Overview

A Health Savings Account (HSA) is an individually-owned, tax-advantaged savings account.  You may use HSA funds to pay for medical, dental, prescription and vision expenses for you, your spouse and qualifying dependents. When contributing money into your HSA via payroll, your contributions are tax-free at time of deposit.* The UW System

Key Features

  • HSAs offer a triple tax advantage by making the following tax-free:
    • Contributions
    • Distributions
    • Investment earnings
  • You decide how much you want to contribute and the money in your account rolls over from year to year.
  • The HSA money is yours to keep–you can take it with you if you leave UW System and/or use it during retirement.
  • The UW System contributes money to your HSA**.

*University Staff Temporary employee payroll contributions will be post-tax.

**excludes crafts workers

There are important legal and tax rules regarding HSAs. A summary of those rules is contained in IRS Publication 969 “Health Savings Accounts and Other Tax-Favored Health Plans.” If you have an HSA, you should carefully review that publication. If you have legal, tax, or financial questions about HSAs, you should consult your own professional advisor.

The HSA is administered by TASC. For more information on the HSA, including eligible expenses and participant responsibilities, see the HSA Brochure and HSA Participant Guide.

Eligibility

You may only enroll in the HSA if you enroll in an HDHP or the Access HDHP offered by the State Group Health (SGH) Insurance program. If you enroll in one of the HDHPs offered by the SGH program, it is required that you enroll in the HSA as well. However, keep the following items in mind:

  • You are not eligible for the HSA (and thus the HDHP and Access HDHP) if you are enrolled in Medicare*.
  • You are not eligible for the HSA (and thus the HDHP and Access HDHP) if you are covered under another health plan (e.g., a spouse’s plan) unless that plan is a qualified high deductible health plan. (Coverage under TRICARE or other traditional health plans will disqualify you.)
  • You are not eligible for the HSA if you have a Health Care Flexible Spending Account (FSA) or if your spouse is enrolled in an FSA.
  • You are not eligible for the HSA if you can be claimed as a dependent on someone else’s tax return (other than your spouse).
  • You must re-enroll annually into the HSA if you continue to participate in the HDHP/Access HDHP (during the Annual Benefit Enrollment period).

*Important Reminder: If you are already enrolled in Medicare, you are not eligible to enroll in this plan, per the IRS. Medicare eligibility usually begins at age 65 and you can be retroactively enrolled in Medicare Part A, unless you can postpone your Medicare enrollment. Medicare Part A is mandatory for those who receive Social Security income. Check with Social Security to determine your eligibility to postpone Medicare enrollment.

Contribution Limits

Each year the IRS establishes contribution maximums for HSAs. The table below outlines contribution limits for 2017. These limits include contributions from all sources, including the UW System employer HSA contribution.

Coverage Level HSA Contribution HSA Contribution for Age 55+
Single $3,400 $4,400
Family $6,750 $7,750
How much will the UW System contribute to my HSA?

For 2017, the UW System will contribute the following amounts to your HSA based on your HDHP or Access HDHP health insurance coverage level:

  • Single coverage: up to $750
  • Family coverage: up to $1,500

mid-year enrollments:

The maximum contribution limits and UW System contribution amounts above are based on an assumption of HDHP or Access HDHP and HSA enrollments for the entire calendar year. If your enrollments are not effective on January 1, the amounts above will be prorated. See the “Maximum HSA Contributions for Mid-Year Hires” schedule for more information.

Employees are responsible for making sure their HSA contributions (from all sources) are within the annual IRS limits.

Important Considerations

If you decide to enroll in the HDHP or Access HDHP plan, you are responsible for administering your HSA. As an HSA owner, you:

  • Decide the amount of the eligible contributions to the HSA for any calendar year
  • Arrange for the withdrawal of any excess contributions
  • Determine how funds in your HSA will be spent
  • Declare whether the distributions from your HSA are taxable or non-taxable.

