Considerations for a Health Savings Account

HSAIf you work for a district that offers TRS Active Care, you have an important decision to make every year. Typically, you have three choices with one being Health Savings Account compatible (TRS ActiveCare 1-HD).

Before we get into the considerations, we should define what a Health Savings Account (HSA) is. A Health Savings Account as defined by the IRS in Publication 969:

A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.

No permission or authorization from the IRS is necessary to establish an HSA. You set up an HSA with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.

Sounds complicated, doesn’t it? Basically, it is a way to save and pay for medical expenses much like a more familiar Flexible Spending Account (FSA) with one major difference: no use it or lose it stipulation. In other words, you keep the money you put in and it rolls over from plan year to plan year. Case in point, my wife adds a set amount to her HSA each month and has built up a balance of over $4500 which is impossible in an FSA.

Consideration: Cost of premiums and deductibles

Since you must have high deductible plan to qualify for an HSA, your deductible will be higher than one of the other TRS ActiveCare option. In this case, we’ll compare TRS ActiveCare 1-HD to ActiveCare 2 using numbers for employee only coverage found on a school district’s website.

ActiveCare 1-HD ActiveCare 2 Difference
Monthly Premium $67 $482 $415
Yearly Premium $804 $5,784 $4,980
Deductible $2,750 $1,000 ($1,750)
Yearly savings selecting TRS ActiveCare 1-HD with deductible met $3.230

So even with the deductible being met, your annual savings would be over $3000 which could be put into an HSA. If you don’t have any medical expenses, the savings would be the full $4,980 which would be a noticeable difference each paycheck. This brings us to our next major consideration, your health.

Consideration: Your current and expected health
If you are generally healthy, then you should seriously consider the ActiveCare 1-HD option paired with an HSA. It would offer you the opportunity to save much like an IRA and grow the savings tax free for future medical use or retirement savings.

If you require a lot of medical attention including medications, you need to review your options carefully. For example, the prescriptions you purchase all count against your deductible and your out of pocket maximums may be higher.

Other Considerations
There are several other considerations to take into account such as:

  • Record keeping of HSA purchase in case of audit
  • Out of pocket maximums for in and out of network
  • Need for additional retirement savings

 

We encourage you to take your time and consider your options carefully while you have time. If you wait until open enrollment to make your decision, you may not have the time to fully take all of the considerations into account.

 

Learn More About HSAs

HDHP Limits

HDHP Limits

Before you launch your HSA, take a look at your health insurance coverage. To contribute, you must be covered under an HSA-eligible high deductible health plan (HDHP). An HDHP generally requires that you pay out of pocket for medical expenses incurred (excluding certain preventive care expenses) until your deductible is met. After that, plan coverage kicks in. An HDHP may be HSA-eligible if it satisfies the IRS’ annual deductible and out-of-pocket expense limits. However, the rules that define an HSA-eligible HDHP can be complicated so check with your insurance provider or employer to see if your health plan is HSA-eligible.

In addition, to have HSA-eligible HDHP coverage, you:

  • cannot be covered by another health plan (with limited exceptions)
  • you cannot be enrolled in Medicare, and
  • cannot be eligible to be claimed as a dependent on another person’s tax return.

HSA eligibility is determined as of the first day of each month.

HDHP Limits*

2020
Minimum Annual Deductible: $1,400 for self-only, $2,800 for family
Maximum Out-Of-Pocket Expenses: $6,900 for self-only, $13,800 for family

2021
Minimum Annual Deductible: $1,400 for self-only, $2,800 for family
Maximum Out-Of-Pocket Expenses: $7,000 for self-only, $14,000 for family

*These limits are subject to annual cost-of-living adjustments.

Contributions

Contributions to your HSA

As long as you don’t go over the limits that apply to your type of insurance coverage, you can contribute as much as you want, as often as you want throughout the year until your tax return due date (generally April 15 of the following year). In addition, anyone can contribute for you, even your employer.

HSA Contribution Limits*

2020
Self-Only Coverage: $3,550 ($4,550 if age 55 or older)
Family Coverage: $7,100 ($8,100 if age 55 or older)

2021
Self-Only Coverage: $3,600 ($4,600 if age 55 or older)
Family Coverage: $7,200 ($8,200 if age 55 or older)

*These limits are subject to annual cost-of-living adjustments.

