WEA HD-HSA FAQ

HD/HSA FAQ

HSA Compliance webinar Q&A from Tango Health

Q: Can I pay for out of network charges at time of service with my HSA debit card?
A: Yes..it is fine to pay entire bill at time of service for out of network with your HSA debit card. Make sure the bill gets to Cigna so that they credit you for the charge towards your deductible. Cigna will adjust the amount credited depending on their MRC chart price for that service but the entire expense is a legitimate HSA payment.  The only exception would be if the teacher had already hit their basic $2000/$4000 deductible in which case they would only owe 20% and Westport would pay 80%. In that case it would be better to pay the bill with a different credit card and then after the 20% comes back, pay themselves back from the HSA account.

Q: Can a spouse have an FSA and can I contribute to an HSA?
A: No..read this explanation and IRS publication 969. If it is a limited purpose FSA or only covers medical expenses for the spouse then it may be allowed..also read this

Q: What is the difference between the High Deductible (HD) and the Health Savings Account (HSA).

A: High Deductible plans are plans that require participants to pay for the first levels of medical expenses (aside from preventative care such as physicals). An HSA is a federal tax program which allows you put money into an account to pay for qualified medical costs. You must be a member of a HD plan in order to contribute money to an HSA. If you are no longer in a HD plan, you can still spend HSA funds but can’t contribute any longer.

Q: Can covered dependents be paid for with HSA funds?
A:
“Coverage of Adult Children: While the Patient Protection and Affordable Care Act allows parents to add their adult children (up to age 26) to their health plans, the IRS has not changed its definition of a dependent for health savings accounts. This means that an employee whose 24-year-old child is covered on his HSA-qualified high-deductible health plan is not eligible to use HSA funds to pay that child’s medical bills. Claims will count towards the deductible but can’t be paid for with HSA funds.

If account holders can’t claim a child as a dependent on their tax returns, then they can’t spend HSA dollars on services provided to that child. According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling, or any descendant of these) who:
– Has the same principal place of abode as the covered employee for more than one-half of the taxable year.
– Has not provided more than one-half of his or her own support during the taxable year.
– Is not yet 19 (or, if a student, not yet 24) at the end of the tax year or is permanently and totally disabled.”

However, a 24 year old can open his own HSA and pay his claims that way.
If they open their own HSA, they should be careful about how much they fund it just in case they don’t stay on their Insurance long.
The IRS actually allows dependents to have HSA based on family deductible, not individual, so they can put up to $6550.  A husband and wife can only put a combined $6550, but a dependent can put $6550.  Strange rule.
Anyway – if they open an HSA, the safest way to contribute is to divide the annual max by 12 and deposit that amount.  This way they won’t face penalties should they leave the insurance too soon but deposit more money than the months enrolled.

Q: My husband didn’t have his HSA debit card and paid for a prescription with his credit card. How do I get reimbursed?
A:  As long as he used his Cigna card he should have received any discount that they give. Even if he paid with his credit card or cash, you just have to keep that receipt and then you can go to a Chase bank to reimburse yourself by making a withdrawal from your HSA account. There is a branch here in Westport.  Make sure to keep both the payment and HSA withdrawal slips in your Cigna file in case you ever get audited by the IRS.

Q: What happens to my HSA if I leave Westport or I change to a regular PPO (what we have now) plan.
A:  Any money that the BOE or you put into your HSA is yours forever until you spend it on qualified medical costs. If you are not in a HD plan, you can still use the money. You will never pay any tax on money in your HSA as long as you use it for qualified medical expenses. Just like any tax shelter program, if you want to take the money to use on other stuff, you will pay taxes and a penalty.

Q: What does it mean that Westport is self insured?
A: Cigna sets up a network of doctors and service providers such as hospitals and imaging centers and labs and negotiates rates with them. When we go to a Cigna doctor, Cigna reviews the visit and then tells Westport BOE to pay the bill. Cigna also establishes rates for what they will pay for out-of-network doctors.
Cigna charges Westport a per person fee to let us use their network and for administration of our plan. Westport pays the bills as they come in. Cigna has no stake in what we spend.

Q: Is there still a premium that will get deducted from our paychecks?
A: Yes..we will be paying 16% of the total HD/HSA plan cost. The amount will be less than last year. It will be deducted from 20 paychecks just like it is now.

Q: What happens to your HSA money if you leave the district?
A: Any money that goes into the HSA belongs to the HSA owner (you) and the BOE or Cigna will have no access to it to even to check how much is in there.

Q: Are we expected to come up with 2,000 or the 4,000 all at once when making our first deposit into the HSA?
A: There is no set amount that you must put into the HSA..you could put in $0 or $50 or up to the limit which does include the Westport BOE contribution. 2013 limits: single: $3250 and family: $6450.

