HSAs: A Smart Way to Manage Your Health Care Dollars
All of Purdue’s consumer-driven health plans (CDHPs) offered for 2021 also come with a Health Savings Account (HSA) offer to help manage out-of-pocket expenses for those who are eligible to participate.
Here are some of the key things Triple tax advantage: An HSA is a smart way to save for healthcare costs now and in the future. You may contribute to your HSA with pre-tax dollars deducted from your paycheck each pay period—this allows you to lower your current taxable income at the same time you are saving for healthcare needs. Then, the interest you earn over time continues to grow tax-free. Finally, you can also make tax-free withdrawals to cover qualified medical expenses, now or in the future—even in retirement. Choice is yours: You decide how much to contribute—and you can change it any time during the year—as long as you stay within the annual limits set by the IRS. So, if any surprises come up, you can increase or decrease your contribution level at any point. As you decide how much to contribute to your HSA, it’s helpful to consider expenses that you know you will have throughout the year. Services such as prescriptions, sick visits and non-preventive lab expenses can cost just a little less if you pay for them with funds that are never taxed. Purdue helps, too: We also make contributions, giving you a start toward budgeting your out-of-pocket expenses. Purdue makes two types of contributions based on your medical plan coverage: Base Contribution
$325 individual (employee only) $650 family (employee +1 or more)
Healthy Boiler Wellness Program
Up to $325 individual (employee only) Up to $650 family (employee +1 or more) Always yours: HSAs are owned by you, so unused funds roll over year to year and always belong to you, even if you leave Purdue. And they pass on to your beneficiary in the event of your death.
How to Grow Your HSA Nest Egg For some, the challenging part of using an HSA is that the funds are only available as they are deposited. That’s why it’s important to build up a nest egg. While Purdue is giving you a jumpstart in 2021 by depositing the base contribution in January, it’s still important to grow your HSA so you have funds handy for future medical expenses. Two things you can do to build up your HSA: 1. Contribute any savings from your new CDHP premium to your HSA. Example: On the existing PPO plan, an employee with family coverage and annual income under $45,500 pays $4,521.96 in annual premiums. In 2021, the annual premium costs will be lower in comparison. Since you are already accustomed to paying that amount, consider reallocating the premium difference into an HSA in order to build up your nest egg: Medical Plan 2021 Annual Family Premium Savings to Contribute to HSA
Premier $1,962.24 $2,559.72
Standard $825.00 $3,696.96
Limited $212.52 $4,309.44 2. Participate in the Healthy Boiler Wellness Program to earn financial incentives for completing an annual physical and/or providing a biometric screening. Participating in the Healthy Boiler Wellness Program can add up to another $325 (individual) or $650 (family) in your HSA.
How CDHP plans and HSAs can work together From the example above, a family moving from the PPO plan to the Standard Plan (under $45,500 salary tier) for 2021 will save $3,696.96 in annual premiums. In 2021, the family has $4,000 in medical expenses from a few office visits, prescriptions, labs, a couple urgent care visits and an outpatient diagnostic test. But both employee and spouse participate in the Healthy Boiler program, earning the full HSA contribution from Purdue: $650 base + $650 Healthy Boiler incentive = $1,300. Premium: $825 Savings from 2021: $3,696.96 2021 Costs: $4,000 HSA Base: $650.00 HSA Healthy Boiler: $650.00
$4,825 cost
$4,996.96 HSA contributions In summary, $4,825 costs vs $4,996.96 HSA contributions. The base contribution from Purdue, as well as the employee’s decision to contribute the premium savings and participate in the Healthy Boiler program not only ensure they have enough to cover their expenses for the year—but it leaves a little extra in their HSA for the start of the next year.
2021 Maximum HSA Contribution Limits* Individual: $3,600 Family: $7,200 Catch-up contribution *Combined annual contributions (i.e. yours, Purdue’s base, Healthy Boiler wellness program incentive) cannot exceed these amounts. If your spouse also receives contributions to an HSA, you must collectively adhere to the family maximum plus catch-up contributions, if applicable. Eligible HSA Expenses
Ways to Best Utilize HSA
Resources Interactive HSA Tool – HSA Bank –
Questions? Contact the HR Service Center at hr@purdue.edu hr@purdue.edu |