- Employee benefits
- Health & welfare
- Health savings account (HSA)
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Health Savings Account FAQ
Health Savings Account FAQ
Starting in 2026, any non-Medicare employee or retiree who satisfies UC’s eligibility requirements can enroll in the HealthSavings+ plan, which includes a Health Savings Account (HSA) with a UC contribution. The IRS provides the eligibility requirements to establish an HSA and the qualifications to contribute to it.
Read more about information below about the eligibility guidelines and rules for the HSA below.
Eligibility guidelines
The IRS has strict guidelines to determine who is eligible to establish and contribute to an HSA, along with financial penalties for not complying. For example, you are not eligible for an HSA if you are enrolled in Medicare (Part A and/or Part B) or TRICARE.
Not every health plan with a high deductible is eligible for an HSA. For a high-deductible health plan to be HSA-eligible, it must meet specific IRS requirements, including a minimum deductible, a maximum out-of-pocket expense limit, and restrictions on benefits for non-preventive care until the deductible is met.
UC offers one health plan every year that meets these requirements and is HSA-eligible: the UC Health Savings Plan in 2025 and HealthSavings+ in 2026. UC’s other medical plans are not HSA-eligible; instead, they may be paired with a Health Flexible Spending Account.
To be eligible for an HSA, you must meet all of the following requirements:
- You are covered by a single or family high-deductible health plan that is HSA-eligible, such as the UC Health Savings Plan (for 2025) or HealthSavings+ (for 2026).
- You are not covered by any other health plan at the same time, unless it is also an HSA-eligible health plan.
- You are not enrolled in any parts of Medicare (Part A, Part B and/or Part D), a Medicare Supplement Plan or a Medicare Advantage plan.
- You are not enrolled in TRICARE.
- You are not claimed as a dependent on another person’s tax return, excluding your spouse.
To open a Health Savings Account, you must have a valid US address (not a P.O. Box) and a Social Security Number. These are requirements of the USA PATRIOT Act. See IRS Publication 969 on how to qualify for an HSA contribution.
No. IRS regulations do not allow you to participate in both an HSA and a Health FSA concurrently. If you are participating in UC’s Health FSA and wish to transfer to HealthSavings+ (with HSA) at the start of a new plan year, the balance remaining in your Health FSA may be transferred to a Limited Purpose Flexible Spending Account (LPFSA).
These regulations also state that an individual enrolled in the Health FSA cannot enroll in HealthSavings+ in the middle of a tax year unless the change in status event would otherwise permit the employee to cancel their Health FSA election midyear and the IRS consistency rule is met. Please refer to page 8 of the Health FSA Summary Plan Description (SPD) for details.
It’s your responsibility to ensure that you are following IRS regulations regarding participation in tax-advantaged programs such as the Health FSA and HSA.
Under IRS rules, participation in both an FSA and an HSA concurrently is not allowed. Since HealthSavings+ includes an HSA, an individual enrolled in the Health FSA cannot enroll in HealthSavings+ in the middle of a tax year unless the change in status event would otherwise permit the employee to cancel their Health FSA election midyear and the IRS consistency rule is met. Please refer to page 8 of the Health FSA Summary Plan Description (SPD) for details.
It’s your responsibility to ensure that you are following IRS regulations regarding participation in tax-advantaged programs such as the Health FSA and HSA.
Current CORE and UC Health Savings Plan members will be enrolled in HealthSavings+ for 2026 unless they choose another plan during Open Enrollment. If you are enrolled in Medicare, you need to choose another UC medical plan (Kaiser, Blue & Gold HMO, or UC Care) or waive UC medical coverage before Open Enrollment ends.
Be aware that Medicare Part A can be backdated up to six months, and HSA contributions made during those months are subject to penalties for over-contribution. If you enroll in Medicare, you have a specific window for retroactive Part A enrollment, which can impact your HSA contributions. To avoid penalties, it’s best to stop contributions at least six months before enrolling in Medicare.
If you are over 65 and not receiving Social Security, you can delay enrolling in Medicare to continue contributing to your HSA. If you start receiving Social Security benefits before age 65, you will be automatically enrolled in Medicare Part A at age 65, which requires you to stop your HSA contributions.
About the HSA
To establish and own an HSA, you must have a Social Security Number and a valid U.S. address (a P.O. Box is not acceptable). These are requirements of the USA PATRIOT Act. See IRS Publication 969 on how to qualify for an HSA contribution.
You own the HSA, and it is yours even after you end your employment at UC.
