sponsored by an employer be an HDHP?
Yes.
What tax implications are there?
1. What is the tax treatment of an eligible individual's HSA contributions?
Contributions made by an eligible individual to an HSA (which are subject to the limits) are deductible by the eligible individual in determining adjusted gross income (i.e., “above-the- line”).
The contributions are deductible whether or not the eligible individual itemizes deductions. However, the individual cannot also deduct the contributions as medical expense deductions under section 213.
2. What is the tax treatment of contributions made by a family member on behalf of an eligible individual?
Contributions made by a family member on behalf of an eligible individual to an HSA (which are subject to the limits) are deductible by the eligible individual in computing adjusted gross income.
The contributions are deductible whether or not the eligible individual itemizes deductions. An individual who may be claimed as a dependent on another person’s tax return is not an eligible
individual and may not deduct contributions to an HSA.
3. What is the tax treatment of employer contributions to an employee’s HSA?
In the case of an employee who is an eligible individual, employer contributions (provided they are within the limits) to the employee’s HSA are treated as employer-provided coverage for medical
expenses under an accident or health plan and are excludable from the employee’s gross income. The employer contributions are not subject to withholding from wages for income tax or subject to
the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act. Contributions to an employee’s HSA through a cafeteria plan are
treated as employer contributions. The employee cannot deduct employer contributions on his or her federal income tax return as HSA contributions or as medical expense deductions under section 213.
4. What is the tax treatment of an HSA?
An HSA is generally exempt from tax (like an IRA or Archer MSA), unless it has ceased to be an
HSA. Earnings on amounts in an HSA are not includable in gross income while held in the HSA (i.e., inside buildup is not taxable). There are other additional rules regarding the taxation of
distributions to the account beneficiary.
How Can An HSA Be Established?
1. How does an eligible individual establish an HSA?
Beginning January 1, 2004, any eligible individual can establish an HSA with a qualified HSA trustee or custodian, in much the same way that individuals establish IRAs or Archer MSAs with
qualified IRA or Archer MSA trustees or custodians. No permission or authorization from the Internal Revenue Service (IRS) is necessary to establish an HSA. An eligible individual who is an
employee may establish an HSA with or without involvement of the employer.
2. Who is a qualified HSA trustee or custodian?
Any insurance company or any bank (including a similar financial institution as defined in section
408(n)) can be an HSA trustee or custodian. In addition, any other person already approved by the IRS to be a trustee or custodian of IRAs or Archer MSAs is automatically approved to be an HSA
trustee or custodian. Other persons may request approval to be a trustee or custodian in accordance with the procedures set forth in Treas. Reg. § 1.408-2(e) (relating to IRA nonbank
trustees). For additional information concerning nonbank trustees and custodians, see Announcement 2003-54, 2003-40 I.R.B. 761.
3. Does the HSA have to be opened at the same institution that provides the HDHP?
No. The HSA can be established through a qualified trustee or custodian who is different from the
HDHP provider. Where a trustee or custodian does not sponsor the HDHP, the trustee or custodian may require proof or certification that the account beneficiary is an eligible individual, including
that the individual is covered by a health plan that meets all of the requirements of an HDHP.
4. When and how do I apply for an HSA? Does the employer or employee do it?
Before you can apply for an HSA you must have a qualified High Deductible Health Plan in force.
Then, either the employer or employee can contact an HSA administrator, such as HSA Bank, to set-up a qualified Health Savings Account. Once the proper application and eligibility forms are received, HSA Bank
will open the account. Each employee will then receive a customer Welcome Kit with their account number and important account details.
1. Who may contribute to an HSA?
Any eligible individual may contribute to an HSA. For an HSA established by an employee, the employee, the employee's employer or both may contribute to the HSA of the employee in a given
year. For an HSA established by a self-employed (or unemployed) individual, the individual may contribute to the HSA. Family members may also make contributions to an HSA on behalf of
another family member as long as that other family member is an eligible individual.
