Frequently Asked Questions

A High Deductible Health Plan (HDHP) is a health insurance plan offering lower premiums in exchange for a higher deductible. The plan generally covers health care expenses after the deductible is met. You can also opt for varying coinsurance rates which can also affect your premium.

Preventative care is usually covered 100% under an HDHP, and there is a cap on the out-of-pocket expenses you are responsible for during the year. HDHPs are frequently paired with HSAs to help you pay for expenses your plan does not cover. You must have an eligible HDHP to open an HSA.

A Health Savings Account (HSA) is a savings account that offers a tax-advantaged way for consumers to pay for their health care expenses. Usually paired with a High Deductible Health Plan (HDHP), HSAs help consumers pay for current health expenses and save for future qualified medical and health expenses in retirement.

Contributions to an HSA are tax-deductible and distributions can be taken tax-free.

You own and control the money in your HSA. You make the decisions on how to spend the money, within IRS guidelines for eligible expenses. The money in HSAs can be invested to take advantage of the potential for future growth. Investment options vary depending on who is managing the account.

For 2010, an HDHP is eligible for an HSA if its minimum deductible is at least $1,200 (self-only coverage) or $2,400 (family coverage). The annual out-of-pocket expenses (including deductibles and co-pays) for 2010 cannot exceed $5,950 (self-only coverage) or $11,900 (family coverage).

Yes, but to open and contribute to an HSA you cannot be covered by any plan other than eligible HDHPs, except for:

• Dental or vision coverage
• Long-term care coverage
• Accident/disability coverage
• Hospital Insurance Plan (HIP)-type coverage or disease-specific coverage

You must be covered by an eligible HDHP to open or contribute to an HSA.

An HSA is an individual account; you cannot open a jointly-held HSA. Multiple adults covered under a family plan may each open an HSA, but the collective total of both accounts may not exceed the family contribution maximum. For 2010 the family contribution maximum is $6,150. Note: Although HSAs are individual accounts, the funds in the HSA can be used for your spouse, yourself or a dependent’s eligible medical expenses.

A husband and wife enrolled in an eligible family HDHP can:

• Open an HSA in one spouse's name and contribute up to the family maximum. Those funds can be used to pay for medical expenses for anyone covered by the plan.
• Open individual HSAs and contribute to both, but the collective total of both must not exceed the family contribution maximum including any catch-up amounts. This may be an appealing option if you and your spouse are both eligible for catch-up contributions to an HSA after age 55, because each person's catch-up contribution must be made to their own account.

If you later unenroll from your HDHP, enroll in Medicare or become covered by a non-HDHP, you can keep your HSA and continue to use the remaining funds, but you can no longer contribute to it.

No. You cannot establish separate accounts for dependent children, including children who can legally be claimed as dependents on your tax return. You can use your (or your spouse's) HSA funds to pay for your child's eligible medical expenses however, as long as the child is claimed as a dependent on your tax return.

Contribution limits are established by the IRS and may be updated each year. In 2010, the maximum annual contribution is $3,050 for individual and $6,150 for a family. Rollover amounts from previous years, medical savings accounts or another HSA do not count toward the maximum annual contribution.

• Individuals between the ages of 55 and 64 can contribute an additional $1000 annually in catch-up contributions.
• If you are 65 years or older and not enrolled in Medicare you can continue to contribute to your HSA and make catch-up contributions if you are enrolled in a HDHP.

If you are covered on December 1, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year. If you did not have HDHP coverage for the full year, you must prorate your catch-up contribution for the number of full months you were eligible. See IRS guidelines for information about prorating a contribution.

Each eligible individual covered by a HDHP, (i.e., the policy holder and his/her spouse, if both are at least 55) can make a catch-up contribution of up to $1,000 annually. Each spouse must have an HSA in their name to receive the catch-up contribution.

Note that the total contributions to all HSA accounts under a family plan must not exceed the family contribution maximum. For 2010, the family contribution maximum, before any eligible catch-up contributions, is $6,150.

Yes. If you are covered by an HDHP on December 1, you are treated as an eligible individual for the entire year. However, if you become ineligible the following year, any excess contributions over a prorated contribution amount is included in income and subject to a 10% additional tax.

If you are not covered on December 1, your contribution is prorated based on the number of months you had an HDHP plan in place. See IRS guidelines for information about prorating a contribution.

Contributions made to your HSA that exceed the contribution limits are not tax-deductible. In addition, a tax penalty of 6% is imposed on excess contributions. You can avoid the penalty on excess contributions by withdrawing excess contributions before the last day prescribed by law (including extensions) for filing your federal income tax return for the tax year.

Yes. You do not have to have earned income to fund a Health Savings Account.

Anyone can contribute to an HSA on your behalf including individuals not covered by the plan, i.e., extended family.

HSA contributions made by a family member on your behalf are tax-deductible by you when you are computing your adjusted gross income.

Contributions to an HSA can be made at any time during the year in any increment, including:

• All at once at the beginning of the year
• All at once at the end of the year
• In equal amounts during the year

Contributions to an HSA for the current year can be made through April 15 of the following year. Contributions for 2009 can be made through April 15, 2010.

Yes. When your account balance reaches a certain amount, you can invest the excess funds. The same types of investments permitted for IRAs are allowed for HSAs, including stocks, bonds, mutual funds, and certificates of deposit. The investment options for your HSA account are determined by the investments offered by the HSA manager. Mellon Trust of New England is the provider of the HSA for BCBSNC HDHP. After you purchase a BCBSNC HDHP, Mellon Trust will send you a Welcome Kit with further information about the options for your HSA.

Review a list of eligible medical expenses
Review a list of noneligible medical expenses

HSA distributions are tax-free if used for eligible medical expenses as defined by Internal Revenue Code Section 213(d). Non-eligible distributions will be taxed as part of gross income and will incur a 10% penalty. After age 65, the 10% penalty is dropped, though the distribution is still treated as taxable income. Eligible medical expenses include doctor's office visits, pre-deductible amounts and coinsurance.

No. Your HSA is established on the effective date of your Blue Options HSA policy. However, to officially activate your HSA, you must send in your signature card. If you delay, the IRS may infer you intended to open your account at a later date.