Health Savings Account (HSA)

If you are enrolled in our High Deductible Health Plan (HDHP) then you are qualified to also contribute to a Health Savings Account (HSA)

WHAT IS AN HSA?

A health savings account (HSA) is a tax-advantaged savings account that an individual can  use to pay medical expenses:

• It must be used in conjunction with an IRS‐qualified, High Deductible Health Plan (HDHP)
• An individual/employee owns the account but both the employee and the employer can  contribute funds
• Triple Tax‐advantage:
  • Contribute pre-tax money through payroll deductions
  • Funds accrue tax‐free and are invested tax-free
  • Funds can be withdrawn tax‐free (if used for eligible medical expenses)

Other benefits of HSAs:

• Funds roll over each year, so an individual can use their HSA to save tax‐free money for  retirement
• The employee owns the account, even if they leave the company
• When you retire, you can use the funds for all types of expenses – they remain tax-favored for qualified medical, dental and vision services and you pay income tax on  expenses that are non‐qualified
• For eligible employees enrolling for April 1, Lewis & Clark will contribute money into your HSA

WHO IS ELIGIBLE TO CONTRIBUTE?

Anyone who is:

• Enrolled in a qualified High Deductible Health Plan
• Not enrolled in Medicare, Medicaid, Tricare, or other  government sponsored insurance plans
• Not covered under other non‐qualified health  insurance* including Flexible Spending Accounts and  Health Reimbursement Accounts (HRAs)
• Not another person’s tax dependent

NOTE: For employees participating in the FSA currently with rollover balances, you will be allowed to roll over into a limited‐purpose FSA which does not negatively impact your eligibility for the HSA.

*Other health insurance does not include specific disease or illness, accident, disability, dental, vision and/or long‐term care insurance.

HOW MUCH CAN BE CONTRIBUTED?

Each year, the IRS sets contribution limits for the total funds contributed, including employer contributions, employee contributions, and any other additional contributions.

In 2024 the limits are $4,150 for individual and $8,300 for employee + 1 or more dependents. 

Effective 4/1/2024 Lewis & Clark College will contribute in the following format:

• Individual coverage:
  • $1,000 annually, $500 front loaded at the beginning of the benefit plan year (prorated if benefit coverage begins after the start of the benefit plan year), $41.67 monthly
  • Employees can contribute up to an additional $3,150.
  • Employees over age 55 are eligible for an additional $1,000 in contributions.
• Employee + 1 or more coverage:
  • $2,000 annually, $1,000 front loaded at the beginning of the benefit plan year (prorated if benefit coverage begins after the start of the benefit plan year), $83.34 monthly
  • Employees can contribute up to an additional $6,300.
  • Employees over age 55 are eligible for an additional $1,000 in contributions.

HOW DO I SPEND MY HSA FUNDS?

HSA distributions can be taken for qualified medical expenses for the following  people:

• The account holder
• Spouse of that individual (even if not covered by the HDHP)
• Tax dependents of that individual (even if not covered by the HDHP)

For individuals aged 65 and older, HSA distributions can be used for nonqualified  medical expenses without facing the 20% penalty

• income taxes will apply for nonmedical distributions
• regardless of whether the individual is enrolled in Medicare

The IRS defines what is considered a “qualified medical expense” for the purpose  of HSA distributions

Expenses must be primarily to treat or prevent a physical or mental defect or illness. 

• Health Savings Account Reimbursement List

Select insurance premiums, including:

• COBRA
• health insurance after you turn 65 (except for a Medicare  supplemental policy)
• qualified long‐term care insurance
• health  insurance premiums paid while receiving unemployment benefits

** If an individual uses HSA funds for expenses outside of what the IRS deems as qualified,  they will be subject to income tax on the distribution and an additional 20 percent penalty **