how consumer-directed health plans work
If good health or good luck doesn’t require you to visit the doctor often, choosing a consumer-directed health plan (CDHP) can save you money and give you flexibility in how you spend and save for your health care.
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While CDHPS provide coverage similar to traditional plans, they have specific eligibility requirements and other features that make them unique. Before you sign up for a CDHP plan, learn how it works and if it’s right for you and your family.
eligibility and enrollment
Due to the unique tax advantages of health savings accounts (hsas), which are governed by the internal revenue service (irs), certain circumstances prevent you from enrolling in a cdhp. you cannot enroll in a cdhp if:
- you or your spouse are enrolled in a medical flexible spending arrangement (fsa), even if you are not covering your spouse in your health plan
- claimed as a dependent on someone else’s tax return
- enrolled in medicaid, medicare (part a or b), or tricare
- enrolled in another comprehensive health plan
- you or your spouse are enrolled in a voluntary employee benefit association (veba) account
- may meet eligibility requirements
- want the lowest monthly premium
- are generally healthy and have no significant ongoing medical costs or needs
- are willing to verify what services, supplies and medications qualify under the hsa
- you can track hsa expenses in the event of an irs audit
- want to save on taxes by putting their own money into an hsa
If none of these apply to you, then you can use the step-by-step instructions for enrolling in benefits on the Integrated Service Center website. contact the integrated service center if you have questions.
is a cdhp right for me?
compared to pebb’s other plans, cdhps cover the same basic health care services and have a similar benefit structure. Like other plans, you pay coinsurance for services, your care costs less when you use network providers, and you get coverage for common services like vision and prescriptions.
cdhps differs from the other plans in two important ways: the hsa and high deductible, low premium cost balance.
while cdhp’s have the lowest premium cost, by selecting a cdhp you take on greater financial risk: a much higher deductible and out-of-pocket limit. If you get sick or injured and need major medical care, you’ll pay much more out of pocket than you would with a traditional plan.
The potential for higher out-of-pocket costs may not be a problem if you have money saved, either in the HSA or elsewhere, to cover those costs.
If you have money saved, a CDHP may be right for you. also cdhps works well for people who:
If you’re interested in signing up for a CDHP but first want to compare CDHPS to the other plans, visit the individual plan pages. kaiser wa, ump and kaiser Permanente nw all offer CDHP plans.
how hsa work
When you enroll in a CDHP, you are also automatically enrolled in an HSA. Along with cheaper premiums, this is the main advantage of choosing a CDHP.
An HSA works like a typical bank account, but to take full advantage of this benefit, the money should only be used for medical expenses. while the internal revenue service (irs) specifies exactly what expenses qualify, you are in charge of how and when you spend your hsa money. You even get an HSA debit card that works like a typical debit card.
Not only is the HSA money yours, but money is deposited directly into your HSA by the state at the end of each month:
Notice for employee-only coverage that over the course of a year, the state deposits $700, which is half of the CDHPS’s $1,400 deductible. Any money you save in an HSA earns interest, just like a bank account.
and, just like you would in a bank account, the money in your hsa stays there from one year to the next. This may come as a surprise to those accustomed to flexible spending arrangements (FSAs) where you lose unspent account funds at the end of the year.
While an HSA works much like a traditional bank account, unlike a typical account, the money you put into your HSA is before taxes. this is a significant benefit to you as it reduces your federal tax liability.
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The only downside, so to speak, to having an HSA is that you are fully responsible for the tax consequences, which include using HSA funds only for qualified expenses and not exceeding annual contribution limits.
hsas for pebb plans are administered by healthequity, a health savings company. Learn more about how HSAS work, including what qualifies as a medical expense, by visiting the HealthEquity website.
put money into your hsa
If you want to put money into your HSA, you have two options: make a contribution through healthequity or set up uw payroll deduction.
To deposit through healthequity, log in to your HSA account to make a contribution to your account. If you have questions, please contact healthequity directly.
You can change your payroll deduction as many times as you want during the year. If you wish, you can fully fund your HSA at the beginning of the year, as long as you remain covered by a qualified CDHP throughout the year.
annual contribution limits for hsas
You have every responsibility to make sure your HSA contributions do not exceed the IRS limit. This includes contributions from you, your spouse, the state, and any other contributors. The maximum amount a contributing household can contribute each year to an HSA is shown in the table. For complete tax details, visit the IRS Health Savings Account page.
keep your hsa after you leave the cdhp
You own your HSA and you won’t lose any unspent funds when you change health plans, change jobs, or retire. You can spend your HSA funds on future qualified medical expenses.
when you leave the cdhp plan, the state stops contributing funds to your hsa. If you have a payroll deduction going to your HSA, stop the deduction on the business day by following the HSA contribution switching instructions. contact the integrated service center if you have questions.
In addition, healthequity will charge you a monthly fee of $3.95 if you have less than $2,500 in your account after leaving CDHP. You can avoid this fee by making sure you have at least $2,500 in your HSA or by spending all of your HSA funds.