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Human Resources

Health Savings Account

The two HSA-eligible plans (DMBA HSA 80 and DMBA HSA 60) can be paired with Health Savings Accounts (HSA) so you can save money tax-free for out-of-pocket medical expenses.

HSAs are regulated by the IRS. These regulations include eligibility requirements, annual contribution limits, and eligible expenses. The IRS sets these guidelines because HSAs are powerful tax-savings tools.

An HSA lets you set aside pretax money to pay for qualified medical expenses, such as doctor visits, prescription medications, and certain medical procedures. You can also use the funds in your account to pay deductibles, copayments, coinsurance, glasses, contacts, dental expenses, etc.

HSAs are different from Flexible Spending Accounts (FSAs)

While HSAs are similar to FSAs, there are some important differences:

  • Your money is yours to keep. The use-it-or-lose-it feature of an FSA does not apply to an HSA. Your balance rolls over from year to year, even if you change your job or health plan. This allows you to build up a substantial balance to cover future healthcare costs.
  • Employer contributions. BYU will contribute to your HSA to help you pay for healthcare expenses. These contributions count towards the annual HSA contribution set by the IRS.
  • Funds are available as you contribute. You or your employer must first deposit money into the HSA before you can withdraw the money. Unlike an FSA, your total election is not available immediately at the beginning of the year.
  • You Don't Send substantiation documents to DMBA. You are not required to submit substantiation documents to DMBA like you do with an FSA. You are responsible for maintaining physical or digital receipts and documents in the event you are audited by the IRS.
  • Keep or transfer your HSA. If you change your job or health plan, you can keep your HSA open or transfer it to another provider. You can continue to use it to pay for qualified medical expenses, even if you’re no longer enrolled in an HSA-eligible plan. You can’t make new contributions to the account if you are not enrolled in an HSA-eligible plan, but you can withdraw money tax-free for qualified expenses.

Benefits of a Health Savings Account

  • Triple tax advantage. Pretax money contributed to your HSA can be invested (once it reaches a certain balance) and earn tax-free interest. Withdrawals are not taxed when used for qualified expenses. HSA funds, when used as described, are not subject to federal income, Social Security, or Medicare taxes.
  • Pair with a Limited Purpose FSA (LPFSA). You can pay your out-of-pocket dental and vision expenses using an LPFSA and maximize your HSA for growth. For more information, please visit Flexible Spending Account page.
  • Retirement distributions. After turning 65, if you use the funds for qualified healthcare expenses, they will remain tax free. if you use the funds for other purposes, they will be taxed as any retirement account, such as a 401(k). You can withdraw your HSA funds for any purpose without paying penalties.
  • Name a beneficiary. If you pass away, your HSA is inheritable by your designated beneficiary tax-free for eligible medical expenses.
  • Keep or transfer your HSA. If you change your job or health plan, you can keep your HSA open or transfer it to another provider. You can continue to use it to pay for qualified medical expenses, even if you’re no longer enrolled in an HSA-eligible plan. You can’t make new contributions to the account if you are not enrolled in an HSA-eligible plan, but you can withdraw money tax-free for qualified expenses.
  • Make catch-up contributions. Beginning the year you turn 55, you may contribute up to an additional $1,000 over the contribution limit each year.
  • Post-tax contributions. In addition to payroll contributions, you may contribute directly to your HSA and claim tax benefits when you file taxes for that year.

To be eligible to contribute, all of the following must be true:

  • you cannot be claimed as a dependent on someone else's tax return.
  • you cannot have an active healthcare Flexible Spending Account (FSA) or Health Reimbursement Account (HRA), including those of your spouse.
  • You must be enrolled in a qualified HSA-eligible plan.
  • You cannot be covered by other non-HSA eligible health insurance, including government-provided plans (e.g., Medicare, Medicaid, Tricare) or a spouse's non-HDHP plan.
  • You must not have received certain types of care (broadly, care that is non-preventive and unrelated to your military service) from the Veterans Administration (VA) within the pas three months, as this care is considered other health coverage.

For more information on HSA, please see DMBA.com or contact Benefit Services at 801-422-4716.