2. How much may be contributed to an HSA in calendar year 2004?
The maximum annual contribution to an HSA is the sum of the limits determined separately for each
month, based on status, eligibility and health plan coverage as of the first day of the month. For calendar year 2004, the maximum monthly contribution for eligible individuals with self-only
coverage under an HDHP is 1/12 of the lesser of 100% of the annual deductible under the HDHP (minimum of $1,000) but not more than $2,600. For eligible individuals with family coverage under an
HDHP, the maximum monthly contribution is 1/12 of the lesser of 100% of the annual deductible under the HDHP (minimum of $2,000) but not more than $5,150. In addition to the maximum
contribution amount, catch-up contributions may be made by or on behalf of individuals age 55 or older and younger than 65. All HSA contribut ions made by or on behalf of an eligible individual to
an HSA are aggregated for purposes of applying the limit. The annual limit is decreased by the aggregate contributions to an Archer MSA. The same annual contribution limit applies whether the
contributions are made by an employee, an employer, a self-employed person, or a family member. Unlike Archer MSAs, contributions may be made by or on behalf of eligible individuals even if the
individuals have no compensation or if the contributions exceed their compensation. If an individual has more than one HSA, the aggregate annual contributions to all the HSAs are subject to the limit.
3. How is the contribution limit computed for an individual who begins self-only coverage under an
HDHP on June 1, 2004 and continues to be covered under the HDHP for the rest of the year?
The contribution limit is computed each month. If the annual deductible is $5,000 for the HDHP,
then the lesser of the annual deductible and $2,600 is $2,600. The monthly contribution limit is $216.67 ($2,600 /12). The annual contribution limit is $1,516.69 (7 x $216.67).
4. What are the “catch-up contributions” for individuals age 55 or older?
For individuals (and their spouses covered under the HDHP) between ages 55 and 65, the HSA
contribution limit is increased by $500 in calendar year 2004. This catch-up amount will increase in $100 increments annually, until it reaches $1,000 in calendar year 2009. As with the annual
contribution limit, the catch- up contribution is also computed on a monthly basis. After an individual has attained age 65 (the Medicare eligibility age), contributions, including catch-up
contributions, cannot be made to an individual’s HSA.
Example: An individual attains age 65 and becomes eligible for Medicare benefits in July, 2004 and had been participating in self-only coverage under an HDHP with an annual deductible of $1,000. The individual is no longer eligible to make HSA contributions (including catch-up contributions) after June, 2004. The monthly contribution limit is $125 ($1,000 /12+ $500/12 for the catch- up contribution). The individual may make contributions for January through June totaling $750 (6 x $125), but may not make any contributions for July through December, 2004.
5. If one or both spouses have family coverage, how is the contribution limit computed?
In the case of individuals who are married to each other, if either spouse has family coverage, both are treated as having family coverage. If each spouse has family coverage under a separate health
plan, both spouses are treated as covered under the plan with the lowest deductible. The contribution limit for the spouses is the lowest deductible amount, divided equally between the
spouses unless they agree on a different division. The family coverage limit is reduced further by any contribution to an Archer MSA. However, both spouses may make the catch- up contributions
for individuals age 55 or over without exceeding the family coverage limit.
Example (1): H and W are married. H is 58 and W is 53. H and W both have family coverage under separate HDHPs. H has a $3,000 deductible under his HDHP and W has a $2,000 deductible under her HDHP. H and W are treated as covered under the plan with the $2,000 deductible. H can contribute $1,500 to an HSA (1/2 the deductible of $2,000 + $500 catch up contribution) and W can contribute $1,000 to an HSA (unless they agree to a different division).
Example (2): H and W are married. H is 35 and W is 33. H and W each have a selfonly HDHP. H has a $1,000 deductible under his HDHP and W has a $1,500 deductible under her HDHP. H can contribute $1,000 to an HSA and W can contribute $1,500 to an HSA.
6. In what form must contributions be made to an HSA?
Contributions to an HSA must be made in cash. For example, contributions may not be made in the
form of stock or other property. Payments for the HDHP and contributions to the HSA can be made through a cafeteria plan.
7. When may HSA contributions be made? Is there a deadline for contributions to an HSA for a taxable year?
Contributions for the taxable year can be made in one or more payments, at the convenience of the
individual or the employer, at any time prior to the time prescribed by law (without extensions) for filing the eligible individual's federal income tax return for that year, but not before the beginning of
that year. For calendar year taxpayers, the deadline for contributions to an HSA is generally April 15 following the year for which the contributions are made. Although the annual contribution is
determined monthly, the maximum contribution may be made on the first day of the year.
