Employees whose insurance follows either the Manager's Plan or the Commissioner's Plan are eligible to enroll in the HDHP. The authorizing language is found in Minnesota Statute 43A.23 subdivision 1 (d):
Beginning January 1, 2010, the health insurance benefit plans offered in the commissioner's plan under section 43A.18, subdivision 2, and the managerial plan under section 43A.18, subdivision 3, must include an option for a health plan that is compatible with the definition of a high-deductible health plan in section 223 of the United States Internal Revenue Code.
Anyone enrolled in the HDHP is eligible for the state-sponsored HSA.
A person generally qualifies as a dependent for HSA purposes if you claim them as an exemption on your federal tax return.
An HSA is a special tax-preferred trust or custodial account established under IRS Code Section 223 that is used to pay for current and future medical expenses. The state-sponsored HSA works hand in hand with its High Deductible Health Plan (HDHP). An HSA works like an IRA, except that the money is used to pay health care costs. The money deposited into the HSA and earnings thereon are not taxable. The funds can be withdrawn from the account to cover qualified medical expenses tax-free. Unused balances roll over from year to year.
The money withdrawn is taxable and may be subject to a 20% penalty if you are under the age of 65.
Anyone may contribute to the HSA of an eligible individual. For example, if an employee establishes an HSA, either the employee or the employer can make contributions. Family members may also make contributions to the HSA on behalf of the family member the HSA belongs to as long as that family member is also an eligible individual.
IRS limits may change on an annual basis to keep up with inflation.
The state will make monthly contributions to the HSA of up to
However, if you take the health assessment during Open Enrollment and agree to accept a call from a health coach, the employer will contribute an additional $300 (for a total of $800 per year) for full-time employees with HDHP single coverage and an additional $600 (for a total of $1,600 per year) for those with HDHP family coverage. State employees may also contribute to the HSA on a pre-tax, payroll-deducted basis. However, payroll-deducted contributions may only be directed to the financial institution designated by the health plan you have chosen to administer your HDHP.
Employees on the state's central payroll system will be able to contribute on a pre-tax basis through payroll. You may also make post-tax contributions by writing a check for deposit to your HSA. Check with the financial institution where your HSA is set up for details on how to contribute to that HSA.
Your HSA belongs to you and as such, you're responsible for maintaining the account. Here's what's expected of you as an HSA account holder:
To be eligible for an HSA, an individual generally cannot have health coverage other than HDHP coverage. This means that an HSA-eligible individual cannot be covered by any health plan that provides coverage below the minimum HDHP deductible, including Medicare. For example, if your spouse has family coverage that would provide for coverage of benefits within the HDHP deductible, you would not be permitted to have an HSA. (Remember that if you receive monthly social security payments, you are enrolled in Medicare Part A.)
Remember that any expenses that could be paid from an MDEA or HRA can be paid from your HSA. However, to avoid any adverse tax consequences should you wish to enroll in an MDEA, you must enroll in a limited purpose MDEA from which you may pay only vision and dental expenses, and expenses incurred after you have met the HDHP's annual deductible. The same holds true of your HRA which must become a limited purpose HRA. The State's pre-tax plan administrator, 121 Benefits, currently administers such accounts.
Yes. If both an individual and spouse have family HDHPs, the maximum annual HSA contribution for the family is $7,100 in 2020. This is true if there is just one HSA or if each spouse has their own HSA. A family cannot increase its annual contribution because there are two HDHPs and/or two HSAs. This limit is split equally unless the individual and spouse agree on a different division. For other tax situations, consult your tax advisor.
A married couple may not have a joint HSA. Each spouse who wants to contribute to an HSA must open a separate HSA, and dollars cannot be transferred between them. However, one spouse may use withdrawals from their HSA to pay or reimburse the qualified medical expenses of the other spouse, without penalty. However, both HSAs may not reimburse the same expenses.
The schedule of benefits is built on the Minnesota Advantage Health Plan with its four tiers of primary care providers. The network of providers for the HDHP is the same as for the low-deductible Minnesota Advantage Health Plan. Under the HDHP, all services, including prescription drug purchases but not including preventive care, are subject to the annual first dollar deductible for single and family ranging from $1,500 to $4,000 for single coverage and $3,000 to $8,000 for family coverage. Once the deductible has been met, individuals are responsible for a copayments and coinsurance payment up to the annual out-of-pocket maximums of $3,000 for single coverage to $10,000 for family coverage.