Q: Does Westport match our first deposit regardless of what we deposit? For example, if I can afford to put in 1,000, do they put in 1,000 as well?
A: There is no matching. You can put in as much as you want. Each year from Sept 2013 – Aug 2016, Westport BOE will fund the HSA we set up with $1000 for single and $2000 for family. Deposit schedule in 2013:
Sept 1: 50% ($500/$1000), Nov 1: 25% ($250/$500), Feb 1: 25% ($250/$500). Starting with 2014-2015, deposits will be quarterly.

Q: Do we have to put any money into the HSA? If you chose not to contribute to the HSA, do you still get the Cigna discount at doctors and for prescriptions?
A: There is no requirement for you to put money in the HSA unless you need to pay for doctors above the BOE contribution. The Cigna discount for doctors in the Cigna network will always apply because we are members of that network. If you pay for doctor visits without using HSA money, then it will still count towards your deductible but you will get no tax benefit.

Q: Can I add to the HSA in September and be matched and then add to it later in the year and be matched again? For example, if I can only afford to put in 1,000 in September, then they match my 1,000, then can I put in another 1,000 after Christmas and be matched again?
A: There is no matching. The best way to put money into your HSA (should you choose to do so) is by payroll deduction because then you will not pay SS tax or fed & state income taxes. If you use a check to put money into your HSA, you can deduct it when you do your taxes.

Q: What has changed about coverage of our plan?
A: Coverage will not change, just the way it gets paid. Same doctors and network. Some items like Chiropractor & PT visits that were free in the past will now have to be paid until the deductible is satisfied.

Q: What is the single and family premium for this year?
A: http://westportea.org/cigna/insurance-costs/

Q: How can you spend the money in the HSA? The representative mentioned being able to use the card anywhere like any other debit card. But then, it seems in the paperwork that you can only spend it on certain medical items.
A: You will get a debit card which you can use at the doctor office or at the pharmacy to pay for qualified medical expenses. Eligible and Ineligible Expenses.  (this is a partial list). If you don’t have your card with you, you can pay with your own credit card and then pay yourself back from your Chase HSA account. Keep all receipts in case you are audited.

Q:How is this monitored? For example, if I buy products at CVS with my own money, then reemburse myself with the debit card, how does CIGNA really know how I’m spending the money?
A: Cigna has no knowledge of how your HSA funds are spent and they don’t care. The HSA is a federal tax program. If you use the money for a non-qualified expense such as a dinner out, nobody will know. If the federal government does audit you, you will have to furnish receipts for payments using the debit card. Cigna will maintain receipts for doctor visits within their network but you will have to maintain receipts from all medical expenses that you use the HSA money for.

Q: How does the deductible work..what period does it run from
A: Deductibles will be counted from Sept 1 – Aug 30. On Sept 1, 2014, the deductible “counter” will reset to the limits…$2000 single & $4000 family with the $1000/$2000 extra (using the $10/$30/$45 method we have now) for pharmacy once you have met the medical in-network deductible.  2013-16 Insurance language.

Q: Does the deductible get pro-rated depending on when you join the HD/HSA plan?
A: No. If someone enrolled in the HDHP 6, 7, or 10 months into the plan year, he or she would still be subject to the full deductible.

Q: How does an HSA save me money over a PPO plan (what we have now)?
A: HSA premiums ususally run 20% lower than PPO plans so you will save money on how much you pay in premiums. Right now a family pays 18% of the BOE costs which equals appx $4000/year. Next year we will pay 16% of the lower HSA premium. See current insurance costs.

Q: What about Delta Dental?
A: Dental Dental plan remains exactly the same as in the past. You can use money from your HSA to pay bills but they will not count towards satisfying your deductible amount.

Q: Can I use the HSA to pay for Medicare premiums?
A:  HSA money, at age 65, can be used for Medicare coverage and other health care coverage EXCEPT for premiums for Medicare supplemental plans.
source: IRS publication 969, page 8 under insurance premiums.

Q: What if I am leaving Westport in June of 2013?
A:  The new plan will run from Sept 1 – Aug 31 each year, so you will always have coverage through the end of August even if you leave Westport for greener pastures.

Q: Do I have to take the HS/HSA plan or can I keep the PPO (what we have now)?
A: You will be able to “buy up” to the PPO plan. Here is how it will work. During 2013-14, the BOE will pay 84% of the cost of the HD/HSA plan and we will pay 16%. Typically HD/HSA plans save about 20% over a traditional PPO plan. We will pay 16% of the HD/HSA family price of $21,113.64 or $3378.20 total. The difference between the total cost of HD/HSA and PPO plan is $4318.12. Your family cost would be $4318.12 + $3378.20 = $7696.32 ($384.32 for 20 pays) to “buy up” to the PPO from the HD/HSA.

Q: What is the deductible for prescriptions?

Until you reach your deductible limit (single, $2000 & family, $4000) you will pay full discounted price for medications, negotiated price for in-network doctors as well as negotiated price for lab work such as blood work and imaging. Once you meet the $4000, then you will pay $0 for in network doctor visits and lab work but will still be responsible for the $10/$30/$45 co-pays for medications until you hit another $2000 in expenses.