Health Savings Accounts (HSA)

After your HSA is established with Purdue, if you lose your eligibility to receive contributions to it mid-year, you must decline the account in order to stop your employer contributions. If you are losing eligibility by enrolling in a non-HSA-qualifying medical plan, you will not see the option to enroll in an HSA and therefore won't need to decline it.

In either case, your HSA will become a retail account (rather than an account connected with an employer) and you will become responsible for the monthly account maintenance fee. When this happens, you will receive a letter from HSA Bank regarding the change along with an updated Fee Schedule.

If you are no longer working at Purdue, you will not be able to make or receive pre-tax contributions to your HSA. Your HSA funds will remain yours to keep and you can still use them free of taxes and penalties, provided they are spent on eligible expenses. Your HSA will become a retail account and you will become responsible for the monthly account maintenance fee. When this happens, you will receive a letter from HSA Bank regarding the change along with an updated Fee Schedule.

The IRS prohibits individuals from participating in both an HSA and a health care FSA or HRA (allows reimbursement for eligible medical, prescription, over-the-countervision, and dental expenses, like the HSA). The only FSAs Purdue offers which do not affect your HSA eligibility are Limited Purpose FSAs (eligible vision and dental expenses only) and Dependent Care FSAs (eligible childcare expenses only).

Spouses may not each enroll in an HSA and a health care FSA or HRA at the same time. Therefore, if your spouse is enrolled in a health care FSA or HRA, you would not be eligible to enroll in an HSA.

Purdue partners with HSA Bank to administer our HSAs, FSAs, and HRAs. Get more information on HSA Bank.

An HSA is an FDIC insured bank account with a triple tax advantage in which eligible employees may participate. First, your contributions to the account are pre-tax, second, withdrawals and distributions from the account are tax-free when the funds are used properly, and third, interest earned on the funds in the account along with any growth and interest following investment is tax-exempt.

When you enroll in an HSA, Purdue will send your information to HSA Bank.

In order to open a bank account, HSA Bank is required by law to validate a person's identity. Their first validation begins with a physical residential address; therefore, if you've only listed a P.O. Box address in our system, you will need to update your address before your account can be opened.

Once your account is opened, the rest of your data is verified through HSA Bank's Customer Identification Program, or CIP, and your account is ready to receive contributions. Occasionally, however, more information is needed to further verify your identity. Most often this occurs when there has been a recent change in name or address. In this case, HSA Bank will reach out to request verifying documentation from you directly.

It is possible to incur fees with your HSA (e.g., by ordering additional debit cards after the first two, over-drafting). You can view a summary of these fees online through your HSA Bank account by logging into HSA Bank, clicking Resources from the menu bar, then clicking View Fee Schedule.

During the annual open enrollment period in the fall, when electing an HSA, you will have the option to make your own contributions and can enter the annual amount you'd like to contribute. Purdue will divide that amount by your number of pays, deduct it incrementally from your pay before taxes, and submit those funds to HSA Bank for deposit.

The number of pays for a full year are as follows: 12 for the fiscal payroll schedule, 8 for the academic payroll schedule, and 26 for the bi-weekly payroll schedule. Those on the academic payroll schedule will not have HSA deductions taken the months of May and August.

You are encouraged to contribute to your HSA via payroll in order to maximize your tax benefits as that way you wouldn’t pay federal income or Social Security and Medicare payroll taxes; however, if you are unable to contribute via payroll or would prefer not to lower your IRS-reported taxable income which may impact your future Social Security benefits, you are allowed to make post-tax contributions to your account. This way you will get back federal income taxes when filing your taxes, but you will not get back the payroll taxes.

You have until the tax-filing deadline each year (4/15) to do one of the following:

1. 1. Complete the HSA Contribution Form for HSA Bank and mail it to them with a check. Note: Be sure to mark the appropriate contribution tax year. For example, if you are contributing to your 2020 account in 2021, you will check the box for Prior Year.
   2. If your HSA is linked with your personal bank account, you may do an electronic funds transfer. Instructions on electronic funds transfers and on linking a bank account to your HSA are found in the HSA Bank Member Website Guide. If you are contributing outside of the current year, be sure to select the applicable tax year for the contribution.

As a reminder, you are responsible for ensuring the total contribution amount that goes to your HSA each year does not exceed the IRS maximum for that year – Purdue does not track contributions made to your HSA outside of payroll. Questions around this process can go to HSA Bank at (800) 357-6246 and questions around taxes should be directed to a tax advisor.

For 2024, a person with individual/self-only medical coverage may have HSA contributions up to $4,150 (additional $1,000 for age 55+), and a person with family/self-plus-one or more dependents medical coverage may have HSA contributions up to $8,300 (additional $1,000 for age 55+).

Funds contributed in excess of your IRS contribution limit and the earnings on those funds are subject to penalty and tax unless you take one of the following additional actions. It is recommended you speak with a tax advisor.

