2017 Health Savings Account
Effective January 1, 2017
In an effort to protect employees from fraudulent or mistaken use of the HSA, the Benefit debit/Visa cards will only be able to be used at qualified healthcare providers such as your doctor’s office, hospital or pharmacy. Any IRS approved healthcare expense purchased at a non-healthcare provider (such as band-aids or contact lens solution purchased at a grocery store) should be paid out-of-pocket. You can then go online and transfer funds from your HSA back to a personal bank account in order to reimburse yourself for that expense. Continue to retain receipts for your records in case you are ever audited by the IRS. Or, better yet, get rid of that paper receipt and instead attach a copy of the receipt to the transaction detail online through the expense tracker feature of your Nyhart account.
The Health Savings Account, administered by The Nyhart Company, is a special tax-advantaged bank account that can be used to pay for IRS-qualified health expenses for you, your spouse or tax dependents.
The three main tax advantages to an HSA are:
- No taxes taken on the contributions made to the account. All contributions are made on a pre-tax basis via payroll deductions.
- No taxes when the funds in the account are used for IRS-qualified health expenses.
- No taxes on the account interest or investment earnings.
Because this account offers tax-advantages, it is regulated by the IRS. The IRS stipulates the maximum annual contribution amount that you can contribute to the HSA, the eligibility rules for being allowed to have an HSA account, as well as the list of expenses that the HSA can be used for. You must be an eligible individual to qualify for an HSA.
Enrollment in either the Anthem PPO HDHP Plan or the IU Health HDHP Plan allows enrollment in the Health Savings Account. Enrollment in the HSA requires a minimum $300 contribution in order to receive the IU contribution. Those not eligible for tax-free HSA contributions may waive the HSA. Those that elect to participate in the HSA authorize The Nyhart Company to open a health savings account in the employee's name with Healthcare Bank.
Additional Account Features
- The HSA balance rolls over year-to-year, even if you leave the University.
- The money in the cash account is kept in an FDIC-insured account that earns interest. The interest can be used tax-free.
- If your HSA account balance reaches $1,000 or more, you can open an investment account and invest your funds in various mutual funds. The earnings on your HSA investments, if any, are also tax-free.
- You can change the annual contribution amount coming from your paychecks anytime throughout the year.
- There are no claim forms to submit, just retain receipts for IRS purposes.
- You can use the funds for expenses incurred as far back as the original date the account was opened.
By enrolling in this plan you certify that you:
- Meet the eligibility requirements for establishing and making tax-free contributions.
- Agree to the Healthcare Bank Custodial Agreement and Disclosure Statement (PDF)
- Agree to the Patriot Act Requirements/Electronic Disclosure (PDF)
- Agree to Nyhart’s banking fees (PDF). (The university pays the basic monthly account maintenance fee for your HSA account, while actively employed and enrolled in the HSA plan, which includes online banking features and 2 debit cards at no charge; however, you may be responsible for additional bank charges, e.g., replacing cards, monthly statements by mail, etc).
- Understand there is a minimum $300 employee contribution to participate.
- Understand that you can choose to also participate in the TSB Healthcare Reimbursement Account plan, but the TSB Healthcare account can then only be used for dental, vision and post-deductible medical expenses.
In order to be an eligible individual and qualify for an HSA, you must meet the following requirements:
- You must be covered under a high deductible health plan (HDHP),
- You have no other medical coverage (see next section for details).
- You are not enrolled in Medicare.
- You cannot be claimed as a dependent on someone else’s tax return.
- You have a valid Social Security Number.
No Other Medical Coverage requirement
In order to be eligible for tax-free contributions into an HSA, the IRS requires that you have no other medical coverage other than an IRS-qualified high deductible health plan. You are disqualified for tax-free contributions if:
- You are covered by a federal government plan like Medicare A, B, or D, Tricare, or have received VA services in the last three months;
- Your spouse covers you on an IU plan or another employer’s medical plan unless it is also a high deductible plan.
- Your spouse has a Health Reimbursement Account (HRA) or flexible spending account (FSA) or IU’s TSB Healthcare Reimbursement account that is unrestricted, and the account could be used to cover your HDHP deductible.
You are still eligible to put tax-free contributions into your HSA if your spouse has other medical coverage. However, you cannot be covered on his/her medical or HRA/FSA/TSB plan and still be eligible to make tax-free contributions to your HSA account.
If you are ineligible to make tax-free contributions, you can waive the HSA and still elect to be enrolled in an HDHP plan.