You cannot delegate these responsibilities to either the UW System or to TASC. As an HSA owner you are in control of the HSA, meaning that you are responsible for reporting all contributions and distributions to the IRS on your Form 1040. If you make any errors and do not correct them timely, you must pay additional tax and/or penalties to the IRS. Questions should be directed to your tax advisor.

For more information on the HSA, including eligible expenses and participant responsibilities, see the HSA Brochure and HSA Participant Guide or contact your tax advisor.

FAQs

No. While you must enroll in an HSA in order to enroll in the HDHP, you are not required to add your own money into your HSA. You will still receive a UW System HSA contribution to your HSA if you are eligible for it.

If you enroll in the HSA using Self Service, you will be prompted to enter your annual HSA election during your enrollment session.

If you are not able to enroll in benefits using Self Service, you can enroll in the HSA using the HSA Enrollment Form. On this form, you can write down the HSA amount you want to contribute—you can indicate either the annual contribution or the per-pay-period contribution.

Be careful not to exceed the annual IRS HSA contribution limits (remember to factor in the UW System contribution).

Note: If you do not want to contribute to your HSA, you can enter $0.00 in Self Service, or write in $0.00 on your enrollment form.

If you made an annual HSA election during your enrollment, it will be divided up by the remaining number of payrolls in the calendar year to determine how much is deducted per paycheck. For example, if you elected $1,000 and there are 10 remaining payrolls when your HSA becomes effective, you will have $100 deducted from each of the 10 remaining payrolls.

The number of HSA contributions in a year may differ from employee to employee, depending on how often you are paid.

If you are paid…

  • on a monthly basis and work the academic year (9 months with summer months optional):  You will have one contribution deducted from each of your 9 regular paychecks. However, you will receive the UW System contribution to your HSA over 12 months.
  • on a monthly basis and are employed on an annual basis: You will have one contribution deducted from each of your 12 paychecks. You will also receive the UW System contribution to your HSA with each paycheck.
  • on a biweekly basis: You receive 26 paychecks in a year, but HSA contribution deductions will only come out of 24 paychecks—HSA deductions are not taken on “C” payrolls. You will also receive the UW System contribution to your HSA with each of the 24 paychecks. See Payroll Schedule.

You may change the amount of your HSA contribution at any time by completing a Change of Election Form. Submit the completed form to your human resources office.

For a list of eligible expenses, visit: http://www.etf.wi.gov/members/IYC2016/HSAEligibleExpenses.pdf

In general, expenses are considered eligible for distribution from an HSA if the healthcare expense includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be primarily intended to alleviate or prevent a physical or mental defect, or illness. In general, expenses solely for cosmetic care are not deemed as qualified medical care, nor are expenses that are merely beneficial to one’s general health.

You can pay for eligible expenses with your TASC Card, or pay out-of-pocket and request a reimbursement, called a distribution, online. You may only use your TASC card or request a distribution for amounts up to the current balance of your HSA account. If funds in the account are insufficient, only the available balance in that account will be issued. The outstanding balance of the distribution request will not be reimbursed. An additional distribution request must be submitted once additional funds are available in the account to pay for any remaining balance.

With an HSA, it is your sole responsibility to make sure your purchases are for qualified healthcare expenses. We recommended saving your receipts and retain with your individual tax return documentation in case you should ever need to prove expense eligibility.

If you use HSA money to pay for anything other than qualified expenses, the amount will be taxable, and, if you are under 65 years of age, you will pay an additional 20 percent tax penalty.

When your HSA balance exceeds a minimum of $2,000, those excess funds may be transferred to an HSA Investment Account to be invested in top-rated mutual funds where earnings grow tax-free.

In order to invest your HSA funds, you must set up an HSA Investment Account. If you do not set up this account, your monies will remain in your HSA which is considered a “cash account” and earns minimal interest.

For more information on the HSA Interest Rate & Investment Options, see the HSA Interest Rate & Investment Options flyer.

Forms & Resources


last updated: 7/10/17

Every effort has been made to ensure this information is current and correct. This page does not guarantee enrollment or the ability to make changes to your benefits.