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Download the 2019-20 Optum Bank HSA presentation
The State of Colorado will contribute $60 per month to each eligible employee’s Health Savings Account (HSA) at Optum Bank, the State’s designated HSA trustee.
An HSA is a tax-advantaged savings account that belongs to you. It is always paired with an HSA-qualified High Deductible Health Plan (HDHP). Think of an HSA as a savings plan for healthcare you’ll need today, tomorrow, and into the future. It works like a regular bank savings account, but you don’t pay federal income tax on the money deposited. When you use your HSA money to pay for qualified healthcare expenses (medical, dental and vision) you won’t pay income taxes on the money you withdraw from your account either. You can build your HSA savings for expenses in future years or even into a nest egg for retirement. Unlike a healthcare flexible spending account (FSA), all of your HSA savings rollover from year to year. There’s no “use it or lose it” rule. The money is there when you need it. And it’s yours to keep.
An HSA allows you to be more involved with decisions on how your healthcare dollars are spent and encourages you to budget effectively and save money. In order to think in terms of a healthcare budget, you want to look at your financial situation and the type of healthcare you require. Consider whether you are eligible to establish and contribute to an HSA, have benefits paid from an HSA, or claim the tax deduction for your HSA contributions. Whether a High Deductible Health Plan combined with an HSA is right for you depends on a number of factors including the health needs of you and your family.
Health Savings Account (HSA) Eligibility Requirements—You can open a Health Savings Account (HSA) at Optum Bank, the State’s designated HSA trustee, if you:
For any month that you do not meet all eight (8) of the above eligibility requirements you are ineligible to open an Optum Bank HSA.
Other IRS restrictions and exceptions may also apply. We recommend that you consult a tax, legal or financial advisor to discuss your personal circumstances and for personal advice on eligibility, tax treatment and restrictions.
If you later switch to a health plan that is not an HSA-qualified HDHP that makes you ineligible to continue depositing money into your HSA, you may continue to use the money in your account for qualified healthcare expenses, but you can no longer make deposits to your HSA.
You are eligible to receive the State-paid $60 monthly HSA contribution for each month you meet all of the following eligibility requirements:
For any month that you do not meet all three (3) of the above eligibility requirements you are ineligible to receive the State-paid $60 per month HSA contribution.
If you meet the eligibility requirements you can sign-up and open your Optum Bank HSA through your employer by visiting your State of Colorado open enrollment website at benefitsolver.com.
As part of the USA Patriot Act of 2001 when a Health Savings Account is opened, the account holder goes through a verification process. All financial institutions are required to verify the name, date of birth, social security number and address of each account holder. The USA Patriot Act of 2001 verification process applies to all financial accounts (Public Law 107-56).
A Health Savings Account (HSA) helps you plan, save and pay for healthcare.
Here are four key tax benefits to a Health Savings Account (HSA).
It’s not just for doctor visits. You can use your HSA to pay for qualified healthcare expenses such as medical, dental, vision, eyeglasses, hearing aids and qualified prescriptions. You can even use your HSA savings to pay for other kinds of health insurance, such as COBRA, long-term care insurance and any health plan coverage you have while receiving unemployment compensation. When you turn 65, you can use HSA funds to pay for any tax deductible health insurance (except for Medicare supplemental insurance).
You can invest it*. Once your balance reaches the designated investment threshold, which is typically around $2,000, you can begin investing in mutual funds at Optum Bank. If you earn money on your investments, you don’t pay income tax on that money, either.
*However, investments like mutual funds are not FDIC insured, are not guaranteed by Optum Bank, and may lose value.
You can save for the future. By saving in an HSA, you can be ready for expenses due to illness or accident. And, after you turn 65 or you enroll in Medicare benefits or you become disabled, you may withdraw money from your HSA for expenses that are nonqualified healthcare expenses without paying the 20 percent (20%) IRS penalty tax, although you may have to pay normal income taxes on the withdrawal.
HSA contribution limits are determined every year by the Internal Revenue Service (IRS) under section 223 of the Internal Revenue Code (IRC). For 2019, the statutory annual HSA contribution limit is $3,500 if you have individual HDHP coverage ($50 more than 2018) and $7,000 if you have family HDHP coverage ($150 more than 2018). The IRS also allows you to make an extra catch-up contribution of $1,000 if you are age 55 or older. You can make contributions to your HSA all the way up to the tax-filing deadline (usually April 15) and still get tax credit for the previous calendar year.
Note: These IRS statutory contribution limits apply to the combined total of all of your HSA deposits including contributions from you, your employer, family members or anyone else.
Note: Catch-up contributions can be made during the calendar year in which the HSA participant turns 55.
You may have had a Healthcare FSA in the past. With a Healthcare FSA, all the money you chose to contribute was available to help pay for eligible expenses on the first day of your benefit plan year. An HSA works differently. Money grows in your HSA as you and your employer may deposit money into it. You can only use your Optum Bank HSA to pay for qualified healthcare expenses if you have enough money in the account to cover the cost. While you are growing your HSA savings, you may be required to pay for a qualified healthcare expense out of your pocket if your HSA balance is not great enough to pay for the expense. You can reimburse yourself from your HSA later, after you have enough money in your account.
There are several ways to contribute money to your account:
After you open your Optum Bank HSA you will receive in the mail your welcome kit with your account number, account disclosures, and your Optum Bank HSA Debit MasterCard.
Once an eligible employee has opened their Optum Bank Health Savings Account (HSA) and money has been deposited into your HSA, Optum Bank will begin to charge you an HSA administration fee of $1.75 per month which will be deducted from your HSA funds. In addition to the monthly HSA administration fee, Optum Bank may charge you fees for other banking services you use.
If you contributed money to your Health Savings Account (HSA) you’ll want to fill out IRS Tax Form 8889 so you can deduct the correct amounts from your taxable income. Don’t forget to file this form to claim the tax deductions.
While the Affordable Care Act (ACA) allows parents to add their adult children (up to age 26) to their health plans, the Internal Revenue Code (IRC) definition of a qualifying tax dependent child (qualifying child) who may be covered under an employee’s HSA is different. This means, for instance, if you have adult children covered under your health plan you may not use your HSA funds to pay or reimburse yourself for their qualified healthcare expenses if they are not your qualifying tax dependent children.
For more information refer to the Working Families Tax Relief Act of 2004 (WFTRA) which established the IRS definition of a qualifying tax dependent child (qualifying child) effective January 1, 2005.
This information is not intended as legal or tax advice. We recommend that you consult a tax, legal or financial advisor to discuss your personal circumstances and for personal advice on eligibility, tax treatment and restrictions.
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State of Colorado benefits plans from previous years.
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