If you are ineligible to make tax-free contributions and still elect the HSA, you are responsible for reporting the ineligible HSA contributions on your annual tax return. Consulting a tax advisor about reporting ineligible contributions is advised.
Contributions are only available as they are deposited. You can enroll in the HSA plan or change the employee contribution amount anytime throughout the year by completing an HSA Enrollment/Change form and submitting it to IU Human Resources Department. All contributions are made with pre-tax dollars.
- HSA Enrollment/Change Form (coming soon)
The University makes a contribution to the employee’s HSA account in one lump sum on the second paycheck in January, or for new hires, in the second paycheck after benefit elections have been made. The benefit is not prorated. However, for family status changes or hires effective on or after September 1 of the year, no University contribution will be made for that plan year.
When enrolled in the Anthem PPO HDHP:
- $1,300 for employee-only Anthem PPO HDHP coverage level
- $2,600 for all other Anthem PPO HDHP coverage levels (employee w/spouse, employee w/child(ren), or family)
When enrolled in the IU Health HDHP:
- $1,600 for employee-only IU Health HDHP coverage level
- $3,200 for all other IU Health HDHP coverage levels (employee w/spouse, employee w/child(ren), or family)
The employee is required to make a minimum $300 annual contribution through payroll deductions on a pre-tax basis. In addition, the employee can decide whether to make additional contributions up to the IRS-allowed maximum. The employee’s annual contribution amount will be evenly distributed over the number of paychecks in the year (based on 12 months of employment). Lump-sum contributions are not available through payroll deductions.
The IRS Maximum is the combination of all contributions made to the account (IU’s Contribution, Employee’s Contributions, etc.)
IRS Annual Maximums:
- $3,400 for employee-only coverage level
- $6,750 for all other coverage levels (employee w/spouse, employee w/child(ren), or family)
- $1,000 catch up contribution for those who turn or are already 55+ in 2017
The maximums can be affected by a spouse’s HSA contributions, Archer MSA contributions, and/or the number of months you are covered under an HDHP. Examples:
- If your HDHP was effective January 1st, and you maintain HDHP coverage for the entire plan year, the total amount you can contribute to your account is the full maximum contribution amount set by the IRS ($3,400 for employee-only or $6,750 for family coverage).
- If this is your first year of coverage under a HDHP and you start mid-year, you can contribute up to the full applicable federal limit; including a full catch-up amount if age 55 or greater, so long as you start your HDHP coverage no later than December 1 of that year. In this case; however, you will be subject to a testing period. The testing period requires that you maintain HSA eligibility for a period beginning on December 1 of the year you started and ending on December 31 of the next year.
- If your HDHP coverage ends, and is not continued through COBRA or through another employer’s HDHP plan, your maximum contribution amount is pro-rated based on the number of months your HDHP was in effect.
Details on the calculation of the IRS prorated maximum can be found in IRS publication 969 (PDF). If your contributions have exceeded the IRS prorated maximum, you must work with The Nyhart Company to resolve the excess contribution issue. Excess contributions not withdrawn from the Health Savings Account are subject to a 6% excise tax until withdrawn. You should be aware of the reporting requirements for excess contributions as detailed in the instructions for IRS Form 8889.
Caution: if this is your first year of HSA eligibility the amounts above may be reduced if you fail to meet a testing period. If you are an existing HSA owner, the amounts above may be reduced if you fail to maintain your eligibility for the full tax year.
Please contact your tax advisor if you have additional questions.
Employees can also contribute to their HSA’s outside of payroll by transferring money from a personal account directly to the HSA. Please note however, these deposits will not reduce the taxable income on a paycheck like the regular payroll contributions can. Any contributions put in your account on an after-tax basis are still eligible to be deducted from your taxable gross income but not until you file your annual tax return. You are responsible for tracking your contributions to ensure you don't exceed the IRS annual contribution limits.
An investment account can be opened when there is at least $1,000 in your HSA cash account to transfer to the investment account. Once opened an array of investment options are available.
- All initial investing and any trades can be done online at any time free of charge.
- The earnings on your HSA investments, if any, are also tax-free.
- An investment in a mutual fund is not insured or guaranteed by the FDIC or any other government agency. It is possible to lose money by investing. Investors should carefully consider the investment objectives, risks, charges and expenses of the fund. Please carefully read the prospectus, which contains this and other important information before you invest money.
