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/depts/uwhealth/benefits/open-enrollment/uwmf-open-enrollment/health-savings-account/resources/FAQs-for-Health-Savings-Account.pdf

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Departments & Programs,UW Health,Benefits,UW Health Open Enrollment,UWMF Open Enrollment,Health Savings Account,Resources

FAQ for Health Savings Account

FAQ for Health Savings Account - Departments & Programs, UW Health, Benefits, UW Health Open Enrollment, UWMF Open Enrollment, Health Savings Account, Resources


FAQs for Health Savings Account (HSA)
Q: Is the HDHP and associated HDHP right for me and my family?
A: Things to consider when choosing a HDHP and HSA:
 Your anticipated health care expenses
 How active you want to be in your healthcare spending
 Your personal financial situation
 If enrolled in other coverage through a spouse, you may be ineligible for an HSA
 A conversation with your tax advisor can help you decide
Note: you are not eligible for an HSA if you are:
 Claimed as a dependent on someone else’s taxes
 Covered by another plan that conflicts with HDHP, such as Medicare, a Flexible
Spending Account, or selected Health Reimbursement Arrangements
Q: If I or my eligible dependents are receiving Medicare benefits how will this affect
my/their participating in the HDHP and associated HSA?
A: There are requirements around the HDHP and HSA when an individual is receiving
Medicare benefits, please work with your tax advisor to determine your specific needs
and eligibility to participate.
Q: Can I contribute after-tax funds to the HSA?
A: Yes, but post-tax plus pre-tax contributions combined cannot exceed the IRS
maximum limit. Please send these funds to Discovery Benefits at:
Discovery Benefits
PO Box 2926
Fargo, ND 58108
Q: How do I report this contribution to the IRS so it becomes tax deductible?
A: This information will be on your W-2. Discovery Benefits will send the 1099 for
distributions and 5498 for contributions. Please work with your tax advisor regarding
which additional tax forms you will need to complete.

Q: If I contribute after-tax funds to the HSA, whose responsibility is it to monitor the
annual maximums?
A: If you contribute after-tax funds to the HSA, it is your responsibility to monitor the
annual maximum. Ask your tax preparer to help you monitor your contributions so you
stay within the IRS limits.
Q: What happens if I cover contribute to the HSA?
A: Excess contributions are taxed 6% each year they remain in the HSA. If you believe
you have exceeded the annual maximum contribution under the HSA plan, please work
with your tax or legal advisor.
Q: I would like to enroll in the HDHP and include my Domestic Partner and their
children as eligible dependents. Can I use the HSA for their eligible expenses under the
plan?
A: Domestic Partners and their dependents are not eligible for HSA distributions.
Q: If i am not able to use the HSA, will their claims still be counted towards the
deductible and out-of-pocket maximums under the HDHP?
A: Yes, Unity will administer benefits for Domestic Partners (same and opposite sex)
under the HDHP, their associated covered claims will count towards the deductible and
maximum out-of-pocket limits.
Q: Through Discovery how often can I change the investment direction for my HSA
funds?
A: you can change your investment direction at any time. Please contact Discovery
Benefits at 866-451-3399 for additional information on how to make this change.
Neither UWMF nor Discovery Benefits are able to advise you on which options to select.
Please work with your tax or legal advisor.
Q: Is there a charge associated with transferring funds with the investment options?
A: Yes; the investment fee is simply a flat fee of 25 basis points per year, assessed
quarterly. This equates to 0.0625% each quarter on any dollars currently held in mutual
funds. For example, if a participant as $2,000 in Mutual Fund A; he/she would be
assessed $1.25 each quarter for a total of $5.00 over the course of the year. If he/she

made additional contributions that doubled the balance sometime between the second
and third quarters, the assessment would increase to $2,50 for the third and fourth
quarters, totaling $7.50 for the year ($1.25 for the first two quarters and $2.50 for the
last two). The HealthcareBank interest-bearing account is excluded from this fee.
Q: If I am no longer enrolled in the HDHP, what happens to the HSA funds?
A: They may continue to be used for the same types of expenses; however, future
contributions can’t be made. Please review the Eligible Expense information provided by
Discovery Benefits.
Q: Can someone at Discovery assist me if I have questions on the investment options?
A: Discovery Benefits is able to provide you with instructions to invest your funds,
however they are not able to provide individual investment advice.
Q: What are my investment options?
A: Please review investment options listed on U-Connect under HealthcareBank HSA
Investment Returns – Discovery Benefits.
Q: Can I use investments for my HSA outside of Discovery is offering?
A: No, all investment options will be through Discovery Benefits.
Q: Where are my initial contributions to the HSA invested?
A: Your funds start out in an interest-bearing FDIC insured Cash Account. There is no
minimum deposit required for opening an HSA. Once your contributions reach $1000,
you have additional investment choices, such as the Interest Bearing Account or various
Mutual Funds. You may find out more information on these investments at
www.discoverybenefits.com.
Q: Why do I need to sign a Custodial Agreement with Discovery Benefits?
A: Discovery Benefits requires a Custodial Agreement, which provides the guidelines
between the establishment of your HSA in combination with the reimbursement of
qualified expenses between the accountholder, spouse, dependents, and
HealthcareBank.
Q: What is the USA PATRIOT Act?