Example: B has self-only coverage under an HDHP with a deductible of $1,500 and also has an HSA. B’s employer contributes $200 to B’s HSA at the end of every quarter in 2004 and at the end of the first quarter in 2005 (March 31, 2005). B can exclude from income in 2004 all of the employer contributions (i.e., $1,000) because B’s exclusion for all contributions does not exceed the maximum annual HSA contributions.
8. What happens when HSA contributions exceed the maximum amount that may be deducted or excluded from gross income in a taxable year?
Contributions by individuals to an HSA, or if made on behalf of an individual to an HSA, are not
deductible to the extent they exceed the limits. Contributions by an employer to an HSA for an employee are included in the gross income of the employee to the extent that they exceed the limits
or if they are made on behalf of an employee who is not an eligible individual. In addition, an excise tax of 6% for each taxable year is imposed on the account beneficiary for excess individual and
employer contributions. However, if the excess contributions for a taxable year and the net income attributable to such excess contributions are paid to the account beneficiary before the last day
prescribed by law (including extensions) for filing the account beneficiary's federal income tax return for the taxable year, then the net income attributable to the excess contributions is included
in the account beneficiary's gross income for the taxable year in which the distribution is received but the excise tax is not imposed on the excess contribution and the distribution of the excess contributions is not taxed.
9. Are rollover contributions to HSAs permitted?
Rollover contributions from Archer MSAs and other HSAs into an HSA are permitted. Rollover
contributions need not be in cash. Rollovers are not subject to the annual contribution limits. Rollovers from an IRA, from a health reimbursement arrangement (HRA), or from a health flexible
spending arrangement (FSA) to an HSA are not permitted.
10. Can the employer pay for the setup fees for each of the employees and not contribute to the HSA?
Yes. The employer can pay the setup fees by sending a separate check with the employee applications accompanied by each employee's check for the opening contributions.
11. How is money deposited into an HSA? What frequency?
Employer funded or payroll deduction: Any frequency that employer desires. Most common is that employer mails check with listing of employees with social security numbers so we know how to
allocate money. Employer can also request that the bank originate ACH transfers on periodic basis. Or Employer can request to be set up to originate ACH transfers (one time or recurring) themselves
via internet called “On Demand Transfer”. All of these options are free.
Employee funded: Any frequency that employee desires. Most common is that employee mails
check with contribution form (we supply contribution/withdrawal form in customer welcome kit or available to print from our website) or with deposit ticket if they purchased checks. Employee can
also request that the bank originate ACH transfers on periodic basis. Or Employee can request to be set up to originate ACH transfers (one time or recurring) themselves via internet called “On
Demand Transfer”. All of these methods are free except deposit tickets which can be purchased separately or are included with the check order.
12. What discrimination rules apply to HSA contributions?
If an employer makes HSA contributions, the employer must make available comparable
contributions on behalf of all "comparable participating employees" (i.e., eligible employees with comparable coverage) during the same period. Contributions are considered comparable if they are
either the same amount or same percentage of the deductible under the HDHP. The comparability rule is applied separately to part-time employees (i.e., employees who are customarily employed for
fe wer than 30 hours per week). The comparability rule does not apply to amounts rolled over from an employee’s HSA or Archer MSA, or to contributions made through a cafeteria plan. If employer
contributions do not satisfy the comparability rule during a period, the employer is subject to an excise tax equal to 35% of the aggregate amount contributed by the employer to HSAs for that period.
Example: Employer X offers its collectively bargained employees three health plans, including an HDHP with self-only coverage and a $2,000 deductible. For each employee electing the HDHP self-only coverage, X contributes $1,000 per year on behalf of the employee to an HSA. X makes no HSA contributions for employees who do not elect the HDHP. X’s plans and HSA contributions satisfy the comparability rule.
1. When is an individual permitted to receive distributions from an HSA?
An individual is permitted to receive distributions from an HSA at any time.