- To get more information about the Investment Services:
- Go to the Nyhart website (iu.nyhart.com), login and click on “View my Balances”
- On the Welcome screen, click on the “Manage Investments” button in the left column.
- On the Accounts / Investments Summary page, select “Manage Investments” on the right in order to create an investment account or to change your investment selections.
For investment advice and assistance you can contact a Nyhart registered representative at 800-284-8412 free of charge.
See the HSA Investment Options (PDF)
See the HSA Banking Fees (PDF)
Online Account Access
The HSA is accessible online 24 hours a day, 7 days a week, 365 days a year. Login at iu.nyhart.com to access your account:
Employee ID: <enter 10-digit employee ID>
Password: <enter the last four digits of your Social Security Number>
You can change the account password after your initial login. If you forget your password, click on the “Forgot Your Password” link and follow the steps to reset your password. If you need additional assistance you can reach Nyhart customer service at 800-284-8412.
Take a look at the HSA Online Quickstart Guide (PDF).
Accessing HSA funds
Once contributions are made to the HSA account, funds can be accessed in several different ways:
- Use the IU Benefit Debit/Visa card at Retail locations*. The IU Benefit debit/Visa card can be used at doctors’ offices, pharmacies and other locations where debit/VISA cards are accepted.
- Pay immediately by swiping your debit/Visa card at your provider’s office
- Write the debit/Visa card number on the provider’s bill and return to your provider
- Make an HSA Distribution online. Click on the Make HSA Transaction button on the Welcome page.
- Send yourself one-time or repeating checks to reimburse yourself for healthcare bills that you paid out of another account or with cash (a $10 fee is charged for each check distribution sent to yourself).
- Send a payment to a provider directly from your account (NEW! No fees for payments made to providers)
- Transfer funds directly from your HSA account to a personal bank account (no fees apply).
ATM cash machines and hard-copy checkbooks are not available options for accessing HSA funds.
* Special rules apply to the use of the IU Benefit debit/Visa card when enrolled in both the HSA and the TSB Healthcare Reimbursement accounts. See the ‘IU Benefit Card’ section below for more information.
Nyhart Mobile App
The Nyhart mobile app will allow you to view your balances, view account activity, view notifications, upload receipts, and more.
Detailed information about qualified health expenses can be found:
- IRS Publication 502 (PDF)
- Expense Eligibility Table
- or contact Nyhart at 800-284-8412 or with questions.
Examples of Qualified Expenses
The following is a list of some items that are qualified expenses. This list is not all-inclusive, and is subject to change by the IRS. After you open an HSA, you can use funds to pay for covered expenses that apply toward the HDHP annual deductible and co-insurance costs (e.g. medical services, prescriptions, mental health services, etc). You can also pay for qualified health expenses that your health plan might not cover, such as vision care (eyeglasses and contact lenses), dental and orthodontic services.
Qualified Expenses include:
- Medical deductible or co-insurance payments
- Dental co-payments
- Prescription drugs
- Diabetic supplies
- Hearing aids
- Eye exams, eyeglasses, contact lenses and solutions
- Laser eye surgery
- Orthodontia, dental cleanings and fillings
- Physical therapy, speech therapy and chiropractic expenses
- Specialized equipment and devices for disabled persons
- Transportation expenses related to medical care
- Weight reduction programs for physician-diagnosed obesity
- Premiums: Long-Term Care, Medicare, COBRA
Examples of Non-Qualified Expenses
The following is a list of some items that are non-qualified expenses. This list is not all-inclusive, and is subject to change by the IRS. Any HSA funds used for non-qualified expenses will be taxable. These distributions will also be subject to a 20% IRS penalty if you are under the age of 65, unless they are made after death or disability. Consult a tax advisor if you are in doubt about a particular expense.
Non-Qualified Expenses include:
- Advance payment for services rendered next year
- Athletic club membership, Fitness programs/health club dues
- Car insurance premium (medical portion)
- Commuting expenses of a disabled person
- Cosmetic surgery and procedures (unless due to accident, birth defect, or disease)
- Cosmetics, hygiene products, and similar items
- Diaper service
- Domestic help
- Funeral, cremation, or burial expense
- Illegal operations and treatments
- Illegally procured drugs
- Maternity clothes
- Over-the-counter medication (unless accompanied by a prescription), such as:
- Daily Vitamins
- Allergy Medicine
- Cold & Flu Medicine
- Premiums for life insurance, income protection, disability, loss of limbs or sight
- Scientology counseling
- Social activities
- Special foods or beverages
- Teeth-whitening services & products
- Toothpaste and mouthwash
- Travel for general health improvement
- Tuition and travel expenses to send a special needs child to a particular school
- Weight loss programs
Using funds for Family Members
You may use HSA funds to pay for the qualified health expenses of you, your spouse or an IRS-qualified tax dependent without tax penalty. This is true even if they are not covered on your HDHP plan.
