How to Confirm a Qualifying HDHP for HSA Eligibility

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Canoeist
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Joined: Sat Aug 08, 2020 9:39 am

How to Confirm a Qualifying HDHP for HSA Eligibility

Post by Canoeist »

Hello,

I am trying to determine whether my health care plan (BCBS of MN) through my employer will qualify for my husband and I to contribute to an HSA. My health care plan appears to meet the minimum deductible ($5,200) and max out of pocket expenses($6,500).

I thought we were in good shape to contribute to an HSA, then I saw in the Bogleheads HSA Wiki page that there may be additional requirements, which I've never heard of before from other financial blogs and podcasts discussing HSAs. I've looked through my health care plan's Benefits Booklet and cannot find any reference to "Qualifying High Deductible Health Plan" or a reference to "IRC Section 223" as the Wiki suggests.

What is my sure-fire way to know whether my health care plan is a qualifying high deductible health plan?

We also have VEBA, funds from the employer put into an account to reimburse medical expenses. I am not sure what this is categorized as. HR told me it was an HRA; however the VEBA funds rollover, not use-it-or-lose-it. I thought HRAs were all use-it-or-lose-it funds, perhaps I'm wrong there. Anybody work in government in MN that may be familiar with VEBA? Since the funds from VEBA come from my employer and not me, I am assuming this is not the same as an HSA.

Any insight appreciated! This started out seeming simple, then the Boglehead Wiki really has thrown me through a loop.
jebmke
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Re: How to Confirm a Qualifying HDHP for HSA Eligibility

Post by jebmke »

Either your employer or BCBS should be able to represent this one way or another. My employer stated it on the enrollment documents as well as the confirmation of enrollment every year during open enrollment.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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Nate79
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Re: How to Confirm a Qualifying HDHP for HSA Eligibility

Post by Nate79 »

HSA eligible plans have "HSA" blasted everywhere on the documentation, in the title, in the plan literature, in employer documents, etc. You could also call the insurance company and your employer but almost 200% sure you are not eligible. Especially with what sounds like an HRA.

Here is about VEBA. If it allows you to use for any health expense then you are not HSA eligible.

https://www.investopedia.com/terms/v/vo ... sassoc.asp
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Artful Dodger
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Re: How to Confirm a Qualifying HDHP for HSA Eligibility

Post by Artful Dodger »

It may or may not be a HDHP plan, but even if it is the employer provided HRA would make it ineligible to contribute to a HSA. And, as Nate said, if it is an HSA eligible plan, it’s usually noted prominently somewhere in the description. Along with the minimum deductible, there can be no first dollar benefits such as a waived deductible or copays (office, RX, ER, etc) except for preventive services.
Spirit Rider
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Re: How to Confirm a Qualifying HDHP for HSA Eligibility

Post by Spirit Rider »

As has been pointed out if you have an employer sponsored account that provides 1st dollar reimbursement of medical expenses, you would be HSA ineligible regardless if it was an HSA qualifying health insurance plan. It would be almost certain that an employer would not provide such an account if the health insurance plan was HSA eligible.

I can not tell you if you have an HSA qualifying health insurance plan, but I can tell you two disqualifying features even if the minimum deductible and maximum OOP are met:
  • The plan provides 1st dollar reimbursement of any non-preventive expenses before the deductible is met. This usually takes the form as co-pays and/or co-insurance.
  • A family plan pays non-preventive expenses after an imbedded individual deductible before the minimum family plan deductible is met.
As has also been stated. Almost all HDHPs have HSA in the plan name.
Topic Author
Canoeist
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Joined: Sat Aug 08, 2020 9:39 am

Re: How to Confirm a Qualifying HDHP for HSA Eligibility

Post by Canoeist »

Thank you all for the feedback. Your explanations make this seem much more straightforward.
:oops:
Unfortunately, your responses mean that I've made quite a big mistake. We've already contributed to an HSA which we weren't eligible to, back in 2018. My husband's employer offered a HDHP with an HSA option through Optum. My husband and I are both on my employers health plan, which, as explained originally, seemed like it met the thresholds for being eligible for HSA contribution. He opened an HSA with Optum and contributed about $6k to it.
I assume we will need to correct our 2018 tax returns, but I'm not sure how we close this HSA and correct our mistake. Is this something I should hire a professional to do? :confused

How do we correct this situation?

Thank you all for your information, I'm glad we got this cleared up now rather than illegally continuing to contribute to an HSA we're not eligible for. Now just need to figure out how to clean up the mess. Lesson Learned, always look up the Bogleheads Wiki first!!
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