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Purdue University HR Interactive HSA Guide

NOTE: Purdue University is providing you with this tool for informational purposes to help guide you through the HSA eligibility rules. The IRS contribution limits listed below reflect the rates for 2015. The contributions made on the employee's behalf (for example by Purdue) are included within this limit. Any reference to "children" refers to "IRS-qualified children".
This information does not constitute tax or legal advice. If you have specific questions about the implications of these plans for you, you are encouraged to seek professional tax or legal counsel.

Eligibility Rules

HSA Eligibility:

  • Employee may not be a dependent on someone else's tax return
  • Employee cannot be receiving Medicare, Social Security or TRICARE
  • Employee must be covered by a high deductible health plan, as defined by the IRS
  • Employee may not be covered under any other type of health insurance plan other than an HDHP (exceptions for insurance for specific injuries, accidents; disability; dental; vision; and long term care)
  • If a spouse is being covered as a dependent on the employee's HSA plan, they are not eligible to have an FSA. One must drop the account. See the Family Interactive Guide for further clarification and scenarios.
  • The only FSAs that are permitted when an employee has an HSA are limited purpose, after-tax, and dependent care FSAs.

Eligible Expenses

  • Medical expenses incurred by you, your spouse, and all legal dependents you claim on your tax return
  • Medical expenses incurred by any legal dependent you could have claimed on your tax return except if: a) the dependent filed a joint return (such as with his or her spouse) b) the dependent had a gross income of $3,700 or more
  • Insurance premiums for long-term care, health care continuation coverage (ex. COBRA), health care coverage while receiving unemployment compensation under federal or state law, Medicare Part A, B, and D and other health care coverage if you were 65+ (other than premiums for a Medicare supplemental policy such as Medigap)
  • Funds belong to the employee and can be withdrawn at any time for any reason. If it is for a qualified medical expense, whether over or under 65, the funds are not taxable and there is no penalty. If it is for a non-qualified medical expense, the money is taxable and subject to a 20% penalty if the employee is under 65. If the employee is 65 or older and withdraws for a non-qualified medical expense, the money is taxable but there's no penalty.

Interactive HSA Guides

End result

IRS Contribution Limit

55+ HSA Catch-Up Contribution Per Eligible Member
(NOTE: this is an additional contribution above the limit noted above)

Purdue Employee plan Spouse plan Employee/Spouse covered on same plan? Will you or your spouse be
covering IRS-qualified children?

          Instructions: Pick an item from the first column to start. This will populate additional options in the following columns. Select the item applicable to you and the final result will appear in a box above the interactive columns.

          You are eligible to enroll in an HSA as long as you do not have Medicare. If one of your dependents is covered under Medicare, it is still permissible for you to sign up for the HSA. If you, or any dependents, are covered under Medicaid, you are still eligible for the HSA. It should be noted, though, that the same expense cannot be claimed under both Medicaid and the HSA.

          If you do not accept Medicare when you first qualify, there are special rules for when you do decide to take the coverage (i.e. if you choose to retire after age 65). You must stop all contributions to the HSA 6 months before you decide to accept Medicare, otherwise you will need to account for those 6 months with your HSA or on your taxes.

          If you are receiving social security, you may NOT opt out of Medicare Part A. Therefore, if you are getting social security and you are 65 or older (Medicare-eligible age), you will not be eligible for an HSA.

          End Result

          IRS Contribution Limit

          55+ HSA Catch-Up Contribution

          Age Employee Status Medicare Eligible? Enrolled in Medicare?

          Instructions: Pick an item from the first column to start. This will populate additional options in the following columns. Select the item applicable to you and the final result will appear in a box above the interactive columns.

          Specific Situations

          Children of Divorced Parents

          • For purposes of the HSA only, the child is considered the dependent of both parents. Therefore, either parent's HSA money may be used on the child.
          • If the child is not listed as a tax dependent and HSA money is used for their expenses, the money will be taxed.
          • If the employee is covering the child(ren) under his or her health insurance even if they are not a tax dependent, s/he can contribute up to the family maximum for HSA but may not spend the HSA money on the child(ren).

          Same-Sex Domestic Partners (SSDP)

          • Purdue employee: If the employee is eligible for an HSA, he or she may use their funds for their own personal medical expenses. If they are also covering an IRS-qualified tax SSDP or other dependents on their health plan, the employee may contribute up to the family maximum.
          • Children: If the child the employee is covering is an IRS qualified dependent, the employee may use the HSA funds to pay for the child's medical expenses.
          • SSDP, non-IRS tax dependent: If an employee has a non-IRS qualified SSDP, the HSA money may not be used to cover the SSDP's medical expenses. If this is the case, contact your tax advisor for further assistance.
          • Same-sex IRS-qualified tax dependents are treated the same as spouses for the purposes of HSA.
          • If the employee has family health coverage through Purdue but the SSDP isn't a tax dependent and there are no other IRS-qualified dependents, then the employee may still use the family tax limit for the IRS. Purdue will contribute the family amount from the employer side if the employee has dependents on his or her health plan.

