City of El Mirage Health Savings Account
Information on City of El Mirage health savings account, vendor links and forms.
What is a Health Savings Account?
Otherwise known as an HSA, a Health Savings Account can be funded with your tax-exempt dollars, by your employer, or both, to help pay for eligible expenses not covered by an insurance plan, including the deductible, coinsurance, and even in some cases, health insurance premiums.
Who is eligible for an HSA?
You can have an HSA if you:
- Have coverage under an HSA-qualified High Deductible Health Plan (HDHP);
- Have no other first-dollar medical coverage (other types of insurance, such as specific injury or accident, disability, dental care, vision care, or long-term care, are permitted);
- Are not enrolled in Medicare, Tri-Care, or a Full Coverage Flexible Spending Account (FSA);
- Have not received benefits from Veterans Affairs (VA) and/or Indian Health Services for a period of three (3) months; and
- Cannot be claimed as a dependent on someone else’s tax return.
How does an HDHP/HSA work?
How does an HDHP/HSA work?
Part 1: Qualifying High Deductible Health Plan (HDHP)
Intended to cover serious illness or injury after the deductible has been met.
Part 2: Health Savings Account (HSA)
Pays for out-of-pocket expenses incurred before the deductible is met.
What are the steps in an HSA?
- Employee elects medical coverage through the HDHP.
- Employee and/or employer make deposits into the HSA account.
- Employee seeks medical services.
- Medical services are paid by the HDHP, subject to deductible and coinsurance.
- Employee may seek reimbursement from HSA account for amounts paid toward deductible and coinsurance.
- Deductible and out-of-pocket maximum fulfilled.
- Employee may be covered for all remaining eligible expenses.*
*Subject to plan design; check Summary Plan Description.
When do I use my HSA?
After visiting a physician, facility or pharmacy, your medical claim will be submitted to your HDHP for payment. Your HSA dollars can be used to pay your out-of-pocket expenses (deductibles and coinsurance) billed by the physician, facility or pharmacy, or you can choose to save your HSA dollars for future medical expenses.
How do I manage my HSA?
Your Health Savings Account (HSA) is your account; the HSA dollars are your dollars. Since you are the account holder or HSA beneficiary, you manage your HSA account. You may choose when to use your HSA dollars or when not to use your HSA dollars. HSA dollars pay for any eligible expense. Most commonly, the HSA account holder will use HSA dollars to pay the out-of-pocket expenses (i.e., deductible and coinsurance) associated with their high deductible health plan.
What expenses are eligible for reimbursement from my HSA?
HSA dollars may be used for qualified medical expenses incurred by the account holder and his or her spouse and dependents. Qualified medical expenses are outlined within IRS Section 213(d). In summary the IRS Section 213(d) states that “the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness.”
In addition to qualified medical expenses, the following insurance premiums may be reimbursed from an HSA:
- COBRA premiums;
- Health insurance premiums while receiving unemployment benefits;
- Qualified long-term care premiums (subject to restrictions – see IRS); and
- Any health insurance premiums paid, other than for a Medicare supplemental policy, by individuals ages 65 and over.
Are dental and vision care qualified medical expenses under an HSA?
Yes, as long as the expenses are qualified expenses as defined under the current IRS rules. For example, a cosmetic procedure, like cosmetic dentistry, would not be considered a qualified expense.
What happens when my HSA funds run out?
You may be financially responsible for any eligible medical expenses that fall within the coverage gap.
What is a coverage gap?
This is the gap between total out-of-pocket expenses associated with your high-deductible health plan and your HSA dollars. For example, assume that your plan has a $5,000 maximum out-of-pocket, and either you or your employer has contributed $3,000 to your HSA account. If your medical costs incurred exceed $5,000 for the year, then you are financially obligated to pay the difference between your total maximum out-of-pocket ($5,000) and your HSA balance ($3,000) – ($5,000 – $3,000 = $2,000).*
* May vary depending on HSA plan design and benefit plan design. Refer to your Summary Plan Description or HR administrator for specifics pertaining to your plan.
Can I use my HSA dollars for non-eligible expenses?
Money withdrawn from an HSA account to reimburse non-eligible medical expenses is taxable income to the account holder and is subject to a 20 percent tax penalty – unless you are over age 65, disabled or upon death of the account holder.
When can I start using my HSA dollars?
You can use your HSA dollars immediately following your HSA account activation and once contributions have been made.
How do I pay my physician or network facility at time of service with my HSA dollars?
You should request that the network provider submit your claim to your health plan. Once the medical claim has been processed, if applicable, out-of-pocket expenses will be billed. At this time you may choose to use your HSA debit card or HSA check to pay for any out-of-pocket expenses, or you may choose to pay with your own money and receive reimbursement at a later date. You should always ask that your medical claim be submitted to the health plan before you seek reimbursement from your HSA. This procedure will ensure that provider discounts are applied. Also, remember to keep all medical receipts and Explanation of Benefits (EOBs).
What if I have HSA dollars left in my account at year-end?
The money is yours to keep. It will continue to earn interest and will be available for you and your health care costs next year.
How do my remaining HSA dollars rollover at year-end?
Any dollars left in your HSA account at year-end will automatically roll over into next year’s HSA account.
What happens to my HSA dollars if I leave my employer?
The funds are yours to keep. You may elect one of the following options:
- Leave your funds in the current HSA account;
- Transfer your funds to an HSA with your new employer; or
- Transfer your funds to another qualifying account within 60 days.
Can my HSA dollars be used for retirement health care costs?
Yes. HSA dollars can be used to pay for things like COBRA premiums, long-term care insurance, Medicare premiums and qualified out-of-pocket expenses such as deductibles, coinsurance and copayments.
Can I use the money in my account to pay for my dependents’ medical expenses?
You can use the money in the account to pay for medical expenses of yourself, your spouse or your dependent children. You can pay for expenses of your spouse and dependent children even if they are not covered by your HDHP.
Can couples establish a “joint” account and both make contributions to the account, including “catch-up” contributions?
“Joint” HSA accounts are not permitted. Each spouse should consider establishing an account in their own name. This allows you to both make catch-up contributions when each spouse is 55 or older.
Can I shift my IRA funds to my HSA?
Owners of individual retirement accounts that are enrolled in a high-deductible health plan can shift IRA funds to an HSA without facing a tax penalty. The IRS allows a one-time transfer that does not exceed your maximum HSA contribution limit.
Can I borrow against the money in my HSA?
No. You may not borrow against it or pledge the funds in it. For more information on prohibited activities, see Section 4975 of the Internal Revenue Code.
Can the funds in an HSA be invested?
Yes, you can invest the funds in your HSA. The same types of investments permitted for IRAs are allowed for HSAs, including stocks, bonds, mutual funds and certificates of deposit. The investment options available vary by banking institution.
Health Savings Account Resources
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