Health Savings Account FAQ

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). 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.
• You are not covered by any other health plan at the same time, unless it is also a qualifying high-deductible 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.   

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. 

IRS regulations do not allow you to participate in both an HSA and a Health FSA concurrently. If you are participating in the Health FSA and wish to transfer 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.

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. 

You do.

Anyone can contribute to your HSA. However, only the account holder receives tax deductions on monies contributed. 

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.

For 2025, the IRS limits HSA contributions to $4,300 for individual coverage and $8,550 for family coverage. For 2026, the IRS limits HSA contributions to $4,400 for individual coverage and $8,750 for family coverage. People age 55 and over can make an additional “catch-up” contribution of $1,000.

You must take into account UC’s contribution (up to $500 for individuals and up to $1,000 for families) to your HSA to determine your personal contribution for the year.

You take that money with you wherever you go. The HSA is in your name. It’s your account. If you’re on Medicare or go to another employer that doesn’t have a qualified high deductible health plan similar to the UC Health Savings Plan, you can still use your HSA money to pay for copays and qualified medical expenses, but you won’t be able to continue to make contributions to your HSA.

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. Similar to an IRA, many HSAs let you choose to 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 contribution amounts.

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 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 his or her medical expenses. Otherwise, your domestic partner whom you cover in the UC-sponsored HealthSavings+ will need to establish his/her own HSA and can contribute up to $7,750.

You’re responsible to pay 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 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.