2. How are distributions from an HSA taxed?
Distributions from an HSA used exclusively to pay for qualified medical expenses of the account beneficiary, his or her spouse, or dependents are excludable from gross income. In general, amounts
in an HSA can be used for qualified medical expenses and will be excludable from gross income even if the individual is not currently eligible for contributions to the HSA. However, any amount of
the distribution not used exclusively to pay for qualified medical expenses of the account beneficiary, spouse or dependents is includable in gross income of the account beneficiary and is
subject to an additional 10% tax on the amount includable, except in the case of distributions made after the account beneficiary's death, disability, or attaining age 65.
3. What are the “qualified medical expenses” that are eligible for tax- free distributions?
The term “qualified medical expenses” are expenses paid by the account beneficiary, his or her spouse or dependents for medical care as defined in section 213(d) (including nonprescription
drugs as described in Rev. Rul. 2003-102, 2003-38 I.R.B. 559), but only to the extent the expenses are not covered by insurance or otherwise. The qualified medical expenses must be incurred only after
the HSA has been established. For purposes of determining the itemized deduction for medical expenses, medical expenses paid or reimbursed by distributions from an HSA are not treated as
expenses paid for medical care under section 213.
4. Are health insurance premiums qualified medical expenses?
Generally, health insurance premiums are not qualified medical expenses except for the following:
qualified long-term care insurance, COBRA health care continuation coverage, and health care coverage while an individual is receiving unemployment compensation. In addition, for individuals
over age 65, premiums for Medicare Part A or B, Medicare HMO, and the employee share of premiums for employer-sponsored health insurance, including premiums for employer-sponsored
retiree health insurance can be paid from an HSA. Premiums for Medigap policies are not qualified medical expenses.
5. How are distributions from an HS A taxed after the account beneficiary is no longer an eligible individual?
If the account beneficiary is no longer an eligible individual (e.g., the individual is over age 65 and
entitled to Medicare benefits, or no longer has an HDHP), distributions used exclusively to pay for qualified medical expenses continue to be excludable from the account beneficiary’s gross income.
6. Must HSA trustees or custodians determine whether HSA distributions are used exclusively for qualified medical expenses?
No. HSA trustees or custodians are not required to determine whether HSA distributions are used
for qualified medical expenses. Individuals who establish HSAs make that determination and should maintain records of their medical expenses sufficient to show that the distributions have been made
exclusively for qualified medical expenses and are therefore excludable from gross income.
7. Must employers who make contributions to an employee’s HSA determine whether HSA
distributions are used exclusively for qualified medical expenses?
No. The same rule that applies to trustees or custodians applies to employers. Individuals who
establish HSAs make that determination and should maintain records of their medical expenses sufficient to show that the distributions have been made exclusively for qualified medical expenses
and are therefore excludable from gross income.
8.What are the income tax consequences after the HSA account beneficiary’s death?
Upon death, any balance remaining in the account beneficiary’s HSA becomes the property of the
individual named in the HSA as the beneficiary of the account. If the account beneficiary’s surviving spouse is the named beneficiary of the HSA, the HSA becomes the HSA of the surviving
spouse. The surviving spouse is subject to income tax only to the extent distributions from the HSA are not used for qualified medical expenses. If, by reason of the death of the account
beneficiary, the HSA passes to a person other than the account beneficiary’s surviving spouse, the HSA ceases to be an HSA as of the date of the account beneficiary’s death, and the person is
required to include in gross income the fair market value of the HSA assets as of the date of death. For such a person (except the decedent’s estate), the includable amount is reduced by any
payments from the HSA made for the decedent’s qualified medical expenses, if paid within one year after death.
9. How do you pay for a service rendered (office visit, Rx)? What is the claims process?
HSA Bank is not in the insurance business so we can only speak to what we see from the bank side.
Healthcare Provider: Customer still informs provider with proof of insurance w/ insurance card. Customer receives services. Customer can pay at time of visit or wait to be billed. Provider still files claim with insurance carrier like normal. If customer paid too much, either due to discounts or by meeting the high deductible, the provider will credit them. Customer also has the option to pay (at time of service or when invoiced) w/ non-HSA accounts like their personal checking. They can choose to reimburse themselves later by taking funds from their HSA, but they are not required to… ie. they can use their HSA like another retirement account.
