Health Savings Accounts, also known as HSAs, are available only to those who enroll in the Port-sponsored High Deductible Health Plan (HDHP). Like a Flexible Spending Account (FSA), you can use an HSA to reimburse your eligible out-of-pocket health care expenses that aren’t covered by your high deductible health plan, such as amounts you pay toward meeting the deductible, or other out-of-pocket costs. Unlike an FSA, You cannot be reimbursed for more than you have in your account at any given time. However, you can enroll, stop, increase, or decrease contributions on a monthly basis, and unused funds roll over from year to year.
Please read the PayFlex Health Savings Account Custodial Agreement for other important disclosure provisions that will apply if you elect an HSA.
Great reasons to enroll in an HSA
- Contribute pretax and/or post-tax dollars.
- Contribute up to $3,650 per individual or $7,300 per family annually.
- If you are age 55 or older on December 31, 2022 you may contribute an extra $1,000 as a catch-up.
- Unused funds roll over from year to year.
- Your HSA stays with you, even if you switch employers, change health plans, or retire.
- If you have an HSA somewhere else, you can transfer the balance to your new HSA.
- Your money can earn interest—plus, you can enjoy investment options.
A wide range of eligible expenses
You also can use the HSA to pay for eligible health care expenses incurred by your spouse, children, or other dependents claimed on your tax return. If your children are not your tax dependents, for their expenses to be eligible, they must not turn 19 (or 24 if a full-time student) in 2022.
- Deductibles, copays, and coinsurance
- Eligible prescriptions
- Vision care, including LASIK eye surgery
- Dental care, including orthodontia
TIP: Save itemized statements, detailed receipts, and any Explanation of Benefits statements for your expense records.
Visit the PayFlex website to learn more about Eligible HSA Expenses.
Up to three ways to pay
Once your funds are available, it's easy to pay for your eligible expenses. You can:
- Use your PayFlex debit card: Your expense is automatically paid from your account
- Pay yourself back: Pay for eligible expenses with cash, a check, or your personal credit card. Then pay yourself back from your account through the online portal or the PayFlex Mobile app. You can even have your payment deposited directly into your checking or savings account.
- Pay your provider: Use the PayFlex online feature to pay your provider directly from your account
Earn a Wellness Reward of up to $1,000
Don’t forget, if you earned your 2021 wellness reward, in January 2022, the Port will contribute $500 for an individual with employee-only coverage, and $1,000 for employees with family coverage, to your HSA. That’s tax-free money in your PayFlex account to help you pay for out of pocket medical costs! Remember that you must elect the HSA plan to receive the Port contribution even if you elect to contribute nothing by payroll deduction.
Take care of your HSA and it could keep on growing
Once you have a minimum HSA balance of $1,000, you can open an investment account. There's a range of mutual funds to choose from. Plus, no transfer or trading fees and no minimum investment trade amounts.
Important notes about HSAs
When contributing to your HSA through pay deduction, please note that HCM has a per paycheck limit (your annual maximum ÷ 24). The annual maximum varies based on three factors: if the account is for an individual or family, if you have earned the wellness reward, and if you are age 55 or older. For example:
- The maximum per paycheck contribution for an employee-only account with an earned wellness reward is $150.00.
- The maximum for a family account if you are under age 55 with the wellness reward is $300.00.
- The maximum for a family account for a 55-year-old eligible employee with wellness reward is $341.66.
If you think you may need more money in your account earlier in the year, you have the option to write a check to BNY Mellon for deposit to your HSA account. Please note that you will need to keep track of your direct contributions to your HSA and ensure that your total contributions do not exceed the annual limit. You may need to notify Human Resources to decrease or stop your HSA payroll deductions to ensure your contributions do not exceed the annual limit. Also remember to include these direct contributions when you file your taxes to get the appropriate deduction.
There are a few things to consider when determining if you are eligible to enroll in an HSA. You are NOT qualified when you are:
- Covered by any other non-HSA-compatible health plan (e.g. through your spouse)
- Covered by a general-purpose healthcare FSA or health reimbursement account (HRA), including your spouse's
- Claimed as a dependent on another person’s tax return (excluding spouses per Internal Revenue Code)
- Enrolled in Medicare
- Receiving health benefits under TRICARE
Read IRS Publication 969 for other situations that may make you ineligible for an HSA. If you enroll in the HDHP and you are not eligible for an HSA, you may still enroll in a general-purpose healthcare FSA. Otherwise, you are only eligible for a limited-purpose healthcare FSA (see below).
Combining and HSA with an FSA
Employees enrolled in the Aetna HDHP who contribute to an HSA are not eligible for a general-purpose healthcare FSA. Instead, you may enroll in what is known as a limited-purpose FSA. Because both the HSA and the FSA are tax-advantaged plans, there are some rules. You may only use your limited FSA for eligible vision and dental costs until you meet your health plan deductible. After you meet your deductible you then may use your FSA dollars to pay for other eligible healthcare costs.
Last Month Rule
As explained in greater detail in IRS Publication 969, sometimes an employee does not have an HDHP for the entire year. They may start at some point after January 1. This would be true for late enrollees, new hires, and for plan years that do not start on January 1.
- If you have an HDHP on December 1, you can contribute to the HSA as if you were eligible all year. You would have to stay in the HDHP through the "testing period." The testing period starts the month of December. It continues through the end of the next year. This is a total of 13 months. If you do not stay in an HDHP through the testing period, then the contributions for the months that you did not have the HDHP are no longer tax-free. You would also have to pay a 10% penalty.
- Example: You have a self-only plan as of Dec. 1, 2021. You did not have an HDHP for the first 11 months of the year. You can still contribute to the HSA for the full year. For 2021, that is $3,600. You must have an HDHP from Dec. 1, 2021 through December 31, 2022. That's the testing period. If you no longer have the HDHP at some point in 2022, you would have to pay income taxes on the amount that you contributed for the first 11 months of 2021. You would also have to pay a 10% tax penalty on that amount.