A Health Savings Account (HSA) is an individually-owned, tax-advantaged savings account. HSA funds may be used to pay for out-of-pocket qualifying medical, dental, prescription and vision expenses. For information on whose expenses may be covered using this account, see the.
- HSAs offer a triple tax advantage by making the following tax-free:
- Investment earnings
- You decide how much you want to contribute and the money in your account rolls over from year to year.
- HSA money is yours to keep; you take it with you if/when you terminate employment or retire from UW System.
- The UW System contributes money to your HSA** on a per paycheck basis (12 for employees paid monthly; 25 for employees paid biweekly).
**Excludes crafts workers
There are legal and tax rules regarding HSAs. If you have legal, tax, or financial questions about HSAs, consult your tax advisor.
Review the HSA Enrollment Brochure and/or the HSA Participant Guide (Forms & Resources section below) for annual contribution limits, eligible expenses, participant responsibilities and more!
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. Furthermore, it is required that you enroll in a HSA. You must re-enroll during the Annual Benefit Enrollment period each year to participate in the HSA the following calendar year.
You are not eligible for the HSA (and thus the HDHP or Access HDHP) if any of the following apply:
- You are enrolled in Medicare*.
- You are covered under another health plan (e.g., a spouse’s plan) unless that plan is a qualified HDHP. (Coverage under TRICARE or other traditional health plans will disqualify you.)
- You or your spouse are enrolled in a Health Care Flexible Spending Account (FSA).
- You can be claimed as a dependent on someone else’s tax return (other than your spouse).
*Reminder: If you are already enrolled in Medicare, you are not eligible for the HDHP/HSA per the IRS. Medicare eligibility usually begins at age 65 and you can be retroactively enrolled in Medicare Part A, unless you 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.
Each year the IRS establishes contribution maximums for HSAs. The annual contribution limits include contributions from all sources, including the UW System employer HSA contribution. The 2020 contribution limits are:
|Coverage Level||HSA Contribution||HSA Contribution for Age 55+|
How much will UW System contribute?
UW System will contribute the following amounts per paycheck (12 for employees paid monthly; 25 for employees paid biweekly) to your HSA based on your HDHP or Access HDHP health insurance coverage level. Employees required to pay half of the total health insurance premium will receive half of the UW System contribution listed below.
- Single coverage: up to $750
- Family coverage: up to $1,500
The contribution limits and UW System contribution amounts above are for an employee enrolled in the HDHP or Access HDHP (and HSA) for the entire calendar year. If your enrollments are not effective on January 1, the amounts above will be prorated. See the HSA Mid-Year Maximum Contributions document in the Forms & Resources section below for more information.
You are responsible for making sure your HSA contributions (from all sources) are within the annual IRS limits.
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 to contribute to the HSA for each calendar year
- Arrange for the withdrawal of any excess contributions
- Determine how funds in your HSA will be spent and/or invested
- Declare whether the distributions from your HSA are taxable or non-taxable.
You cannot delegate these responsibilities to either the UW System or to the third-party administrator. As an HSA owner 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 may pay additional tax and/or penalties to the IRS. Questions should be directed to your tax advisor.
For eligible expenses, participant responsibilities and more, see the HSA Brochure and the HSA Participant Guide in the Forms & Resources section below or contact your tax advisor.
No. You must enroll in an HSA if you enroll in an HDHP; however, you are not required to contribute to your HSA. You will still receive the UW System contributions even if you are not contributing.
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 using Self Service, you can enroll in the HSA using the HSA Enrollment Form. On this form, you should indicate the HSA amount you want to contribute. You can indicate either the annual contribution or the per-pay-period contribution. If you do not want to contribute to your HSA, enter $0 in Self Service or indicate $0 on your enrollment form. You may change your contribution at any time.
Remember to factor in the UW System contribution so you do not exceed the annual IRS HSA contribution limit.
Your annual HSA election is divided by the remaining number of payrolls in the calendar year to determine your contribution 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; however, HSA contributions will only come out of 25 paychecks (HSA deductions are not taken on “C” payrolls). You will also receive the UW System contribution to your HSA with each of the 25 paychecks. See Payroll Schedule.
You may change the amount of your HSA contribution at any time by completing a ‘ . Submit the completed form to your human resources office.
Click here for a list of eligible expenses.
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 HSA payment card, or pay out-of-pocket and request a reimbursement. You may only use your payment card or request a distribution for amounts up to the current balance of your account. If funds in the account are insufficient, only the available balance in that account will be issued. An additional distribution request may be submitted once additional funds are available.
With an HSA, it is your responsibility to make sure your purchases are for qualified healthcare expenses. We recommend saving your receipts and retain with your individual tax return documentation in case you 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 $1,000, those excess funds may be transferred to an 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 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, review the HSA Investment Options.
You should designate a beneficiary to ensure benefits are paid according to your wishes. If you have a life event, such as a marriage, divorce, birth of a child, review your beneficiary designations and update as necessary. Beneficiary designations can be changed at any time. For more information, review the Beneficiary Information page.
Forms & Resources
- IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans
- 2019: TASC Portal | 1-844-786-3947 | firstname.lastname@example.org
- 2020: ConnectYourCare Portal | 1-833-881-8158 | email@example.com
- Terms and Conditions
Every effort has been made to ensure this information is current and correct. Information on this page does not guarantee enrollment, benefits and/or the ability to make changes to your benefits.