Health Savings Accounts

The Health Savings Account (HSA) is a tax-advantaged savings account that can be used to pay for qualified medical expenses. It is only available for those enrolled in the High Deductible Health Plan (HDHP). Employees may have pre-tax contributions deposited directly from payroll. Additionally, employers may also make pre-tax contributions on the employee’s behalf. Contributions may not exceed the annual maximum as determined by the IRS. The account and funds belong to the employee even if they leave employment. It is strongly advisable that employees understand their responsibilities and the limitations when opening an HSA.

Employees are the owners of their HSA and have sole responsibility for knowing their eligibility requirements, managing all contribution limits, and complying with regulations. Employees are strongly encouraged to seek advice from a qualified tax professional or attorney if they have questions about their obligations related to owning an HSA.

After selecting the HDHP with HSA option on the Blue Cross of Idaho enrollment form, the enrollee must also complete a separate HSA enrollment form from Navia. On this form, employees will indicate how much they wish to contribute to their HSA, if anything. If the employee does not wish to contribute, they must still complete this form.

Your annual election will include a $1.50 administration fee which will be deducted from your election balance each month. Additionally, Navia will charge a $1.50 mailing fee for paper statements. Enrollees may select electronic-only statements via Navia’s website to discontinue receiving paper statements and the associated charge.

During Open Enrollment, SCO agency employees must use the SCO Self- Service portal to enroll in the HDHP and will be asked about their eligibility to participate in the HSA. If the employee is eligible, they will select the appropriate option and enrollment in the HSA will become part of the same application and the employer contribution to the HSA will be established.

Yes, the employer contributions for the State plan for FY27 are $500 for individual coverage and $1000 for family coverage. These amounts are paid on a pro-rated basis, with each payroll, from July to June. If you enroll mid-year you will only receive the remainder of the prorated amount for that year.

The total dollar amount for FY27 is $4,400 for individuals and $8,750 for families. These limits include the employer contributions.

Yes, employees may change their election to start, increase, decrease, or stop making HSA contributions at any point throughout the year.

Yes, enrollees can select how to invest the funds in their account. See Investment Guide PDF for more information.

Financial institutions are required to conduct a Customer Identity Process (CIP). This is a verification process that allows the account to be opened. A CIP failure can occur when the HSA bank cannot verify the information provided by the enrollee. The letter will state specifically what the issue was and how to resolve it.

Yes, but there are some restrictions. If an employee enrolls in the HDHP without an HSA, they may enroll in Dependent Care FSA and the general-purpose Health Care FSA—like any other plan enrollees. However, if an employee enrolls in the HDHP with an HSA, they may elect Dependent Care FSA and/or the Limited-Purpose Health Care FSA.

An FSA benefit is sponsored by your employer, (funds do not belong to the employee) and annual contributions must be spent within specific timeframes, or the funds are forfeited. FSA’s have lower contribution limits and employees must re-enroll every year. On the other hand, an HSA is owned by the employee even if they leave employment. Employees are responsible for their HSA and funds can be invested at the direction of the employee. Additionally, contribution limits are higher and there is no time frame for funds to be spent, so they rollover automatically.

Any rollover funds remaining in an employee’s Health Care FSA will be automatically transferred to a Limited Purpose Health Care FSA by Navia.

Archer MSA’s: Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder’s spouse, or the account holder’s dependent(s). Discontinued in 2007, existing Archer MSAs were allowed to continue. Consumers have the ability to have both an MSA and HSA or more than one HSA, but it comes with some minor adjustments on how they can contribute. The total annual limit does not change, but the allocation on where they can put their funds is important. Related to an MSA, for a family plan, 75 percent of the annual deductible or the IRS maximum, whichever is lower, can be contributed into the MSA. For an individual plan the percentage of the annual deductible changes to 65 percent. The remainder up to the total limit can then be contributed into the HSA.

Idaho MSA: No, the MSA can provide first dollar coverage prior to deductible therefore it is disqualifying coverage.

Medicare MSA’s: MSAs are only for people enrolled in the government Medicare program and are participating in the high-deductible Medicare plans. MSAs take the place of HSAs for Medicare recipients, because Medicare recipients can’t have HSAs. Medicare enrollees who want MSAs have to enroll in high-deductible Medicare Advantage plans run by private insurance companies. A major difference between MSAs and HSAs is that Medicare, not the policyholder, contributes to the MSA.

If an employee’s spouse has a traditional HCFSA, the employee is not eligible to contribute to an HSA if they are in the same household. If the spouse has a limited-purpose FSA or a dependent care account, the employee may contribute to an HSA.

Most types of health insurance “premiums” (including coverage contributions for uninsured plans) are not qualified medical expenses. HSA funds can be used for nonqualified expenses, but income taxes (and excise taxes if under age 65) will apply.

Premiums in the following limited cases do meet the definition of qualified medical expenses:

• Premiums for COBRA continuation coverage;
• Premiums for coverage if unemployed and receiving federal or state unemployment
• insurance;
• Medicare premiums (other than premiums for Medicare supplement policies), if the
• account holder is 65 or older and the premiums are for the accountholder or spouse who first became eligible for Medicare at 65 or later;
• Contributions for an employer-sponsored group retiree health plan, if 65 or over; or
• Certain long-term care insurance premiums (seek the advice of a tax professional as the rules on long-term care insurance are complex).

Note that premiums for Medicare Supplement policies (often referred to as Medigap) are not qualified medical expenses, regardless of age.

Yes, as noted above, COBRA premiums are considered qualified medical expenses; therefore, HSA funds can be used to pay COBRA premiums without tax consequences. Most other types of “premiums” do not qualify for tax-free treatment.

Yes, employees may use their HSA funds to pay their own qualified medical expenses or those incurred by their spouse and/or their tax-dependent child(ren).

For an employee who is turning 65, the IRS recommends individuals discontinue making HSA contributions 6 months prior to avoid tax penalties. Additionally, no HSA contributions are allowed once an individual enrolls in Medicare or reaches 65 years of age. However, HSA funds may still be used to cover qualified medical expenses. 

No matter how your employment ends (retirement, termination, etc) your HSA money is yours therefore, what you have contributed up until your final day of employment will still be available to use. If you’ve ended employment and have questions, contact Navia directly at 800-669-3539.