Part I: Decide Whether or not to Enroll in the Consumer Driven Health Plan (CDHP):
A. Understand the Two Main Components of a Consumer Driven Health Plan
B. Review the CDHP Plan Benefits
C. Ensure You are Eligible to Establish a Health Savings Account
To be eligible to make contributions to a Health Savings Account (HSA), you must be enrolled in the BlueEdge CDHP medical plan and not be covered by another health plan that is not a high deductible plan such as your spouse’s medical plan, a Full-purpose FSA or Medicare. Additionally, you may not be claimed as a dependent on someone else’s tax return. To determine if you are eligible to have a HSA you are advised to talk to your tax advisor and review the following documents:
D. Be Aware of Restrictions if also Covered by a Health Care Flexible Spending Account (FSA) Plan
- Generally, coverage under your or your spouse’s FSA will cause you to be ineligible for an HSA since the FSA is considered a health plan without a high deductible.
- However, you or your spouse may be covered under a Limited Purpose FSA (LP FSA) and you will still be eligible for an HSA. An LP FSA reimburses only medical expenses that exceed the medical plan deductible and / or are for dental or vision services (see the Flexible Spending Account Summary Plan Description on the HR website for more information).
Caution: If you are covered under a Full Purpose FSA (not an LP FSA) that has a “Grace Period” such as the DePaul FSA, and have a balance in that account as of December 31st, you will not be able to have contributions made to your HSA until April 1st of the following calendar year.
A “Grace Period” is a feature of an FSA that allows you to obtain services through March 15th and obtain reimbursement from amounts you contributed to the FSA in the previous year.
If you or your spouse has established a medical Full-Purpose FSA with a grace period, you must have a zero (0) balance in the plan by December 31st to begin contributions and receive the employer contribution in January of the following year.
E. Understand the Significant Tax Advantages
- DePaul University’s contributions to employees’ HSAs are not taxable and only become taxable if later used for non-qualified medical expenses.
- Employees’ contributions to their HSAs made through the DePaul University Section 125 Cafeteria Plan reduce taxable income in the year of the contribution and are taxed only if they are used for non-qualified medical expenses.
- Employees’ contributions made directly to their HSAs are tax-deductible to the employees.
- Earnings on all contributions and account distributions are not taxed (unless used for non-qualified medical expenses).
- HSA account balances can accumulate year-to-year tax-free.
Health Plan |Part I | Part II| Part III| Part IV| Part V