> Home > Human Resources > Benefits Information > Health Savings Account (HSA) Information Page

Health Savings Account (HSA) Information Page

Scottsdale's basic healthcare plan will include an optional Health Savings Account (HSA) that will allow employees to use pre-tax dollars to pay medical expenses. This HSA will rollover from year to year, and is portable if the employee leaves the organization.

Health Savings Accounts (HSAs) are considered "consumer-driven" health plans.  They combine a less expensive, qualified high deductible health plan with a tax advantaged savings account that allows you to save and pay for routine medical, dental and vision expenses with pre-tax dollars.  Additionally, you can save the money for retirement to pay for medicare premiums and other IRS qualified medical expenses.
  

HSA Frequently Asked Questions

What is an HSA?

A health savings account (HSA) is a tax-favored savings account created for the purpose of paying medical expenses.

  • Tax-deductible
    Contributions to the HSA are 100% deductible (up to the legal limit) — just like an IRA.
  • Tax-free
    Withdrawals to pay qualified medical expenses are never taxed.
  • Tax-deferred
    Interest earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are tax-free.
  • HSA money is yours to keep
    Unlike a flexible spending account (FSA), unused money in your HSA isn’t forfeited at the end of the year; it continues to grow, tax-deferred.

What are the contribution limits to an HSA in 2014?

Single - $3,300

Family - $6,550

55+ - an additional $1,000

Who can have an HSA?

In order to qualify you must meet the following conditions:
1) Covered by an IRS qualified high deductible health insurance plan; The City's HSA Choice Plan qualifies.
2) Not covered under other health insurance;
3) Not enrolled in Medicare; and
4) Not another person's dependent.

Exceptions.
Other health insurance does not include coverage for the following: accidents, dental care, disability, long-term care, and vision care. Workers’ compensation, specified disease, and fixed indemnity coverage is permitted.

Can my HSA be used for dependents not covered by the health insurance?

Generally, yes. Qualified medical expenses include unreimbursed medical expenses of the accountholder, his or her spouse, or dependents.

 

What about nonmedical withdrawals?

Nonmedical withdrawals from your health savings account are taxable income and subject to a 20% tax penalty.  If you meet the exceptions, there is no penalty for non-medical expenses, however normal income taxes will apply. 

Exception.
This tax penalty does not apply if the withdrawal is made after the date you:
1) Attain age 65;
2) Become totally and permanently disabled; or
3) Die.

 

Can my HSA be used to pay premiums?

No, this would be a nonmedical withdrawal, subject to taxes and penalty.

Exceptions.
No penalty or taxes will apply if the money is withdrawn to pay premiums for:
1) Qualified long-term care insurance; or
2) Health insurance while you are receiving federal or state unemployment compensation; or
3) Continuation of coverage plans, like COBRA, required under any federal law; or
4) Medicare premiums.

 

What happens to my HSA when I die?

Your HSA will be treated as your surviving spouse’s HSA, but only if your spouse is the named beneficiary. If there is no surviving spouse or your spouse is not the beneficiary, then the savings account will cease to be an HSA and will be included in the federal gross income of your estate or named beneficiary.