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Blue by Design (HSA)

HSA - Frequently Asked Questions

Q. What is Blue by Design HSA?
A. The Blue by Design HSA (health savings account) is a tax-preferred way to help pay for current or future out-of-pocket health care expenses. Any money remaining at the end of the plan year can be rolled over into the next year and is belongs to you. An HSA can be established through a custodian or trustee. Family members may also make contributions to an HSA on behalf of another family member as long as that other family member is an eligible individual.

Q. What does “crossover” mean?
A. Crossover is the convenient electronic feature of Blue by Design HSA that connects your providers, your health plan, and the HSA. If you have crossover, claims are submitted electronically from the health plan to the health savings account, which means less paperwork for you. You also have the option of having reimbursements sent to you as a check or deposited directly into your checking or savings account, without completing any paperwork.

Q. What is “rollover”?
A. Rollover means that you can carry over all or part of HSA funds to the next year if a balance remains at the end of the current plan year. The next year’s amount would then be added to the rolled-over amount, giving you more account money to help pay the deductible that year. Check plan materials to see if rollover is available.

Q. Who can own an HSA?
A. Any "eligible individual" can establish an HSA. BCBSKS will enroll an individual in a qualifying high-deductible health plan (HDHP) based on the individual's representations of eligibility. An "eligible individual" means, with respect to any month, any individual who:

• Is covered under a qualifying high-deductible health plan on the first day of any month.
• Is also not covered under another health plan that is not an HDHP (with certain exceptions for plans providing certain limited types of coverage).
• Is not entitled to benefits under Medicare (generally has not yet reached age 65).
• May not be claimed as a dependent on another person's tax return.

It is your responsibility to advise BCBSKS immediately should you become ineligible for an HSA or you enroll in another HSA.

Q. Can an HSA be used for any other qualified expenses?
A. Tax-free distributions are available for long-term care insurance, COBRA continuation and health insurance while unemployed, and Medicare premiums (but not Medicare supplement premiums).

Q. Are claims paid from the HSA only as dollars are contributed?
A. Yes.

Q. Are claims for services received prior to the establishment of an HSA eligible for reimbursement from the HSA?
A. No, but once the HSA is established, reimbursement can be made for services received prior to a contribution being made, as long as the service date was on or after the date the HSA was established.

Q. What if both spouses have separate high-deductible health plans (HDHP)?
A. If both spouses have a family HDHP and an HSA, then the total maximum annual contribution between the two HSAs is limited to the lower family deductible. Each individual is entitled to 50 percent of the annual contribution, unless they agree otherwise. However, both may make the catch-up contributions for individuals age 55 and older without exceeding the family coverage limit.

Q. What are “catch-up” contributions?
A. For individuals (and their spouses under the HDHP) between the ages of 55 and 65, the HSA contribution limit is increased by $800 (2007 catch-up contribution limit). This catch-up amount will increase by $100 annually, until it reaches $1,000 in 2009. As with the annual contribution limit, the catch-up contribution is also computed on a monthly basis. After the individual reaches age 65, contributions, including catch-up contributions, cannot be made to an individual’s HSA.

Q. When may HSA contributions be made? Is there a deadline for HSA contributions during a taxable year?
A. Contributions for a taxable year may be made in one or more payments, at your convenience, during a taxable year, but not before the beginning of the taxable year. For calendar year taxpayers, the deadline for contributions to an HSA is generally April 15 following the year for which contributions are made. Although the annual contribution amount is determined monthly, the maximum contribution may be made on the first day of the year.

Q. What are “qualified medical expenses” that are eligible for tax-free distributions?
A. “Qualified medical expenses” are expenses paid by the account for medical care, as defined in section 213(d), but only for services not covered by insurance or otherwise eligible for payment. The qualified expenses must be received only after the HSA has been established.

Q. How am I reimbursed for payments that I make to providers?
A. If you have crossover, you will receive reimbursements through an automated submission from BCBSKS. Otherwise, you will need to complete a claim form and mail it to the address provided on the form, along with a copy of the summary of claims processed that shows the care you received and the charges you are responsible for. Claim forms can be found in the Forms section of this site.

Q. Can a contribution be put into an HSA, even if it is not earned income? As an example, someone is not working but is living on investment income. Also, can variable payments be put into the HSA (e.g. one month $50 is put into the account and the next month $100 is put into the account)?
A. Yes, to both questions.

Q. Can prescription drugs purchased from Canada be reimbursed from an HSA?
A. Foreign drugs are not a qualified medical expense and could not be substantiated as such in the event of an audit. Therefore, payments from the HSA for foreign drugs would be considered non-qualified withdrawals and would be subject to tax plus 10 percent penalty, and added to gross income (if the HSA is funded by the employer or pre-tax by the employee).