Human Resources

When leaving the university, you will take any unspent HSA funds with you, and:

• Can continue to use the money tax-free for qualified health expenses, or
• Will have to pay IRS penalties (if you are under age 65) and taxes if you use your unspent HSA money for non-qualified health expenses

When your HDHP coverage ends, you are no longer eligible to make or receive tax-free HSA contributions. However, the money in your HSA is yours until you spend it*. As a result, you may keep your HSA with WEX and continue to use the funds to pay for qualified expenses.

When you are no longer an active employee, you will be responsible for the HSA account maintenance fees (see Fee Schedule).

If you become eligible again (i.e., re-enroll in an HDHP), you can make additional contributions to your HSA. Please remember that you are responsible for tracking your personal contribution limit (including coordination of contributions should your spouse also contribute to an HSA) and to contact your tax advisor if you have additional questions about your specific situation.

*If your HDHP coverage ends mid-year, your maximum HSA contribution for that year is prorated based on the number of months that you were enrolled in an HDHP plan. For example, if your HDHP coverage ends on January 31 of a given year, you would be eligible for one month (January) and your annual contribution maximum would be 1/12 of the IRS annual maximum.

The amount you can contribute to your HSA each year is set by federal regulations and is adjusted annually for inflation. For the 2024 tax year, the maximum annual contribution is $ 4,150 if you have employee-only coverage, and $ 8,300 if you cover one or more family members. If you're age 55 or older, you can also make an additional $1,000 "catch-up" contribution to your HSA.

The IRS maximums listed above include the combined total of IU’s contribution(s), your contributions to your HSA, your spouse's contributions to their own HSA (if applicable), and contributions made to an Archer MSA (if applicable).

These maximums can be further affected by the number of months you are covered under an HDHP.

Examples:

1. 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.
2. If this is your first year of coverage under a HDHP and you start mid-year, you can contribute up to the full maximum contribution 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 you lose HSA-eligibility during the testing period (for reasons other than death or becoming disabled) you will have to include the excess contributions as taxable income. You will also have to pay a penalty on that contribution amount.
3. If your HDHP coverage ends mid-year, and is not continued through COBRA or through another HSA-eligible HDHP (such as through another employer or your spouse), 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. If your contributions have exceeded the IRS prorated maximum, you must work with WEX to resolve the excess contribution issue. Excess contributions not withdrawn from the Health Savings Account are subject to a 6% excise tax until withdrawn. Reporting requirements for excess contributions are detailed in the Instructions for IRS Form 8889. See also Section K of the HSA FAQs.

You may request a distribution of your excess contribution by completing the HSA Distribution Request Form and submitting it to WEX via email at , fax 888-887-9961, or by mail at:

WEX
c/o HSA
P.O. Box 2905
Fargo, ND  58108

Yes, you can retain active enrollment in the plan for up to 18 months through COBRA. The university will no longer make contributions to your HSA via pre-tax payroll deductions, but as long as you are enrolled in a HDHP, you can make tax-free contributions to your HSA up to the IRS allowed maximum. Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.

Yes, you can elect to enroll in an HDHP. However, Indiana University will not open or contribute to an HSA for you. If you choose to open an HSA, you will be entirely responsible for opening the account and all associated fees.

Yes. COBRA premiums are an IRS-qualified health care expense.

IU COBRA premiums must be paid with a check or money order.  You can use your HSA funds to pay your premiums in two ways:

1. Log in to iu.nyhart.com and use the “Send Payment” feature online to send a distribution to COBRA (a $10 fee may apply)
2. Send a check from your personal bank account then use the “File Claim/Reimburse Self” feature online at iu.nyhart.com, transferring funds from your HSA to your personal bank account to reimburse yourself for the cost of the premiums (no fee applies to online transfers)

Learn more about your COBRA benefits.

No, the $300 minimum contribution only applies to employees who enroll in the HSA and remain an active employee through the end of the year.

No, IU only contributes to the HSA of active employees.

No, once a contribution has been made to your HSA, it is yours. You may, however, owe taxes on any contributions made to your account that exceed your prorated contribution maximum if you left mid-year.

Details on the calculation of the IRS prorated maximum can be found in IRS publication 969. If your contributions exceed the IRS prorated maximum, you must work with WEX to resolve the excess contribution issue. Excess contributions not withdrawn from your 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.

Indiana University will pay the basic monthly account maintenance fee for the Cash account as long as you are an active employee in the HSA. The basic fee covers online account activity and reporting and two debit/VISA cards.

When you separate from the university or switch to a different IU medical plan, you will be responsible for all account fees (currently $2.75/month for the WEX HSA Cash Account). There are no transaction fees for using the card at point of sale. However, additional fees do apply for things like insufficient funds, additional cards, checks, etc. A complete Fee Schedule is available.

Yes. Contact your new HSA provider and request an HSA transfer. This type of transfer is free and does not count toward the IRS contribution maximum.

Please note, if you have excess HSA contributions, those funds should be removed from your WEX HSA before you transfer your HSA to another custodian.

No. An HSA is an individual account. You cannot combine it with an account in someone else’s name.

Yes. However, if you remove your funds from the HSA for non-healthcare related expenses you will then be subject to income taxes on the amount removed, AND, if you are under age 65, you will also be subject to a 20% penalty.

You can continue to keep this account and continue to use it, tax-free, for your healthcare expenses. The IU Benefit Card (debit/Visa) can be used at healthcare providers anywhere that VISA is accepted.

No. IU’s payroll system is not able to accommodate PTO payout or separation pay deferrals into your HSA. However, you can transfer the money from a personal account directly into your HSA using the online portal or by sending a check and a completed HSA Contribution Form to WEX.

Any contributions put in your account on an after-tax basis are eligible to be deducted from your gross taxable income on your tax return.You are responsible for tracking your contributions to ensure you don't exceed the IRS annual contribution limits.

Monthly paid employees receive their December paycheck in January. Biweekly paid employees may be paid for December hours in January, depending on the termination date. These checks are paid in a new tax year and will pick up the elections for the HSA and FSA that you made during Open Enrollment.

If an HSA deduction is taken on the January paycheck, you may complete an HSA Distribution Request Form to retrieve the funds. If you remain enrolled in your HDHP or enroll in an HSA-eligible HDHP through another employer, etc., you are not required to remove the HSA funds from your WEX account (unless your HDHP coverage ends during the year and it creates an excess contribution). Due to IRS rules and regulations, IU cannot reverse and refund the HSA deduction.