Direct Transfer Form

Use this form to transfer your existing HSA balances to your Gulf Coast Educators HSA.

FAQs

FAQs






Rates & Disclosures

Rates & Disclosures

Standard IRA & Health Savings Accounts (Traditional, Roth, & Education IRAs)

BALANCEDIVIDEND RATEANNUAL PERCENTAGE YIELDMINIMUM OPENING BALANCEMINIMUM BALANCE TO EARN DIVIDENDS
$0 - $499.99No dividends paidNo dividends paid$100 for all IRA types. No minimum to open HSA$500 for all types
$500 - $9,9990.15%0.15%
$10,000 - $49,9990.25%0.25%
$50,000 - $99,9990.35%0.35%
Over $100,0000.45%0.45%

Dividends compounded monthly Dividends credited monthly Dividend Period is monthly Balance Method is daily

Truth in Savings Account Disclosures

Health Savings Account Agreement
Except as specifically described, the following disclosures apply to all of the accounts.

  1. Rate information.

    The Dividend Rate and Annual Percentage Yield on your accounts are set forth above. The Annual Percentage Yield is a percentage rate that reflects the total amount of dividends to be paid on an account based on the dividend rate and the frequency of compounding for an annual period. Dividend Rate and Annual Percentage Yield may change monthly as determined by the Credit Union’s Board of Directors. A withdrawal will reduce earnings.

  2. Nature of Dividends.

    Dividends are paid from current income and available earnings after providing for the required reserves. The Dividend Rates and Annual Percentage Yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.

  3. Compounding and Crediting.

    Dividends will be compounded and credited as set forth above. The Dividend Period for each account is set forth above. The Dividend Period begins on the first calendar day of the Dividend Period and ends on the last calendar day of the Dividend Period.

  4. Balance information.

    The minimum balance required to open each account is set forth above. Dividends are Calculated by the Daily Balance method which applies a periodic rate to the balance in the account each day.

  5. Accrual of Dividends.

    Dividends will begin to accrue on cash deposits on the business day you make the deposit to your term account. Dividends will begin to accrue on noncash deposits (e.g. checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued but unpaid dividends will be paid on term share certificates; accrued but unpaid dividends for all other accounts will not be paid if you close the account before accrued dividends are credited.

  6. Transaction Limitations except for checking transactions.

    During any statement period, you may not make more than six withdrawals or transfers to another credit union account of yours or to a third party by means of a preauthorized or automatic transfer or telephonic order of instruction. No more than three of the six transfers may be made by check, draft, debit card, if applicable, or similar order to a third party. If you exceed the transfer limitations set forth above in any statement period, your account may be subject to closure by the credit union.

  7. Fees could reduce earnings on the account.

HSA Administration for Districts

HSA Administration for Districts

Gulf Coast Educators Federal Credit Union offers members of the credit union HSAs in response to the increase in popularity of High Deductible Health Plans (HDHP) offered by school districts in our service area (TRS Active Care). In addition, our Health Savings Accounts have some distinct advantages to our members:

  • The ability to make additional deposits in person, by mail or online, including same day deposits
  • No monthly service charges
  • Instantly issued Visa debit card
  • Earns dividends
  • Local, trusted employees to support HSA holders

In addition to saving school district employees money, we offer our HSA Program to school districts and their employees with qualifying HDHPs in the state of Texas. The credit union will administer a school district’s Health Savings Account program at no charge to the district. Our offer includes:

  • No per user charge to district
  • No set up fee
  • Unlike Flex Spending Accounts, we do not prefund accounts
  • District can send pre-tax or post-tax funds via direct deposit or payroll deduction
  • HSAs can be opened electronically or on site
  • Co-branded debit card
  • Presentations on benefits of Health Savings Accounts to district employees

If your school district would like more information on our HSA Administration Program, please fill out the contact form below and we will contact you shortly.

HSA Administration Request

Request more information about our HSA Administration Program
  • Name
  • Please check the box to confirm you are not a robot.

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.