Overview

Scottsdale's basic healthcare plan will include an optional Health Savings Account (HSA) that will allow employees to use pre-tax dollars to pay medical expenses. This HSA will rollover from year to year, and is portable if the employee leaves the organization.

Health Savings Accounts (HSAs) are considered "consumer-driven" health plans. They combine a less expensive, qualified high deductible health plan with a tax advantaged savings account that allows you to save and pay for routine medical, dental and vision expenses with pre-tax dollars. Additionally, you can save the money for retirement to pay for medicare premiums and other IRS qualified medical expenses.

Visit HSA Central Bank

A health savings account (HSA) is a tax-favored savings account created for the purpose of paying medical expenses.

  • Tax-deductible - Contributions to the HSA are 100% deductible (up to the legal limit) — just like an IRA.
  • Tax-free - Withdrawals to pay qualified medical expenses are never taxed.
  • Tax-deferred - Interest earnings accumulate tax-deferred, and if used to pay qualified medical expenses, are tax-free.
  • HSA money is yours to keep - Unlike a flexible spending account (FSA), unused money in your HSA isn’t forfeited at the end of the year; it continues to grow, tax-deferred.
HSA Tutorial

HSA Qualifications

In order to qualify you must meet the following conditions:

  1. Covered by an IRS qualified high deductible health insurance plan; The City's HSA Choice Plan qualifies.
  2. Not covered under other health insurance;
  3. Not enrolled in Medicare; and
  4. Not another person's dependent.

Exceptions

Other health insurance does not include coverage for the following: accidents, dental care, disability, long-term care, and vision care. Workers’ compensation, specified disease, and fixed indemnity coverage is permitted.

Contribution Amounts

Annual contribution amounts:

  • Single - $4,150
  • Family - $8,300
  • 55+ - an additional $1,000

To change your HSA contribution amount, you must report your request on the Munis Employee Self Service (ESS) System.

FAQ

Can my HSA be used for dependents not covered by the health insurance?

Generally, yes. Qualified medical expenses include unreimbursed medical expenses of the accountholder, his or her spouse, or dependents.

What about nonmedical withdrawals?

Nonmedical withdrawals from your health savings account are taxable income and subject to a 20% tax penalty. If you meet the exceptions, there is no penalty for non-medical expenses, however normal income taxes will apply.

Exceptions

This tax penalty does not apply if the withdrawal is made after the date you:

  1. Attain age 65;
  2. Become totally and permanently disabled; or
  3. Die.
Can my HSA be used to pay premiums?

No, this would be a nonmedical withdrawal, subject to taxes and penalty.

Exceptions

No penalty or taxes will apply if the money is withdrawn to pay premiums for:

  1. Qualified long-term care insurance; or
  2. Health insurance while you are receiving federal or state unemployment compensation; or
  3. Continuation of coverage plans, like COBRA, required under any federal law; or
  4. Medicare premiums.
What happens to my HSA when I die?
Your HSA will be treated as your surviving spouse’s HSA, but only if your spouse is the named beneficiary. If there is no surviving spouse or your spouse is not the beneficiary, then the savings account will cease to be an HSA and will be included in the federal gross income of your estate or named beneficiary.

Disclaimer:

The foregoing examples are for illustration only and may not reflect your actual circumstances. The city of Scottsdale and its Human Resources Department are not providing you with tax advice nor are they attempting to evaluate your particular situation. You are urged to consult your own tax advisor(s) concerning the federal and state income tax and employment tax ramification from your enrolling your domestic partner or your partner's children in one of the city of Scottsdale's sponsored medical plans.

Produced by Human Resources:

This information represents a summary of benefits provided by the City of Scottsdale to benefited employees. Every effort has been made to report information accurately. All information, including the amount of any benefit and employee eligibility of benefits, is subject to and governed by the terms and conditions of the applicable policy or plan documents. In all cases where any of the information provided differs from the amount of benefit actually provided by the policy or plan, the terms of the legal documents will control.

You may be interested in:

Cigna - Find a Doctor
Cigna - Contact Customer Services
Benefit Forms
HIPAA Privacy Notice

Last Updated: Jun 30, 2024

Was this page helpful?
Tell us how we can be more helpful.

HR - Benefits

9191 E. San Salvador Drive Scottsdale, AZ 85258
Back to Top