Health Savings Account (HSA) Plan overview

In combination with a qualified High Deductible Health Plan, the Health Savings Account (HSA) gives you a way to pay for qualified healthcare expenses now and grow your savings for future healthcare needs. Your HSA contributions don't count toward your taxable income for federal taxes. They're not taxable in most states, as well.

You, your employer, or both can contribute tax-free money to an HSA. Since the money always belongs to you (even if you leave the company) and unused funds carry over from year to year, you never have to worry about losing your money. To be eligible to contribute to an HSA, you need to get a certain kind of health plan called a High Deductible Health Plan. The annual contribution limit is based on IRS rules.

 

Control your healthcare expenses

The HSA lets you control how you save, invest, and use your healthcare dollars.

Because you fund the HSA with pre-tax money, you're using tax-free funds for healthcare expenses you'd normally pay for out-of-pocket. Your HSA contributions don't count toward your taxable income for federal taxes. They're not taxable in most states, as well.

The money always belongs to you, even if you leave the company. Plus, unused funds carry over from year to year so you never have to worry about losing your money. With Humana's HSA, your account can grow tax-free in an interest-bearing savings account. Depending on the type of HSA you have, you may be able to invest HSA funds in a money market account and wide variety of mutual funds, as well. Of course, your funds are always available if you need them for qualified healthcare expenses.

You can use HSA funds for IRS-approved items. Examples include:
  • Doctor's office visits
  • Dental services
  • Eye exams, eyeglasses, contact lenses and solution, and laser surgery
  • Hearing aids
  • Orthodontia, dental cleanings, and fillings
  • Prescription drugs and some over-the-counter (OTC) medications
  • Physical therapy, speech therapy, and chiropractic expenses

For a sample list of IRS-approved expenses, sign in to MyHumana and click the "Spending Accounts" link under the "Claims & Spending" section. You can also refer to IRS Publication 969 and Publication 502. Keep in mind the IRS may allow or disallow any expense because of circumstances involved.

You can spend only the money that's actually in your HSA. If your healthcare expense is more than your HSA balance, you need to pay the remaining cost another way, such as cash or personal check. You can request reimbursement after you have accumulated more money.

Every time you use your HSA, save your receipt in case the IRS asks you to prove that your claim was for a qualified expense. If you use HSA funds for a nonqualified expense, you'll pay tax and penalty on the ineligible amount.

As of January 1, 2011, OTC medications such as pain relievers, cough syrup, and allergy medicines require a written provider's directive to be eligible for reimbursement from a Flexible Spending Account or Personal Care Account. The HumanaAccess Card may not be able to be used to purchase OTC medications.

Examples of how it works — single coverage

Lucy enrolls in a High Deductible Health Plan. Her plan is effective January 1, 2010, and has the following features:
  • $1,500 single deductible
  • 80% coinsurance for in-network providers
She also has a Health Savings Account. Even though Lucy and her employer can put up to $3,050 in a Health Savings Account, Lucy funds the account up to the $1,500 deductible:
  • $500 from her employer
  • $1,000 from Lucy's tax-free paycheck deductions

Year 1

Lucy's healthcare costs are higher than usual because she breaks her leg. Her expenses for the year total $2,715:

  • Hospital doctor's services | $650
  • Hospital facility cost | $350
  • X-rays at hospital | $200
  • Specialist office visit | $315
  • Six physical therapy sessions | $1,050
  • Two prescriptions | $150

How Lucy uses her HSA for healthcare costs

  • HSA funds | $1,500
  • Total cost of services | $2,715
  • Lucy uses HSA to pay deductible | $1,500
  • Balance of cost of services | $1,215
  • PPO plan pays 80% of costs | $972
  • Lucy pays remaining 20% | $243
  • HSA funds remaining | $0

Summary – When the accident happened, Lucy used the HSA dollars deposited so far to cover her deductible. She wrote a check for the rest and then got reimbursed from her HSA when more money went into the account. After Lucy used the HSA to meet her $1,500 deductible, her health plan helped her pay the remaining $1,215. The plan paid 80% coinsurance, and Lucy paid the other 20% out of pocket. Because she used all the money in her HSA, Lucy has a zero balance at the end of the year.