Anyone can contribute to your HSA. However, only the account holder receives tax deductions on their personal contributions. Refer to IRS Publication 969 on how to qualify for an HSA contribution.
You don’t have to claim contributions you receive from others as gross income on your annual federal tax return. However, UC’s contribution to your HSA is subject to California income tax.
The IRS sets limits on the total amount you and your employer combined can contribute to your HSA each year.
For 2025, the IRS limits annual HSA contributions to $4,300 for individual coverage and $8,550 for family coverage. This includes UC’s contribution of up to $500 for individual coverage and up to $1,000 for family coverage.
For 2026, the IRS limits annual HSA contributions to $4,400 for individual coverage and $8,750 for family coverage. This includes UC’s contribution of up to $750 for individual coverage and up to $1,500 for family coverage.
People age 55 and over can make an additional “catch-up” contribution of $1,000. For example, a husband and a wife who are both 55 years old can each contribute an additional $1,000 to their own HSA.
Employees enrolled in HealthSavings+ can elect to have HSA contributions deducted from their paycheck. You may contact HealthEquity to arrange an alternative method of payment.
Retirees enrolled in HealthSavings+ should contact HealthEquity to arrange contributions.
Covered dependents under HealthSavings+ should contact HealthEquity if they want to establish their own HSA. See IRS Publication 969 on the requirements to be eligible and qualify for an HSA contribution.
The money in your HSA remains yours. The HSA is in your name. It’s your account. See IRS Publication 969 on the requirements to be eligible and qualify for an HSA contribution under a new employer or during your retirement.
Yes, and the interest is tax-free. HealthEquity calculates, compounds and credits interest monthly. The interest rate is based on your account balance. For current rates see the interest rate page in the HealthEquity online resource center.
Yes. You can take money out anytime tax-free and without penalty as long as it’s to pay for qualified medical expenses. If you take money out for other purposes, however, you’ll have to pay income taxes on the withdrawal plus a 20 percent penalty.
Yes, and the interest is tax-free. HealthEquity calculates, compounds and credits interest monthly. The interest rate is based on your account balance. For current rates see the interest rate page in the HealthEquity online resource center.
Yes. Like an IRA, many HSAs let you invest your account balance in stocks, bonds, mutual funds, CDs, and/or annuities. With your HealthEquity® HSA, you can typically invest in pre-selected mutual funds after you reach a $1,000 balance in your account.
Yes. However, if you choose to invest your account balance, those investments are not FDIC-insured.
Yes. You can make a one-time rollover from your IRA into your HSA. You can’t, however, roll money into your IRA from your HSA. Note that a rollover will count toward your annual maximum contribution amounts.
Questions about medical expenses
Qualified medical expenses are those that generally would qualify for the medical and dental expenses income tax deduction as outlined in IRS Publication 502─Medical and Dental Expenses. See www.irs.gov/publications/p502/index.html for a current and complete list.
Yes. The money in your HSA can be used to pay for qualified medical expenses of any family member who qualifies as your tax dependent. However, if the tax dependent isn’t covered under your plan, his/her expenses won’t be applied toward your deductible.
If your domestic partner meets the IRS qualifications of a tax dependent, you can legally use your HSA funds for their medical expenses. If your domestic partner is covered under your HealthSavings+ plan but does not qualify as your tax dependent, they will need to establish their own HSA and make contributions.
You’re responsible for paying the amount your insurance has contracted to pay your doctor, typically a discounted rate, until your deductible is met. You can use your HSA for this expense. You may also choose to use your personal funds to pay for this expense and reimburse yourself later. There is no claims submission deadline under the HSA. The IRS allows you to reimburse yourself for any and all eligible claims incurred in the future.
Insurance premiums generally are NOT considered IRS-qualified medical expenses unless they are for:
- Continuing COBRA coverage
- Certain long-term care insurance
- Health coverage during unemployment
- Coverage over age 65, including Medicare or employer retirement health benefits
Yes. If you do, though, and are under 65, you’ll be taxed on the amount you use and assessed a 20 percent penalty. Once you’re 65, you’ll be taxed for monies used for non-medical expenses, but you won’t pay a penalty.
Yes. These expenses will not apply to your insurance deductible, though.
Yes. These expenses will not apply to your insurance deductible, though.
The HSA can be used for cosmetic surgery only if prescribed by a physician as being medically necessary.
Yes. You will be able to see your account balances, HSA debit card balance, claim transactions, and more online. You can also pay providers, request reimbursements and manage your personal information. More information will be sent to those who enroll in the plan.