Rx (Ex. Walgreens): Customers that pay for services where proof of insurance is not required or where insurance claims are not processed need to keep receipts and talk to their insurance agent on how to submit claims to the carrier so that carrier can determine whether claims count towards the deductible or not. Customers will pay upfront (either pay w/ their HSA debit card or HSA checks or choose instead to use non-HSA funds). Again if they used non-HSA funds, the customer can decide later if they want to reimburse themselves by taking the funds out of the HSA (via withdrawal forms, debit card at ATM, or checks).
10. What if there are insufficient funds available in the HSA to make a payment for services
rendered? Are there any options available to lend the money up front, if check-o-matic like method is used?
Checks may bounce and debit card transactions may reject, and overdraft fees will be accessed to
prevent this. HSA Bank provides numerous ways for the client to know their balance: free online
via internet, toll-free bankline, toll-free live customer service rep, monthly statements. Federal and state banking regulators prohibit banks from issuing HSA credit cards or making credit available to
an HSA account such as checking account sweeps (sometimes called “ready reserve” or “personal reserve accounts”, etc.). Banks can choose to make other loans separate from the HSA to HSA
customers, but HSA Bank is still investigating a cost-efficient method of processing small loans
and the compliance problems associated with provisions restricting loans made outside of the bank’s defined local market area per the federal Community Reinvestment Act.
How Insurance Policies work with an HSA
1. What is a "high-deductible health plan" (HDHP)?
Generally, an HDHP is a health plan that satisfies certain requirements with respect to deductibles and out-of-pocket expenses. Specifically, for self-only coverage, an HDHP has an annual deductible
of at least $1,000 and annual out-of-pocket expenses required to be paid (deductibles, co-payments and other amounts, but not premiums) not exceeding $5,000. For family coverage, an HDHP has an
annual deductible of at least $2,000 and annual out-of-pocket expenses required to be paid not exceeding $10,000. In the case of family coverage, a plan is an HDHP only if, under the terms of the
plan and without regard to which family member or members incur expenses, no amounts are payable from the HDHP until the family has incurred annual covered medical expenses in excess of
the minimum annual deductible. Amounts are indexed for inflation. A plan does not fail to qualify as an HDHP merely because it does not have a deductible (or has a small deductible) for preventive
care (e.g., first dollar coverage for preventive care). However, except for preventive care, a plan may not provide benefits for any year until the deductible for that year is met. See additional responses
below for special rules regarding network plans and plans providing certain types of coverage.
Example (1): A Plan provides coverage for A and his family. The Plan provides for the payment of covered medical expenses of any member of A’s family if the member has incurred covered medical expenses during the year in excess of $1,000 even if the family has not incurred covered medical expenses in excess of $2,000. If A incurred covered medical expenses of $1,500 in a year, the Plan would pay $500. Thus, benefits are potentially available under the Plan even if the family's covered medical expenses do not exceed $2,000. Because the Plan provides family coverage with an annual deductible of less than $2,000, the Plan is not an HDHP.
Example (2): Same facts as in example (1), except that the Plan has a $5,000 family deductible and provides payment for covered medical expenses if any member of A’s family has incurred covered medical expenses during the year in excess of $2,000. The Plan satisfies the requirements for an HDHP with respect to the deductibles.
2. What are the special rules for determining whether a health plan that is a network plan meets the requirements of an HDHP?
A network plan is a plan that generally provides more favorable benefits for services provided by
its network of providers than for services provided outside of the network. In the case of a plan using a network of providers, the plan does not fail to be an HDHP (if it would otherwise meet the
requirements of an HDHP) solely because the out-ofpocket expense limits for services provided outside of the network exceeds the maximum annual out-of-pocket expense limits allowed for an
HDHP. In addition, the plan's annual deductible for out-of- network services is not taken into account in determining the annual contribution limit. Rather, the annual contribution limit is
determined by reference to the deductible for services within the network.
3. What kind of other health coverage makes an individual ineligible for an HSA?
Generally, an individual is ineligible for an HSA if the individual, while covered under an HDHP, is
also covered under a health plan (whether as an individual, spouse, or dependent) that is not an HDHP. Also see question 4 below.
