- What is a Health Savings Account (HSA)?
- What is a "high-deductible health plan?"
- How is the HSA "tax-advantaged?"
- How does the HSA work?
- Where is my money actually deposited?
- What happens if I don't use all the funds I've contributed to my HSA over the course of the year?
- What happens to my HSA if I leave my job?
- Who can contribute to the HSA?
- Am I eligible for an HSA?
- How do I make deposits to my HSA?
- How much can I contribute to my HSA?
- What investment options are available for my HSA?
- How do I invest my savings in mutual funds?
- How do I open my investment account?
- How long will it take for my investment account to be established?
- Is there a fee for the investment account?
- What mutual funds are available to me for investment?
- When can I start using the funds in my HSA?
- How do I withdraw funds from my HSA?
- How can I check the balance in my investment account?
- How do I use my mutual fund investments to pay medical expenses?
- Can my Citibank HSA Debit Card MasterCard, HSA Checks and Online Bill Pay access funds in my investment account to pay for medical expenses?
- What expenses qualify for reimbursement from my HSA?
- What if I need to use HSA funds for non-health-related expenses?
- What if I have questions about my HSA?
- What records do I need to retain when I withdraw funds?
- Will I receive HSA statements?
- What fees are associated with an HSA?
- How does this work with my Taxes?
- How soon can I open my account?
- I want to make sure my HSA is "established" as soon as possible. Can I establish my account before my HDHP coverage begins?
What is a Health Savings Account (HSA)?
A Health Savings Account (HSA) is a tax-advantaged interest-bearing savings account you can use to pay for qualified health expenses for you and your family. It works in conjunction with a high-deductible health plan.
What is a high-deductible health plan?
According to the IRS, a qualifying high-deductible medical plan has a minimum annual, in-network deductible of $1,200 for single coverage, $2,400 for family coverage, as well as an in-network, out-of-pocket maximum of $5,950 for single coverage and $11,900 for family coverage. Check your employee benefit materials to see if your employer offers a qualifying plan.
How is the HSA tax-advantaged?
Three ways:
- The money you contribute to your account may be pre-tax or tax-deductible. (Speak with your tax advisor and/or accountant.)
- The money in your account earns interest tax-free.
- When you use funds to pay for your deductible or qualified health care expenses, those withdrawals are tax-free as well.
How does the HSA work?
Simple: You deposit funds in your account either through a payroll deduction (pre-tax), or by mailing in a check (post-tax). Then you may use that money to pay for health care expenses below your insurance deductible, as well as co-insurance requirements after your deductible is met, and expenses not covered by your health plan. Unused funds are saved for expenses in future years.
Where is my money actually deposited?
The administrator and manager of your HSA is Citibank, N.A., one of the world's largest, most respected and most trusted financial institutions.
What happens if I don't use all the funds I've contributed to my HSA over the course of the year?
Those funds simply roll over into the next year. And the next. You never lose your HSA contributions; they just keep accumulating and earning interest. And your money is ready whenever you need it, today or in the future. You can even use your HSA to save for your retirement health care costs. That makes an HSA a powerful tax-advantaged retirement savings account in its own right, like a 401(k) or IRA.
What happens to my HSA if I leave my job?
Your HSA belongs to you. All funds contributed to your HSA, including employer contributions, are yours to keep. Your account is completely portable, meaning you can take it with you, intact. When you change jobs, you can choose to:
- Keep your HSA;
- Transfer your funds to another provider's HSA; or
- Transfer your funds as a rollover to another qualifying account within 60 days.
Who can contribute to the HSA?
Both you and your employer may contribute to the HSA. Other qualified family members may also contribute to the account for you, as long as they meet IRS guidelines. (Check your company health plan materials to see if your employer offers employee contributions, and for your plan's specific funding options.)
Am I eligible for an HSA?
Yes, if you:
- Currently have (or switch to) a "high-deductible health plan" that meets IRS requirements;
- Are not covered by other health insurance (for example, you cannot be a dependent on anyone else's plan, except for vision or dental coverage);
- Are not entitled to Medicare benefits nor enrolled in Medicare or Medicaid; and
- Are not claimed as a dependent on someone else's tax return.
How do I make deposits to my HSA?
There are multiple ways to contribute to your account:
- Payroll Deduction. If your employer offers this option, you can have a set amount deducted from your paycheck each pay period.
- Contribution Form. When you open your HSA you will receive a contribution form which you can use to make a check contribution or indicate a rollover from another qualified plan. You can also find contribution forms at hsa.citibank.com.
How much can I contribute to my HSA in 2010?
HSA Contributions Beginning January 1, 2010
- You may contribute the annual maximum amount as determined by the IRS. The maximum for 2010 is $3,050 for individuals and $6,150 for families.
- If you are over age 55 and up to Medicare entitlement age, you may contribute an extra $1000 for 2009 and $1000 for 2010 and beyond.
- Your employer may roll over funds from your HRA or FSA account once, according to the rules established by the IRS.
What investment options are available for my HSA?
You can invest your savings in a savings account. Once your HSA reaches a minimum balance of $1,500, you can also invest your savings above $1,500 in mutual funds.
How do I invest my savings in mutual funds?
