What is an HSA?

The Cigna Choice Fund OAP medical plan is a high deductible health plan (HDHP) that offers a health savings account (HSA) component. An HSA is a type of savings account that lets you set aside money on a pre-tax basis through automatic payroll deductions. The money you set aside can then be used to pay for your qualified healthcare expenses.

Some of the advantages of an HSA are:

  • Your HSA contributions go into your account before taxes. This lowers your taxable income. As a result, you pay less in taxes.

  • The money you take out to pay for eligible healthcare expenses continues to be tax free.

  • You can use the money in your HSA to pay for your out-of-pocket healthcare expenses, such as deductibles, copays, etc. or save the funds for future use. The money is yours forever.

  • Any unused HSA funds roll over to the next year.

  • The IRS does limit the amount that you may contribute to an HSA each year. For 2021, the limit is $3,600 if you have employee only medical plan coverage or is $7,200 if you have medical plan coverage of employee + dependent(s). Employees age 55 or older during 2021 can make an additional catch-up contribution up to $1,000. These limits include any amount Inovalon contributes to your HSA.

There are some circumstances that may impact your eligibility for an HSA:

  • You cannot have both an HSA and a regular Health Care Flexible Spending Account (FSA). You can have an HSA and Health Care FSA if your FSA covers eligible dental and vision expenses only (called a Limited Purpose FSA).

  • If you have an HSA, your spouse cannot be enrolled in a Health Care FSA or HRA with his or her employer.

  • You cannot be enrolled in Medicare or Medicaid.

  • If you have other medical coverage through Tricare/Tricare for Life or have received VA benefits within the past 3 months and do not have a disability rating, you cannot have an HSA.

  • If you have coverage under your spouse’s medical plan, you cannot have an HSA.

  • You cannot be claimed as a dependent on someone else’s tax return.

The IRS sets the rules for health savings accounts. Here is what you should know:

  • You may cover a domestic partner under your healthcare plan, but his or her qualified healthcare expenses may not be reimbursed from an HSA unless he or she is a qualified dependent for federal income tax purposes. You may still contribute the IRS maximum for family coverage if you cover a domestic partner.

  • While you may cover adult dependent children for health care up to age 26 (regardless of student or marital status), using an HSA to pay for qualified health expenses of dependent children requires he or she be a qualified dependent for federal income tax purposes.

  • You cannot use your HSA to pay the qualified expenses of adult dependent children who you do not claim on your taxes. However, if you have an adult child and are unable to claim them on your taxes, the adult child may open their own HSA to pay those expenses as long as they are enrolled in an HSA plan.

    • If an adult child opens his or her own HSA, he or she can contribute up to the full family amount of $7,200 for 2021.

  • You must have a receipt showing that any money used from your health savings account was used for an eligible health care expense. File your receipts for your tax return in case you are audited by the Internal Revenue Service (IRS).

Employer contribution to your HSA

If you enroll in the Cigna Choice Fund OAP with HSA, Inovalon will contribute the amount outlined below to your HSA. The amount is based on your annual salary and level of HSA medical plan coverage. If you enroll in the HSA medical plan after January 1, the employer contribution will automatically be deposited to your HSA by the end of the month following the month in which your medical plan coverage becomes effective. For example, if your medical plan coverage is effective April 1, the employer contribution will be deposited by May 31. If you enroll in an HSA medical plan during Open Enrollment, the annual employer contribution will be deposited to your account in January.

HSA Eligible Expenses

You can use your HSA to pay for a variety of healthcare products and services for you and your dependents. The IRS determines which expenses are eligible for reimbursement. Examples include medical plan deductibles and coinsurance, dental care, over-the-counter drugs (with a prescription), and contact lenses. For a complete list, visit irs.gov and search for Publication 502.

2021 HSA contributions

*If you enroll in an HSA after January 1, the employer contribution will be prorated based on your medical coverage effective date. For example, if your medical plan coverage is effective April 1, you will receive 67% of the annual employer contribution(8 months of medical coverage/12 months).

Ready to enroll or make benefits changes?

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1-888-896-8031
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