What's an HSA?
A health savings account (HSA) is a tax-free, personal savings account with which you can pay qualified medical expenses.
To be eligible, you must be enrolled in a High-Deductible Health Plan (HDHP). You contribute money to an HSA through pre-tax or post-tax contributions. Funds in an HSA roll over and accumulate year after year if not spent. All money in your HSA is owned by you.
In addition to being a smart way to pay for medical expenses like your deductible and copays, HSAs are increasingly being used as part of a retirement-planning strategy.
HSA Payroll Deduction Forms
- 2024 Health Equity HSA Payroll Deduction Form
- 2024 Lake Michigan Credit Union HSA Payroll Deduction Form
Resources to learn more about how HSAs work
- Health Equity's website: How an HSA Works
- Webinar: Harness The Power of a Health Savings Account 12 mins
- Webinar: HSA: The New Retirement Strategy 16 mins
- Webinar: HSA Your Way: Spend, Save, and Invest in your Healthcare 11 mins
Health Savings Account Contribution Options
You have the option to choose between Health Equity OR Lake Michigan Credit Union.
- Health Equity- Members are issued HSA debit card(s) and have online access to their HSA account and BC/BS explanation of Benefits (EOBs). You also have the option to pay providers directly from the Health Equity member portal account. Health Equity-HSA experts are available 24 hours a day/7 days a week at (866) 346-5800. Account will be created once your WMHIP (HDHP) HSA plan enrollment is processed. Visit Health Equity for more information.
- Lake Michigan Credit Union - Members are issued an HSA debit card(s) and have online access to Health Savings Account. Please note: If you choose Lake Michigan Credit Union-Health Savings Account your account must be open and active before payroll deductions start. You can open your HSA online at LMCU - HSA or you can stop by the nearest LMCU branch and request to open/add HSA. If you have questions on you can contact LMCU-IRA Department at (616) 234-6335.
The Advantages of Health Savings Account
- Pre-Tax Contributions. Contributions are typically made with pre-tax dollars, through payroll deductions. As a result, they are not included in your gross income and are not subject to federal income taxes.
- After-Tax Contributions. If you make contributions with after-tax dollars, you can deduct them from your gross income on your tax return, reducing your tax bill for the year.
- Portability. The money in your HSA remains available for future qualified medical expenses even if you change health insurance plans, go to work for a different employer, or retire.
- Eligible expenses include a wide range of medical, dental and mental health services. They are explained in detail in IRS Publication 502, Medical and Dental Expenses.
- Helps you plan for the future. Money used for eligible expenses is always tax-free. After you turn 65, you may use your HSA account to pay for anything as long as you pay income tax.
HSA Contribution Limits
How much money can you set aside for future healthcare spending with an HSA?
The Internal Revenue Services (IRS) sets the annual HSA limits. The maximum annual contribution is dependent upon whether you are on an individual or family plan. Here is a list of contribution limits for the 2023 and 2024 calendar year:
| Tax Year | Single | Family | Catch-Up Contributions (age 55 and over) |
|---|---|---|---|
| 2023 | $3,850 | $7,750 | $1,000 |
| 2024 | $4,150 | $8,300 | $1,000 |
The annual “catch-up” contribution amount for individuals age 55 or older will remain $1,000.
Important Details on HSA and HDHP
- An HSA is in an individual account holder's name, even when used by a spouse or dependents with family coverage to pay medical expenses. When both spouses have self-only coverage, each spouse may contribute up to the annual HSA self-only limit in their own HSA.
- If you have “other health coverage,” you may not be eligible to make health savings account (HSA) contributions.
- If you have any other health coverage you are not eligible to contribute to HSA.
- If your spouse and child(ren) are covered by “other health coverage,” but you are not, you may still be eligible to contribute to an HSA up to the self-only or family contribution limit, as applicable.
- If your spouse is covered by “other health coverage,” but you and your children are not, you may still be eligible to contribute to an HSA up to the family contribution limit.
- If your children are covered by “other health coverage,” but you and your spouse are not, you may still be eligible to contribute to an HSA up to the family contribution limit.
- While a married couple under a family HDHP share one family HSA contribution limit, they can contribute up to that shared limit in separate accounts and, if both are age 55 or older, each make a separate $1,000 catch-up contribution to an account in their own name.
- Catch-up contributions can be made anytime during the year by HSA-eligible participants who will be age 55 or older by the end of the year.
- While the Affordable Care Act (ACA) allows parents to add their adult children who have not reached age 26 to their health plans, the tax laws regarding HSAs have not changed and children ages 19 until age 26 must be considered a tax dependent in order for an adult child’s medical expenses to qualify for payment from a parent’s HSA.
- HSA holders who lose their eligibility during the year must pro-rate their annual contribution based on the number of months during which they were HSA-eligible on the first day of the month.
- The full family deductible must be met under a two person or family contract before benefits are paid for any person on the contract.
- Recordkeeping. You must keep receipts to prove that your withdrawals were used for qualified health expenses.
Visit HSA Frequently Asked Questions for more information.
Health Savings Accounts and Medicare
Under current law, individuals enrolled in any part of Medicare may not contribute to a Health Savings Account. This is because to contribute pre-tax dollars to an HSA you cannot have any health insurance other than an HDHP. However, you may continue to withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses, such as medical, dental and mental health services. For additional information on HSA and Medicare, please contact: Maria Belmares Herrera at: (616) 234-4052.
Health Savings Account and Medicare Retroactive Coverage
Although some individuals can effectively postpone HSA ineligibility, it is important to note that Medicare Part A coverage is retroactively effective for individuals who delay Medicare (or Social Security) benefits. If an individual does not enroll in Medicare when he/she is first eligible (and is not enrolled in Social Security), his/her later enrollment in Medicare Part A is retroactive for six months. The following explanation can be found on the Medicare website Medicare Sign-Up Periods. Therefore, if an employee initially declines Social Security retirement benefits and Medicare coverage in order to contribute to the HSA and later elects to enroll in Medicare, the individual will be retroactively enrolled in Medicare Part A for the preceding six months, making his/her HSA ineligible for those six months.
Please note: To avoid a tax penalty, you should stop contributing to your HSA at least 6 months before you apply for Medicare. If you delay applying for Medicare and later your enrollment is backdated, any contributions to your HSA made during the period of retroactive coverage are considered excess.
IRS Publication 969- Excess contributions
Disclaimer:
The content on this site is provided as general health savings account information, it is not intended to be legal or tax advice. Federal regulations regarding Health Savings Accounts may change. Specific questions and concerns regarding your individual situation should be directed to your tax advisor.
For more detailed information about health savings accounts, visit https://www.irs.gov.