A spouse means one by marriage, either opposite-sex or same-sex, legally entered into in one of the 50 states, the District of Columbia, or a U.S. territory or a foreign country. Health expenses of a same-sex spouse now qualify for tax-free reimbursement from an HSA or TSB.
The healthcare reform law has made it possible for parents to keep children through age 25 on their health plans – even those who are married and living away from home. TSB funds can be used for the healthcare expenses for these children, even if they are not covered on your medical plan. However, HSA funds can only be used tax-free on family members who qualify as true tax dependents.
The IU Benefit Card is a debit-type Visa card that allows participants to pay for purchases and services from either their Health Savings Account, their TSB Healthcare Reimbursement Account, or BOTH.
- The card may be used at any physician’s office, hospital, pharmacy or service provider that accepts Visa for eligible expenses.
- All participants in the Health Savings Account will automatically receive 2 debit/Visa cards through the mail in the employee’s name. If you want more than 2 cards, fees will apply. The account holder is ultimately responsible for making sure the HSA funds are used according to IRS rules.
- The IU Benefit card is effective for three years. New cards are automatically reissued as they expire.
- For those enrolled in both the HSA and the TSB Healthcare plan, the card can be used for BOTH accounts. The card is a “stacked card”. That means that when the card is used at medical or pharmacy providers, the card will automatically draw from the HSA account funds. When the card is used at dental and vision providers, the card will automatically draw from the TSB funds first, then the HSA funds if the TSB funds have been exhausted.
- Special Note: When the employee has both the HSA & TSB Healthcare accounts, the TSB Healthcare account funds can only be used for dental and vision expenses until the 2017 HDHP deductible has been met for the year. Proof of meeting the deductible must be provided to Nyhart. Once the deductible is met for the year, the funds in the TSB Healthcare account can then be used for medical and prescription expenses, HOWEVER, the debit/Visa card will only pull medical and prescription expenses from the HSA account. To use the funds in the TSB for post-deductible medical and prescription expenses, you will need to pay for the expense out-of-pocket then submit a claim for reimbursement to Nyhart.
To report lost or stolen IU Benefit cards, contact Nyhart at 800-284-8412.
To order additional cards go to iu.nyhart.com.
For those enrolled in both the TSB Healthcare account plan and the HSA plan the card can be used for BOTH accounts. The card is a “stacked card”. That means that when the card is used at medical or pharmacy providers, the card will automatically draw from the HSA account funds. When the card is used at dental and vision providers, the card will automatically draw from the TSB funds first, then the HSA funds if the TSB funds have been exhausted.
Special Note: When the employee has both the TSB & HSA accounts, the TSB Healthcare account funds can only be used for dental and vision expenses until the 2016 HDHP deductible has been met for the year. Proof of meeting the deductible must be provided to Nyhart. Once the deductible is met for the year, the funds in the TSB can be then used for medical and prescription expenses, HOWEVER, the debit/Visa card will only pull medical and prescription expenses from the HSA account. To use the funds in the TSB for post-deductible medical and prescription expenses, you will need to pay for the expense out-of-pocket then submit a claim for reimbursement to Nyhart.
If you have questions, contact Nyhart at 800-284-8412.
Your Health Savings Account will pass to your surviving spouse or named beneficiary. If your spouse is the recipient, no taxes will be assessed if the funds are used for qualified health expenses. If someone other than a spouse is the beneficiary, that person will have to pay applicable taxes. If you are unmarried and do not have a named beneficiary, the money is disbursed to your estate and subject to any applicable taxes.
Beneficiary designations can be done online at iu.nyhart.com. To designate your estate as your beneficiary, please contact Nyhart at 800-284-8412.
Health Savings Account – The Nyhart Company
Member Services: 800-284-8412
iu.nyhart.com (available after account is opened)
Nyhart Mobile App. Use a smart phone or tablet to check available balances, view account activity, access the IRS-qualified health expense list.
IU – IU Human Resources
Benefit Questions: 812-855-1286