• Pay the excise tax on the excess contribution when filing your Federal Income Tax Return for the prior year. The funds would remain in your HSA and count as a current-year contribution; therefore you’d need to make sure you subtract the excess amount from the following year’s IRS HSA limits to determine the maximum amount you can contribute that year to avoid further penalties.
• Complete an HSA Excess Contribution Removal Form and return it to HSA Bank by the tax-filing deadline. The excess amount will be removed from your account and refunded to you, less taxes.  Questions on this process may go to HSA Bank at 800-357-6246.

You may only transfer funds into your HSA from another HSA, an Archer Medical Savings Account (MSA), or an Individual Retirement Account (IRA). To do this, complete an HSA Direct Transfer Request Form and return it to HSA Bank.

You may not transfer funds from an FSA or HRA to an HSA (or vise-versa).

Yes. If you reach a minimum balance of $1,000 in your HSA, you can transfer funds above that amount to an investment account at HSA Bank. There are account fees and additional expenses associated with the investment accounts, depending on which option and investments you choose.

If you are still participating in an HSA while actively employed with Purdue at age 65 and have not enrolled in Medicare, you may continue to make or receive contributions to your HSA.; however, when you retire and enroll in Medicare after age 65, you are retroactively entitled to Medicare for up to 6 months, but no sooner than the first of the month in which you turned 65. This means any HSA contributions made to your account after your Medicare entitlement date will be considered taxable income. Additionally, a mid-year loss of eligibility will affect your contribution limits. It is recommended to consult a Tax Advisor for more information.

Note: Drawing benefits from Social Security at 65 and up requires enrollment into Medicare Part A which affects your ability to make or receive contributions to your HSA.

Upon turning 65, you may use your HSA funds on Medicare Parts A, B, and D premiums. Additionally, if you use or withdraw your HSA funds for non-eligible health care expenses, you will not be subject to the 20% tax penalty, but will be responsible for paying taxes on the amount spent.

You are asked to designate your beneficiary when you first log in online at www.hsabank.com/hsabank/homepage.  To update, log in and click View Account Details under your Health Savings Account, then click My Profile under the My Health Savings Account menu on the left and you will see the Beneficiaries tab on the following page.  You may also complete the HSA Designation of Beneficiary Form and return it to the address at the bottom of the form.

If you are married, your spouse may become the owner of the account and can use it as his/her HSA. Another option is that the account may no longer be treated as an HSA, and will be passed along to your beneficiary or become part of your estate. For specific details on this subject, consult a tax advisor or estate attorney.

You are asked to designate your beneficiary when you first log in online at www.hsabank.com/hsabank/homepage. To update, log in and click View Account Details under your Health Savings Account, then click My Profile under the My Health Savings Account menu on the left and you will see the Beneficiaries tab on the following page.

You may also complete a Designation of Beneficiary Form and return it to HSA Bank using the address at the top of the form.

Enrollment in an HSA requires you to complete IRS form 8889 when you complete your taxes on an annual basis. Be sure to discuss this with your tax preparer.

Log into www.hsabank.com and scroll down to “Quick View.” Hover over the green bar for the appropriate tax year column and you will be shown your total contributions for that year.

HSA Bank will issue you a debit card for your HSA or will sync your HSA to your HSA Bank card if you already have one from other account. You can also set up payments to a health care provider, order checks, and request reimbursements from your HSA to yourself from the member portal at HSA Bank.

If you incur out-of-pocket expenses and do not have funds available in your HSA to cover those costs, you will need to pay by other means. You can reimburse yourself after each pay period when funds are deposited in your HSA until you are paid back in full.

Instructions and options for reimbursement through your HSA are found in the HSA Bank member website guide linked on the left side of this page.

No. You are responsible for ensuring that your purchases using your HSA funds are qualified, and therefore should familiarize yourself with what expenses are and are not allowed. Be sure to keep your documentation with your records in case you ever need to defend your expenditures or decisions during an IRS audit.

To order a HSA Bank debit card, call HSA Bank directly at 1-800-357-6246 or log into the member portal at HSA Bank and select Manage My Debit Card(s). Note: Once you have been issued a total of two cards, there is a $6 fee per card afterwards.

When you use your card at a vision or dental office, funds will first be pulled from your Limited Purpose FSA until it is exhausted and then it will use your HSA funds. This distinction is made through the provider's merchant category code (number assigned to businesses based on their services offered) which is recognized when your card is used. When you use your card anywhere else, your HSA funds will be spent.

Only the following premiums are considered eligible expenses for which you can use your HSA funds: COBRA continuation of health care coverage; health care coverage while receiving unemployment compensation; long-term care coverage (up to the annual amount allowed by age); and for those age 65 and older, Medicare health care coverage including Medicare Parts A, B and D.

Health insurance premiums for coverage offered through an employer and premiums for Medicare supplemental plans, such as Medigap are not considered eligible medical expenses.

You will have to pay taxes on any amount used for ineligible expenses. Additionally, you may incur a 20 percent tax penalty (unless you are 65 or older). Consult a tax advisor for more details.