Once your investment account has been established and you have a minimum account balance of $1,500, you can begin investing your savings above $1,500 in mutual funds. Access your account online via hsa.citibank.com and select the "Investments" tab. Here you can buy, sell and redeem your mutual funds as well as check your fund balances.
How do I open my investment account?
Opening an investment account is easy. Go to hsa.citibank.com and log into your HSA. Select the "Investments" tab. Once there, you will be prompted to read and accept the Terms & Conditions. Upon acceptance of the Terms Conditions, an investment account will be opened for you.
How long will it take for my investment account to be established?
Once you read and accept the Terms & Conditions your investment account will be established in approximately two business days.
Is there a fee for the investment account?
The monthly fee for the investment account is $2.50.
What mutual funds are available to me for investment?
There are a number of mutual funds of various asset class mixes and investment objectives from which you can choose. A complete list of mutual funds can be viewed online at http://www.hsa.citibank.com/forms.html.
When can I start using the funds in my HSA?
Immediately. You can use the funds as soon as they are contributed and available. Note that if your employer matches some or all of your contributions, they can determine their contribution schedule—annually, monthly, weekly, etc. So check with your employer.
How do I withdraw funds from my HSA?
You can withdraw funds using your HSA debit card or by writing a check from your account. You can also use the online bill pay feature.
How can I check the balance in my investment account?
You can check your balance, mutual fund investments and investment history online at hsa.citibank.com or by calling 1-877-HSA-CITI 24 hours a day, 7 days a week to access our automated phone system or 8 a.m. to 8 p.m. to speak with a live agent. You can also view your investment account information on your consolidated monthly HSA statement.
How do I use my mutual fund investments to pay for medical expenses?
In order to use your mutual fund investments to pay for medical expenses, you must first liquidate some or all of your investments to cover your expected medical costs. Once this is done, the proceeds from the sale of your investments can then be used to pay for your medical expenses.
Please remember that it takes one day after the mutual fund sale is made before the proceeds from the sale are available in your cash account.
Can my Citibank® HSA Debit Card MasterCard, HSA Checks and Online Bill Pay access funds in my investment account to pay for medical expenses?
No. Your debit card, HSA checks and online bill pay can only access funds in your cash account. If you anticipate medical expenses beyond the amount in your cash savings account, you will need to liquidate some or all of your funds to cover the expenses. Once this is done, your Citibank® HSA Debit Card MasterCard, HSA Checks and Online Bill Pay can access your account balance and be used to pay for medical expenses.
Citibank will not automatically liquidate investments to pay for medical expenses if you have an insufficient balance in your cash savings account.
What expenses qualify for reimbursement from my HSA?
You can receive tax-free reimbursement for qualified health expenses as defined by Section 213(d) of the Tax Code. A list of these expenses is available on the IRS Web site, www.irs.gov. HSA distributions used for any purpose other than the qualified medical expenses listed will be taxable, and appropriate tax rules will apply.
What if I need to use HSA funds for non-health-related expenses?
If you use your HSA funds for non-qualified expenses, the amount you withdraw will be taxable, and you'll also be required to pay an additional 10 percent tax penalty on the withdrawal amount. (Please speak with your accountant before making a non-health-related withdrawal.)
This seems confusing. What if I have questions about my HSA?
We at Citibank recognize that making the transition to HSA/HDHP is daunting. We have worked very hard to build a support infrastructure to make sure you can comfortably transition into this consumer directed product. Choose from three ways to get the information you need:
- Online. Log on to hsa.citibank.com 24/7, enter your confidential password, and all your account activity will be on screen for you.
- Customer Service Representatives. To speak with a representative, call Monday - Friday, 8:00 a.m.- 8:00 p.m. Eastern Time.
What records do I need to retain when I withdraw funds?
Save all receipts and records of withdrawals for tax reporting to the IRS. If you use your funds for non-health-related expenses, you must report those withdrawals. Since the HSA is your plan, not your employer's, you, not your employer, are responsible for maintaining HSA records.
Will I receive HSA statements?
Yes. You will receive monthly online statements tracking your account balance and activity. These statements will be available to you online at your secure account access site or, if you prefer, they can be mailed to your home.
What fees are associated with an HSA?
There may be account set-up fees, maintenance fees and ATM withdrawal fees. These are provided to you in the HSA Client Manual and Custodial Agreement, available within the Enrollment Kit provided upon enrollment in the program. You will receive communications if these fees are updated.
How does this work with my income taxes?
At the end of the tax year, we will send you a Form 5498-SA summarizing all of your contributions, and a Form 1099-SA which reports the total distributions taken from your account for the year. We will send these forms to the IRS as well. You should attach these forms to your tax return and submit both when you file. (Please consult with your tax advisor and/or accountant before you file with the IRS.)
How soon can I open my account?
Your account can be established as early as the effective date of your HDHP coverage.
I want to make sure my HSA is "established" as soon as possible. Can I establish my account before my HDHP coverage begins?
You can complete all the paperwork prior to the effective date of your HDHP coverage. However, your account is not officially "established" until your HDHP coverage begins. But completing the necessary steps before your coverage begins ensures that your HSA will be "established" as early as possible. This is especially important when your HDHP coverage is effective on a non-business day.