4. What other kinds of health coverage may an individual maintain without losing eligibility for an HSA?
An individual does not fail to be eligible for an HSA merely because, in addition to an HDHP, the individual has coverage for any benefit provided by “permitted insurance.” Permitted insurance is
insurance under which substantially all of the coverage provided relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities relating to ownership or use of property (e.g.,
automobile insurance), insurance for a specified disease or illness, and insurance that pays a fixed amount per day (or other period) of hospitalization. In addition to permitted insurance, an individual
does not fail to be eligible for an HSA merely because, in addition to an HDHP, the individual has coverage (whether provided through insurance or otherwise) for accidents, disability, dental care,
vision care, or longterm care. If a plan that is intended to be an HDHP is one in which substantially all of the coverage of the plan is through permitted insurance or other coverage as described in this
answer, it is not an HDHP.
5. Can an HSA be offered under a cafeteria plan?
Yes. Both an HSA and an HDHP may be offered as options under a cafeteria plan. Thus, an
employee may elect to have amounts contributed as employer contributions to an HSA and an HDHP on a salary-reduction basis.
6. Are HSAs subject to COBRA continuation coverage under section 4980B?
No. Like Archer MSAs, HSAs are not subject to COBRA continuation coverage.
8. Can COBRA employees contribute to their HSA? What other factors would be required to allow COBRA employees to contribute to an HSA?
An individual can choose to contribute to their HSA as long as they have the High Deductible Health Plan in force.
Information Reported by Trustees and Custodians
1. What reporting is required for an HSA?
Employer contributions to an HSA must be reported on the employee’s Form W-2. In addition, information reporting for HSAs will be similar to information reporting for Archer MSAs. The IRS
will release forms and instructions, similar to those required for Archer MSAs, on how to report HSA contributions, deductions, and distributions.
1. Is there a minimum balance to make trades?
HSA Bank requires a $100 bank balance. The remainder can be invested in brokerage. However,
minimum trading balances may also apply, which are determined by the brokerage firm.
2. Are there investment restrictions during the first year? Before a minimum balance is met?
No restrictions other than the customer maintaining at least $100 in the “bank” account. However, brokerage trades might be restricted depending upon a mutual fund’s minimum trade requirements.
Customer would learn of any brokerage restrictions online or talking to live broker.
3. What are my investment choices?
Your brokerage account will be opened through Fiserv Investment Services. You will have your
choice of Stocks, Bonds, and over 8000 Mutual funds. To see a list of the fund families, visit our brokerage information section.
4. Can I choose any broker?
At this time, our brokerage services are self-directed through Fiserv. You can make trades via
online or on the phone. We are investigating opportunities for you to use your own licensed broker for trades, but this service is not available at this time.
1. Tips on using your Debit Card
We have found that in some cases the merchant (usually pharmacies) will ask you to use your PIN
(personal identification number) when you present your debit card to make a purchase or they will ask if your card is a debit card or credit card. Currently we issue all debit cards with a PIN, so you
can either use the PIN when asked or just have the merchant swipe your card as if you didn't have a PIN (signature based). Now, if you were not issued a PIN, have the merchant swipe your card as
"credit" (even though your card is not a credit card, it can be swiped as one) and then you simply sign the receipt. In either case, the money will still come out of your account. Your PIN based daily
limit is $300, while the signature-based limit is $1,000.
2. Is my HSA a savings account or a checking account?
Your HSA account maintains features of both a savings and checking account. In order to offer
you easy withdrawal through debit cards and checks while maintaining legal regulations, your HSA can't be strictly a savings or checking account. When you are using Bankline(HSA Bank's 24-hr
Telephone Banking System) you should select “savings.” When using an ATM to withdraw cash or make balance inquiries, you need to select “checking.”
3. How can I make my PIN numbers match?
Customers who want their Bankline PIN and debitcard PIN to match should call Bankline to change
their access code to match their debit card PIN. (The debitcard pin can't be changed.)
4. Does my card act like a credit card?
Your card is strictly a Debit Card. You must have sufficient funds in your account to use your Debit
Card. If you use your HSA account when you do not have funds, you will be charged overdraft fees just as if you had bounced a check.
5. How do I activate my card?
For security purposes, the first time your debit card is used, your card must be swiped in the
transaction.
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