Health Savings Accounts (HSAs) / Blue Health Fund Frequently Asked Questions

These frequently asked questions are intended to help you assist your employees.

What is Blue Health FundSM?

Blue Health Fund pairs a qualified high deductible health plan (HDHP) with a separate, tax-sheltered savings account called a Health Savings Account (HSA). Your health plan provides comprehensive health care coverage while the HSA lets you set aside tax-deductible, interest-earning funds. These funds help cover your deductible and other qualified medical expenses.

How can a Blue Health Fund plan benefit me?

Blue Health Fund can help you control your health care dollars and save money. Your premiums may cost less. You can then set aside the money you save to prepare for future needs, such as qualified medical expenses, retirement planning or investment options. All while enjoying tax deductions and tax-free interest and earnings.

Blue Health Fund is also a preferred provider organization (PPO) plan. You'll enjoy access to our large PPO network. You have the freedom to use any doctor, specialist or hospital nationwide, without referrals. When you stay in the network, you'll enjoy discounted rates, and you won't have any claims or paperwork to file. The network providers do it for you.

What is a High Deductible Health Plan (HDHP)?

An HSA-compatible HDHP has a minimum annual deductible for single or family benefits. Federal law sets the deductible amount. You must meet the deductible each year before your benefits pay on any medical claims.

Are there High Deductible Health Plan (HDHP) limits for contributions, deductibles and out-of-pocket expenses?

Each year the Internal Revenue Service (IRS) and U.S. Treasury Department set minimum deductible and maximum network out-of-pocket expense limits for HDHPs. The limits on maximum network out-of-pocket expenses include the deductible, any coinsurance payments and any copayments you pay for your plan. The IRS determines annual cost-of-living adjustments. For details on the deductibles and out-of-pocket limits for your Blue Health Fund plan, please refer to your enrollment package. View the IRS Statutory Contribution Limits.  

What is a Health Savings Account?

Federal laws created Health Savings Accounts (HSAs) to help you save for qualified medical expenses and retiree health expenses on a tax-free basis. The funds in an HSA belong to you and are completely portable. Any unused funds remain in the account and roll over to the next year.

How does an HSA plan work?

First, you must get medical coverage under a qualified High Deductible Health Plan (HDHP) like Blue Health Fund. Then you open an HSA with a qualified bank or financial institution. You use the HSA to pay for your qualified medical expenses with tax-free dollars. Once you meet the deductible, the plan starts paying your medical expenses subject to your coinsurance percentages.

What happens to my account if I change jobs?

The money in your HSA goes with you if you change jobs. If you no longer have a qualifying High Deductible Health Plan (HDHP), you can't add money to the account, but you can still make withdrawals.

Is this a "use it or lose it" account?

No. The unused money in your HSA carries over year after year.

How long can I keep money in the HSA?

As long as you want. You own the account, and any unused funds go with you even if you change jobs or health care coverage. Once you reach age 65, you can use the funds for health expenses or to pay certain coverage costs, such as Medicare Parts A & B, Medicare HMO and your share of retiree health coverage costs.

Do I have investment options for the HSA?

Yes. You can choose from a variety of options, and the investment money will earn tax-free interest.

Can I choose my own bank? Can I move my HSA from one bank to another?

Yes and yes.

Who is eligible to establish an HSA?

You are eligible if:

  • You have qualified High Deductible Health Plan (HDHP) coverage.
  • You are not enrolled in Medicare.
  • You do not have other non-HDHP coverage, such as through a spouse's plan.*
  • You are not claimed as a dependent on someone else’s tax return.

*Certain types of insurance or coverage are allowed, including policies that cover a specific disease, such as cancer, or provide a fixed payment for hospital coverage. Supplemental coverage for accident, disability, dental, vision or long-term care benefits are also allowed.

How does an eligible individual establish an HSA?

First, you must have a qualified High Deductible Health Plan (HDHP), like Blue Health Fund. Then you can set up an HSA at a qualified bank or financial institution. You can choose a bank or use our trustee to administer it.

What happens to the HSA funds if my status changes and I am no longer HSA-eligible?

If you change to non-High Deductible Health Plan (HDHP) coverage, enroll in Medicare or become a dependent on someone else's tax return, you will no longer be eligible to contribute to the account or establish a new HSA. You can continue to use the funds tax-free to pay your qualified medical expenses.

What are qualified medical expenses?

These are any health care costs you, your spouse or dependents pay as defined in IRS Code Section 213(d). You must incur medical expenses after you establish your HSA. Withdrawals from your account are not taxable if you use them for qualified medical expenses. Get more information about IRS qualifying medical expenses.

Are health insurance premiums qualified expenses?

Generally, no. Exceptions include qualified long-term insurance, COBRA health care continuation coverage and health care coverage while an individual is receiving unemployment compensation. Get more information about IRS qualifying medical expenses.

What if I use my Health Savings Account (HSA) funds for non-qualified expenses?

If you withdraw funds for anything other than qualified medical expenses, you must include the amount in your gross income when you file your state and federal income taxes. Non-medical withdrawals are also subject to a 10 percent excise tax.

Who will verify that my Health Savings Account (HSA) funds are used for qualified medical expenses?

As the account holder, you are responsible for deciding how to use your HSA funds and meeting all IRS requirements. Neither your HSA trustee nor your employer will verify how you use the funds. You should keep accurate and complete records of your medical expenses in case the IRS audits your account.

How can I make contributions to my account?

You can make contributions as deposits via check or payroll deduction through your employer. Each year the IRS sets maximum contribution limits for HSAs. You can make contributions to your HSA at any time during the year before the deadline for filing your federal tax return. (This is generally April 15, following the year you made the contributions.) Other people can also contribute to your HSA on your behalf. There are no minimum contribution limits. Each bank or financial institution will require a minimum deposit to open the account. Check your enrollment package for the current contribution limits.

How do I track my Health Savings Account (HSA) balance?

If you have an HSA through HSA Bank, then you can manage your funds through our website. On behalf of BlueCross, HSA Bank administers some health savings accounts. HSA Bank is an independent company. From our website, log into My Health Toolkit®. Your balance will appear on the Welcome page. You can "Access Account" to visit HSA Bank's website or click "Pay Claims with HSA Bank" to manage your health claims, pay the patient liability portion directly from your HSA or view payments you've already made.

What are "catch-up" contributions for people age 55 or older?

The catch-up contribution lets you build funds faster in a shorter period of time for medical expenses. Check your enrollment package for the current contribution limits.