          Adult Child

          • Adult child (tax-dependent - up to age 19 or 24 if full time student): the child’s out-of-pocket medical expenses can be paid with the primary account holder’s HSA. In other words, the parent can use their own HSA to pay for the child’s medical expenses.
          • Adult child (not tax-dependent, on parent's HDHP through age 26): the child’s out-of-pocket medical expenses cannot be paid with the primary account holder’s HSA. If this is the case, contact your tax advisor for further assistance.

          Medicare Disclaimer

          • If an employee becomes disabled and enrolls in Medicare, s/he can no longer contribute to an HSA or have anyone else contribute on his or her behalf (such as Purdue) as of the first of the month in which the employee enrolled. The current HSA funds may be used to pay Medicare Part A and/or Part B premiums, as it is considered a qualified medical expense. If the disabled employee does not receive Medicare, s/he can stay on the HDHP just without the Purdue HSA contributions.
          • When the employee reaches age 65, s/he becomes eligible for Medicare. If s/he receives Medicare, s/he can no longer contribute to an HSA or have anyone else contribute to an HSA on his or her behalf (such as Purdue). If the employee declines Medicare, the employee may continue with his or her HSA. See the above Medicare Interactive Guide for further clarification.

          Terminating Employment with Purdue

          The HSA funds in an employee's account will remain in his or her name, but the account will be switched to a retail account and the employee becomes responsible for the monthly account maintenance fees for the HSA.

          COBRA

          If the employee has an HSA account it remains his or her account for the employee to pay qualified health care expenses. The employee will no longer receive contributions from Purdue and the employee can no longer make contributions. Employees on COBRA may choose from any of Purdue's health plans, including the HDHPs, but will not receive an HSA or contributions through Purdue.

          Types of FSAs

          Health Care Flexible Spending Account

          A Health Care Flexible Spending Account is used for medical, dental, and vision expenses that are deemed qualifying reasons by the IRS. There is a $2,500 single contribution limit for 2015, and a $5,000 contribution limit for those filing joint tax returns in 2015. An employee may not make contributions to an HSA and a Health Care FSA at the same time. An employee not enrolled on a high-deductible health plan is eligible for a Health Care FSA and a Dependent Care FSA at the same time. Whenever there is a reference to an FSA in this document, it is referring to a Health Care FSA. For more information, visit the Benefits website at http://www.purdue.edu/hr/Benefits/Standard_FSA.html.

          Limited Purpose Flexible Spending Account

          A Limited Purpose Flexible Spending Account is used to cover qualifying dental and vision expenses. To be eligible for a Limited Purpose FSA, you need to be enrolled in a high-deductible health plan with an HSA. There is a $2,500 single contribution limit for 2015, and a $5,000 contribution limit for those filing joint tax returns in 2015. If an employee is enrolled in a high-deductible health plan, s/he is eligibile for a Dependent Care FSA, a Limited Purpose FSA, and an HSA all at the same time. For more information, visit the Benefits website at http://www.purdue.edu/hr/Benefits/LimitedPurposeFSA.html.

          Dependent Care Flexible Spending Account

          A Dependent Care Flexible Spending Account is used to reimburse dependent day care expenses necessary while an employee (and an employee's spouse, if married) are attending school on a full-time basis or working. There is a $2,500 single contribution limit for 2015, and a $5,000 contribution limit for those filing joint tax returns in 2015. If an employee is enrolled in a high-deductible health plan, s/he is eligibile for a Dependent Care FSA, a Limited Purpose FSA, and an HSA all at the same time. For more information, visit the Benefits website at http://www.purdue.edu/hr/Benefits/Dependent_Care_FSA.html.

          NOTE: The information provided here is offered for informational purposes only.  If you have specific questions about the implications of these plans for you, you are encouraged to seek professional tax or legal counsel. Please also be aware that any reference to "employee" means a Purdue employee, and "spouse" refers to the husband or wife of the Purdue employee, whether they are employed at Purdue or elsewhere.


           
          If you have trouble accessing this page because of a disability, please contact Human Resources at hr@purdue.edu.

          Last Updated on October 11, 2013.