Once the first dollar deductible has been met, individuals are responsible for a coinsurance payment based upon the Cost Level of the primary care clinic chosen to an annual out-of-pocket maximum of $3,000/$10,000 (single/family). Please review the 2020 Advantage High Deductible Health Plan (HDHP) Design and Summary of Benefits for detailed information.
The HDHP is administered by the three plans that currently administer the low-deductible Advantage Health Plan: BlueCross BlueShield, HealthPartners, and PreferredOne.
The plan's monthly premiums will be $634.06/$1,927.28 (single/family) for 2020. The employer will contribute to the premium on the same basis as it contributes to the low-deductible Advantage Health Plan premiums (i.e., 95% of single premium, 85% for dependent premium). Thus, a full-time employee with single coverage will pay $35.04 monthly during the 2020 plan year, and those with dependent coverage will pay $239.02 monthly.
Emergency care or urgent care at a hospital emergency room or urgent care center out of the plan's service area or out of network is covered on the same basis as in-network coverage. Point-of-Service coverage is available only for members whose permanent residence is outside the State of Minnesota and outside the service areas of the health plans participating in the HDHP. The category includes employees temporarily residing outside Minnesota on temporary assignment or paid leave (including sabbatical leaves) and college students. It is also available to dependent children and spouses permanently residing outside the service area. These members pay a $1,500 single or $3,000 family deductible and 30% coinsurance to the $3,000 / $6,000 out-of-pocket maximums.
The deductible under the HDHP program is referred to as a non-embedded deductible. For employees with family coverage, this means that the annual deductible must be collectively satisfied by one or more of the individuals covered under the family plan before the Health Plan begins paying any medical or prescription drug benefits. The annual deductible includes both medical and pharmacy. The annual deductible for single coverage ranges from $1,500 to $4,000 based upon the cost level of your primary care clinic. The annual deductible per family member for family coverage ranges from $2,800 to $6,400 with the range of $3,000 to $8,000 per family and is based upon the cost level of your selected primary care clinic.
Similarly, the out-of-pocket maximum needs to be met collectively before the plan pays 100%. The annual out-of-pocket maximum ranges from $3,000 to $5,000 for individual coverage depending on the cost level of the primary care clinic you have selected and ranges from $6,000 to $10,000 for family coverage depending on the primary care clinic you have selected.
This differs from the low-deductible Advantage Health Plan, which has an embedded deductible, i.e., when out-of-pocket expenses for one family member reach the individual deductible amount, that family member has satisfied their individual deductible and the health plan starts to pay for that individual. The remainder of the family deductible amount can be satisfied by any one or more of covered family members individually or collectively.
The State as the employer will pay HSA fees for as long as you participate in the Advantage High Deductible Health Plan.
For an established HSA, contributions for the taxable year can be made in one or more payments at any time after the year has begun and prior to the individual’s deadline (without extensions) for filing the eligible individual’s federal income tax return for that year.
For most taxpayers, this is April 15 of the year following the year for which contributions are made.
Once your account is initially funded, you can take distributions from funds available in the account any time for qualified medical expenses.
As the HSA accountholder, you must ensure that distributions are used for qualified medical expenses only. Records of medical expenses should be maintained as evidence that distributions have been made for these purposes. You are responsible for ensuring contributions to the HSA do not exceed the IRS maximum limits.
A debit card will be provided, and you will also be able to manually request withdrawals. Check with the financial institution where you have your HSA for other options.
IRS form 8889 must be completed with your tax return each year to report total deposits and withdrawals from your account. You do not have to itemize deposits and withdrawals to complete this IRS form.
The assets in an account, regardless of the source of contributions, always belong to you as the account holder. Any remaining balance will carry over to the next year. There is no "use it or lose it" requirement.
You may continue participation in the HDHP through COBRA continuation; however, State contributions to your HSA will cease unless you are continuing to receive a contribution to your health insurance premium at layoff or retirement. The HSA continues to be your account and you may pay eligible medical expenses through it.
Because you are the HSA account owner, you may continue to maintain the account.
There are many financial advantages to owning an HSA, including:
An HSA can be used to pay for qualified medical, vision, dental or certain over‐the‐counter and prescription drug expenses as defined by the IRS.
Qualified premiums include: