Overview
A Health Savings Account (HSA) is an individually-owned, tax-advantaged savings account. HSA funds may be used to pay for out-of-pocket qualifying medical, pharmacy benefits, dental, and vision expenses. For information on whose expenses may be covered using this account, see the .
Optum is the plan administrator for the Health Savings Account.
Key Features
- HSAs offer a triple tax advantage by making the following tax-free:
- Contributions
- Distributions
- Investment earnings
- The Universities of Wisconsin contributes to your HSA, if eligible.
- You can also contribute to your HSA. You decide how much to contribute and you may change your contribution amount at any time.
- Once the employee and employer contributions are made to your HSA, the funds are yours, even if you end your employment with the Universities of Wisconsin.
- HSA funds automatically, immediately carry over from year to year.
There are strict IRS rules regarding HSAs. If you have legal, tax, or financial questions about your HSA, consult your tax advisor.
Review this page for eligibility, annual contribution maximums, eligible expenses, and account owner responsibilities.
Eligibility
You are eligible to enroll in an HSA if you enroll in a qualified HDHP. A qualified HDHP must meet minimum deductible amounts and contains maximum out-of-pocket amounts; both are criteria set by the IRS and adjusted periodically.
If you enroll in the HDHP or the Access HDHP through the Universities of Wisconsin, you are eligible for and required to enroll in the HSA.
You are not eligible for the HSA (or the HDHP or Access HDHP) if any of the following apply:
- You are covered by another health plan that pays for out-of-pocket health care expenses before meeting the plan deductible (for example, a spouse’s plan, an international travel plan)
- You or your spouse are enrolled in a Health Care Flexible Spending Account (FSA)
- You can be claimed as a dependent on someone else’s tax return (other than your spouse)
- You are enrolled in Medicare*
- You have coverage under TRICARE or have accessed VA benefits within the past 90 days (which disqualifies you from HSA contributions; some exceptions apply)
*If you are already enrolled in Medicare, you are not eligible for the HDHP/HSA per IRS regulations. Medicare eligibility usually begins at age 65, and you can be retroactively enrolled in Medicare Part A, unless you postpone your Medicare enrollment. Medicare Part A is mandatory for those who receive Social Security income. Check with Social Security to determine your eligibility or to postpone Medicare enrollment.
To participate in the HSA for the upcoming plan year, you must re-enroll during the Annual Benefit Enrollment period (which occurs each fall).
Contributions
Each year the IRS establishes contribution maximums for HSAs. The annual contribution maximums include contributions from all sources (examples: employee and employer contributions). The contribution maximums depend on the level of coverage you enroll in for State Group Health Insurance (individual or family) and your age. The contribution maximums are:
| HDHP/HSA Coverage Level | 2024 Contribution Maximums | 2025 Contribution Maximums | ||
|---|---|---|---|---|
| Less than Age 55 | Age 55+ | Less than Age 55 | Age 55+ | |
| Individual | $4,150 | $5,150 | $4,300 | $5,300 |
| Family | $8,300 | $9,300 | $8,550 | $9,550 |
Universities of Wisconsin Contribution:
Universities of Wisconsin contributes the amount listed below to your HSA based on your health insurance coverage level (individual or family).
- 2024:
- Individual coverage: up to $750
- Family coverage: up to $1,500
- 2025:
- Individual coverage: up to $828
- Family coverage: up to $1,650
The employer contributions begin when you are eligible for the employer contribution towards your health insurance premium. If you are required to pay half of the total health insurance premium, you are eligible for up to half of the annual contribution (pro-rated if you are not enrolled for the entire calendar year).
Frequency of Contributions:
- Annual Employees (paid over 12 months): Employee and employer contributions are processed on the first two paychecks of each month (24 paychecks per year if eligible and enrolled for the entire calendar year)
- Academic Year Employees (paid over 9 months): Employee and employer contributions are processed on the first two paychecks of each month during the academic year (18 paychecks per year if eligible and enrolled for the entire calendar year)
Mid-year Enrollments:
The contribution maximums and Universities of Wisconsin contribution amounts above are for an employee enrolled in the HDHP or Access HDHP (and HSA) for the entire calendar year. If your enrollment is not effective January 1, the amounts above will be prorated.
You are responsible for making sure your HSA contributions (from all sources) do not exceed the annual IRS limits. If you exceed the maximum contribution amount listed above and do not remove your excess contribution amount timely, you may be subject to excess contribution penalties. Contact your tax advisor for additional information on excess contributions.
Important Considerations
If you enroll in the HDHP or Access HDHP, you are responsible for managing your HSA. As an HSA owner, you:
- Decide how much to contribute to your HSA for each calendar year
- Determine how funds in your HSA will be spent or invested
- Declare whether the distributions from your HSA are taxable or non-taxable
- Arrange for the withdrawal of any excess contributions
You cannot delegate these responsibilities to the Universities of Wisconsin or to the third-party administrator. As an HSA owner, you are responsible for reporting all contributions and distributions to the IRS on your Form 1040. If you make errors and do not correct them timely, you may pay additional tax or penalties to the IRS. Direct questions to your tax advisor.
For eligible expenses, participant responsibilities and more, review the resources in the Forms & Resources section below or contact your tax advisor.
FAQs
No. You are not required to contribute to an HSA; however, you must enroll in an HSA if you enroll in an HDHP through the Universities of Wisconsin. You may change your contribution at any time. You will receive the employer contribution to your HSA (if eligible) even if you do not contribute to your HSA.
If you enroll in the HSA by logging into my.wisconsin.edu, you will be prompted to enter your annual HSA contribution amount during your enrollment session. If you do not want to contribute to your HSA, enter $0.
If you are not able to enroll by logging into my.wisconsin.edu, enroll using the HSA Enrollment Form (available in the Forms & Resources section below). On the form, indicate your annual contribution amount. If you do not want to contribute to your HSA, put $0 on the form.
Remember to factor in the Universities of Wisconsin contribution so you do not exceed the annual IRS HSA contribution limit.
You may change your HSA contribution at any time.
To make changes complete the FSA & HSA Contribution Change Form (available in the Forms & Resources section below).
Review Optum’s List of Eligible Expenses for more information.
In general, expenses are considered eligible for distribution from an HSA if the healthcare expense is for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. Expenses must be primarily intended to alleviate or prevent a physical or mental defect, or illness. Typically, expenses solely for cosmetic care are not deemed as qualified medical care, nor are expenses that are merely beneficial to one’s general health.
You can pay for eligible expenses with your HSA payment card. Or you may pay out-of-pocket and request reimbursement. You may only use your payment card or request a distribution for amounts up to the current balance of your account. If funds in the account are insufficient, only the available balance in your account will be issued. An additional distribution request may be submitted once additional funds are available.
With an HSA, it is your responsibility to make sure your purchases are for eligible health, dental, and vision expenses. Save your receipts and retain them with your individual tax return documentation in case you need to prove expense eligibility.
If you use HSA funds to pay for ineligible expenses, the amount will be taxable, and, if you are under 65 years of age, you will pay an additional 20 percent tax penalty.
When your HSA balance exceeds a minimum of $1,000, excess funds may be transferred to an investment account to be invested in top-rated mutual funds where earnings grow tax-free.
For more information, review the HSA Investment Options.
Beneficiary Information
Designate a beneficiary to ensure benefits are paid according to your wishes. If you have a life event, such as a marriage, divorce, birth of a child, review your beneficiary designations and update as necessary. Beneficiary designations can be changed at any time. For more information, review the Beneficiary Information web page.
Forms & Resources
Every effort has been made to ensure this information is current and correct. Information on this page does not guarantee enrollment, benefits and/or the ability to make changes to your benefits.
Updated: 05/29/2024