Many people can save money with the CDHP/HSA option after taking into account the lower payroll deductions and tax-free contributions into the HSA. However, a CDHP/HSA is not right for everyone. Listed below are some guidelines.
CDHP/HSA is best for people who:
- Meet the eligibility requirements to participate in a CDHP
o Are enrolled in an HSA-qualified plan and comply with all of the other IRS eligibility requirements (your CDHP). Refer to your employer’s eligibility rules to determine if you are eligible for the CDHP.
o Do not have coverage under any other health plan that is not an HSA-qualified health plan. For example, if you are covered as a dependent under a spouse’s health plan and that plan is not an HSA-qualified health plan, you would be ineligible to open or contribute to an HSA.
o Are not enrolled in any Medicare program, including Medicare coverage for persons with disabilities under the age of 65, or Medicaid.
o Are not enrolled in Tricare (benefits offered to military personnel).
o Have not received VA (benefits from the Veteran’s Administration) benefits within the last three months.
o Are not covered as a dependent under an FSA through your spouse's employer (unless that Health FSA coverage is limited to dental, vision, and/or preventive care expenses).
o File US taxes.
- Want the lowest payroll deduction
- Can pay out-of-pocket for prescriptions and health care services needed early in the year, if there are not enough dollars accrued in the HSA.
- Have overall good health; primarily use preventive care and do not have ongoing major medical needs and/or use specialty drugs (e.g. high-cost injectable, oral or inhaled drugs).
- Are willing to retain documentation for HSA expenditures in case of an IRS audit.
- Are willing to verify if non-covered services or supplies are qualified medical expenses
- Want additional tax-free savings for future medical expenses
- Want to save for the future and build an HSA balance that remains with them even after University of Alaska employment or into retirement.
CDHP/HSA is NOT recommended for people who:
- Cannot pay out-of-pocket for prescriptions and health care services if not enough dollars accrued in the HSA.
- Do not wish to track their HSA dollars and expenses (some people just don’t want to or are unable to do this).
- Do not wish to verify if non-covered services or supplies paid for by the HSA are qualified medical expenses.
- Have ongoing major medical needs and/or use specialty drugs