A: Federal Law requires all financial institutions to obtain, verify and record information
that identifies each person who opens an HSA. This means that you when you open an
HSA with Discovery Benefits, we will ask for your name, street address, date of birth and
other information that will allow us to identify you.
This process takes approximately two days, during which time your account will be
blocked. Once this process i completed and your identity has been verified, access to
your HSA will be unblocked and made available to you. If your identity is not verified
(e.g. if you moved recently and your new address is not on file with the appropriate
government agency), you may be asked to provide proof of your identity by providing a
copy of your utility bill to verify your address or a copy of your Social Security Card if the
number does not match the verifying source’s records.
Q: If I leave UWMF, what happens to my HSA with Discovery Benefits?
A: You may leave your HSA funds with Discovery Benefits; there is a $2.48 administrative
fee, which will be assessed per month to the participant.
Q: How often can I change my contribution amount to the HSA?
A: You can change your contribution amount each pay period, the change form is
required to Human Resources by 5:00 PM the Friday prior to the pay date.
Q: What is the last day a pre-tax contribution can be made to the HSA for 2016?
Contributions can be deducted from your paycheck through December 30, 2016
paycheck. If you want to make after-tax contributions, please consult with your tax or
legal advisor.
Q: What is the last day a pre-tax contribution can be made to the HSA for 2017?
A: Contributions can be deducted from your paycheck through December 29, 2017. If
you want to make after-tax contributions, please consult with your tax or legal advisor.
Q: What is the contribution deadline?
A: The contribution deadline for after-tax contributions is April 15
th
following the year
for which contributions were made. Please work with your tax or legal advisor prior to
making these contributions.
Q: If I use my HSA funds for non-medical purposes, how is this reported to the IRS?

A: Each year Discovery Benefits will send you two forms to complete your records:
 Form 1099-SA, showing your distributions (sent by January 31)
 Form 5498-SA, showing your contributions (sent by the end of May)
It will be your responsibility to report the funds and file the correct forms when you file
your taxes. Please work with your tax or legal advisor.
Q: Can I continue to use the HSA if I have elected COBRA for the HDHP?
A: Yes, because the HSA stays with the employee you may continue to use the HSA after
termination of employment. If you retain this account with Discovery Benefits, you will
be assessed the monthly administrative fee by Discovery Benefits.
Q: What is the maximum amount I can contribute to an HSA for 2017?
A: HSA contributions are based on a monthly basis, but can be made in full mid tax year.
For example, as long as you are HSA eligible on December 1, 2017, you can make the full
annual contribution regardless of how many months you have been eligible during the
tax year and you can make the full contribution whenever you would like to. (If I
become HSA eligible on October 1, I could make the full contribution on October 1 if I
wanted to). However, if you make the full contribution amount, you will need to remain
in HDHP, thereby staying HSA eligible through December 31, 2018. If you do not remain
in the HDHP and HSA eligible through December 31, 2018, you will need to pro-rate the
maximum limit amount by how many months you were eligible in the previous tax year
and you will be taxed on anything over that amount that you contributed.
Scenario A: You become HSA eligible on October 1, 2017 and knew you would be
incurring expenses due to an upcoming surgery. Based on this, you contributed the 2017
single maximum of $3,400. If you remain in the HDHP and are HSA through December
31, 2018, there are no issues and you will not be penalized or taxed on any of your 2017
contributions.
Scenario B: I become HSA eligible on October 1, 2017 and knew you would be incurring
expenses due to an upcoming surgery. Based on this you contribute the 2017 single
maximum of $3,400. During Open Enrollment, you decide to switch back to the
Traditional HMO plan, which will be effective January 1, 2018. As of this date, you will
no longer be enrolled in the HDHP and therefore are also no longer eligible for the HSA.
As you did not meet the testing period requirements, you will need to pro-rate what you

were eligible to contribute in 2017 based on the number of months you were eligible for
the HSA in 2017. $3,400/12 x 3 = $850.00. Anything over $850.00 that you contributed
in 2017 will now be penalized and taxed because you did not remain HSA eligible
through the full testing period.
Please work with your tax or legal advisor regarding the steps you will need to take to
correct your excess contribution to the HSA.
Q: Can I adjust for marriage and other family changes during the year?
A: Yes; please verify your annual maximum contribution amounts allowed due to your
change with your tax or legal advisor.
 If your HDHP coverage changes from single to family coverage, you may increase
your contributions to the HSA on a prospective basis.
 If your HDHP coverage changes from family to single coverage, you may adjust
your HSA contribution on a prorated basis to ensure you do not contribute more
than allowed.
 In the case of divorce or separation agreement, a transfer to your spouse or
former spouse is not taxable as long as it’s maintained as an HSA. Please work
with your tax or legal advisor in regards to this transfer.
Q: Should I keep my receipts for HSA eligible items?
A: Yes. Discovery Benefits does not require you to submit substantiation for HSA
reimbursements, but if you the IRS choose to audit you, the paperwork for your HSA
claims may be requested.