Health Savings Account FAQ

• Who can establish an HSA?
• Who owns the HSA?
• Who can put money in my HSA?
• Do I have to claim HSA contributions from others on my income taxes?
• How much money can I contribute to my HSA?
• What happens to the money in my HSA if I leave my job or retire?
• Does the money I have in my HSA roll over from year to year, or do I lose the money at the end of the year?
• If I enroll in the UC Health Savings Plan, can I also enroll in the Health FSA?
• If I enrolled in the Health FSA at the beginning of the year and have a qualifying life event midyear, can I change my medical plan to the UC Health Savings Plan at that time?
• Can I take the money out of my HSA any time I want?
• Does the money in my HSA earn interest?
• Can I invest the money in my HSA?
• Is my HSA FDIC-insured?
• Can I roll the money from an IRA into my HSA?

Who can establish an HSA?

The IRS defines who can establish an HSA. The IRS has strict guidelines to determine who is eligible to own and contribute to an HSA. Under the law, you are eligible if:

• You are covered by a single or family high-deductible health plan.
• You are not covered by any other health plan, unless it is also a qualifying high-deductible health plan.
• You are not enrolled in Medicare.
• You are not claimed as a dependent on another person’s tax return, excluding your spouse.

Who owns the HSA?

You do.

Who can put money in my HSA?

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

Do I have to claim HSA contributions from others on my income taxes?

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.

How much money can I contribute to my HSA?

For 2024, the IRS limits HSA contributions to $4,150 for individual coverage and $8,300 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.

What happens to the money in my HSA if I leave my job or retire?

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.

Does the money I have in my HSA roll over from year to year, or do I lose the money at the end of the year?

The money rolls over from year to year. You don’t lose the money left in your HSA or the interest it’s earned. It’s your money.

If I enroll in the UC Health Savings Plan, can I also enroll in the Health FSA?

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 to the Health Savings Plan (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 the UC Health Savings Plan 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.

If I enrolled in the Health FSA at the beginning of the year and have a qualifying life event midyear, can I change my medical plan to the UC Health Savings Plan at that time?

Under IRS rules, participation in both an FSA and an HSA concurrently is not allowed. Since the UC Health Savings Plan includes an HSA, an individual enrolled in the Health FSA cannot enroll in the UC Health Savings Plan 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.

Can I take the money out of my HSA any time I want?

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.

Does the money in my HSA earn interest?

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.

Can I invest the money in my HSA?

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.

Is my HSA FDIC-insured?

Yes. However, if you choose to invest your account balance, those investments are not FDIC-insured.

Can I roll the money from an IRA into my HSA?

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.

• What is a qualified medical expense?
• Can I use the money in my HSA to pay for my children’s medical expenses, co-pays and deductibles if I’m not enrolling them in the UC Health Savings Plan?
• If I cover my domestic partner through the UC Health Savings Plan, can I use my HSA for my partner’s medical expenses?
• Do I pay for the full doctor’s office visit when I go to the doctor?
• Can I use the money in my HSA to pay for insurance premiums?
• Can I use the money in my HSA for non-medical expenses?
• Can I use my HSA for eyeglasses, contacts or LASIK surgery?
• Can I use my HSA to pay for dental expenses and orthodontics?
• Can I use my HSA to pay for voluntary cosmetic surgery?
• Can I access my HSA online?

What is a qualified medical expense?

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.

Can I use the money in my HSA to pay for my children’s medical expenses, copays and deductibles if I’m not enrolling them in the UC Health Savings Plan?

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 I cover my domestic partner through the UC Health Savings Plan, can I use my HSA for my partner’s medical expenses?

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 Health Savings Plan will need to establish his/her own HSA and can contribute up to $7,750.

Do I pay for the full doctor’s office visit when I go to the doctor?

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.

It’s best to have your doctor’s office put the charge through to your insurance, so that you receive credit toward your deductible and know exactly what to pay.

Some doctors may require that you pay up front, but most bill your insurance, and then bill you once the claim has been processed. Make sure you don’t pay more than your portion shown on the explanation of benefits you receive from your insurance carrier.

Can I use the money in my HSA to pay for insurance premiums?

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

Can I use the money in my HSA for non-medical expenses?

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.

Can I use my HSA for eyeglasses, contacts or LASIK surgery?

Yes. These expenses will not apply to your insurance deductible though.

Can I use my HSA to pay for dental expenses and orthodontics?

Yes. These expenses will not apply to your insurance deductible, though.

Can I use my HSA to pay for voluntary cosmetic surgery?

The HSA can be used for cosmetic surgery only if prescribed by a physician as being medically necessary.

Can I access my HSA online?

Yes. You will be able to see your account balances, HSA debit card balance, claim transactions, and more online. You also can pay providers, request reimbursements and manage your personal information. More information will be sent to those who enroll in the plan.