Year 2

Lucy's healthcare costs aren't as high as last year. She has an illness that requires two doctor's office visits and two prescriptions. Her expenses for the year total $435:
  • Two office visits | $200
  • Two prescriptions | $235
How Lucy uses her HSA for healthcare costs
  • HSA funds | $1,500
  • Total cost of services | $435
  • Lucy uses HSA to pay | $435
  • HSA funds remaining | $1,065

Summary – Because her healthcare expenses were only $435, Lucy didn't use all of her HSA funds. She also didn't have to use any of her take-home pay to cover out-of-pocket costs. At the end of the year, she has $1,065 left. She can use the money tax-free for eligible healthcare expenses in the future and even invest it tax-free. She can also use these funds to reimburse herself $243 for the amount paid in year 1.

Examples of how it works — family coverage

Doug chooses a High Deductible Health Plan that covers himself, his wife Tina, and their two children — 4-year-old John and newborn Julie. Their plan is effective January 1, 2010, and has the following features:
  • $2,500 family deductible
  • 80% coinsurance for in-network providers
Even though Doug and his employer can put up to $6,150 in a Health Savings Account, Doug funds the account up to the $2,500 deductible:
  • For the first year, Doug's employer contributes $500, and Doug adds another $2,000 in tax-free paycheck deductions.
  • For the second year, Doug's employer deposits another $500. Doug adds $2,000 to the account through tax-free paycheck deductions. He also has the $1,725 left over from Year 1.
Year 1 Both children get sick once during the year. Not surprisingly, they spread the illness to their dad — but Tina manages to avoid it. Doug, John, and Julie each visit the doctor once. Doug and John need a prescription to treat the illness, and John also gets some lab tests. The family's expenses for the year total $775:
  • Three doctor's office visits | $300
  • Lab tests | $100
  • Three prescriptions | $375
How Doug uses an HSA for healthcare costs:
  • HSA funds | $2,500
  • Total cost of services | $775
  • Doug uses HSA to pay | $775
  • HSA funds remaining | $1,725

Summary – Because the family's healthcare expenses were only $775, Doug didn't use all of his HSA. He spent his employer's $500 contribution, plus $225 of the money he put in tax-free. At the end of the year, he's spent none of his take-home pay on out-of-pocket costs, and he still has $1,725 left to use for future healthcare expenses.

Year 2 This year, John is injured — leading to X-rays, a three-day hospital stay, knee surgery, and two prescription drugs. On top of that, both Tina and Julie get sick and have to go to the doctor. The family's expenses for the year total $7,710:
  • Hospital care | $3,000
  • X-rays | $250
  • Surgeon and anesthesiologist | $4,000
  • Two doctor's office visits | $200
  • Two prescriptions | $260
How Doug uses an HSA for healthcare costs:
  • HSA funds | $4,225
  • Total cost of services | $7,710
  • Doug uses HSA to pay deductible | $2,500
  • Balance of cost of services | $5,210
  • PPO plan pays 80% of costs | $4,168
  • Doug pays remaining 20% with HSA | $1,042
  • HSA funds remaining | $683

Summary – Doug used the $2,500 in his HSA to meet the plan's deductible, leaving $1,725 in his account. After meeting the deductible, the family's health benefits paid 80% of the remaining healthcare costs. Doug paid the other 20% with his HSA. He didn't have to use any of his take-home pay to cover out-of-pocket costs, and he still has $683 left to use for future healthcare expenses.

 

Financial tools

Here are some Humana tools that may be useful to members who have a Health Savings Account.

Sample HSA qualified expenses

View a sample list of allowable and disallowable expenses according to the Internal Revenue Service.
(99 KB) Download PDF
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HSA planner

You can estimate how much to contribute using our spending account planner:

Healthcare HSA planner

MyHumana tools

Visit your secure website on Humana.com to:
  • Check your HSA balance
  • Set up account alerts delivered by text message
  • Request reimbursement from your HSA by check or direct deposit
  • Download HSA forms

To access these tools and more, sign in to MyHumana . If you haven't signed up for your secure website yet, register for MyHumana today.

MyHumana Mobile

With MyHumana Mobile, you can check your HSA balance on your mobile device. Use your existing MyHumana sign-in information to access this and more at m.humana.com .

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