Health Savings Account
The Health Savings Account (HSA) is a tax-advantaged account that can be used to pay for qualified health care expenses (e.g., medical, prescription drug, dental and vision care). To be eligible, an employee must be enrolled in the Liberty Mutual Health Plan. Liberty Mutual makes annual tax-free contributions to an eligible employee’s HSA. Employees can contribute too, through before-tax payroll deductions, up to the IRS limit (see below). The HSA is administered by ConnectYourCare.
How the HSA works
An HSA works like an investment account, with an important difference: employees can use it to pay for qualified health care expenses and the money isn't subject to taxes or penalties.*
If an employee enrolls in the CDHP and meets the HSA eligibility requirements, an account will be set up for that employee. Liberty Mutual makes annual contributions to an employee’s HSA based on their enrolled Health Plan coverage level: $500 for individual coverage and $1,000 for family coverage (prorated based on an employee’s date of hire or benefit coverage date). That’s free money employees can use to pay for their qualified health care expenses now or in the future. Employees can also contribute through before-tax payroll deductions, up to the combined IRS limit.
|The CDHP option comes with a Health Savings Account (HSA)|
|Liberty Mutual makes a tax-free contribution to the employee’s account.
Employees can make before-tax contributions, too.
| Employees can use their account to pay for qualified health care expenses now, or in the future.
The balance rolls over from year to year.
|Employees get important tax advantages:
To help employees make more informed health care decisions, Liberty offers incentives when they get a second medical opinion in certain situations or for trying out a virtual visit. The incentives will be paid to their HSA. For employees on the Health Plan who earn an incentive but don’t have an HSA open, they will receive their incentive in their paycheck as a taxable item.
Employees can earn a $100 HSA contribution after their first medical or behavioral health virtual visit in 2019. Virtual visits are a reasonably-priced, convenient alternative to a doctor’s appointment for non-emergency issues.
Medical Second Opinion
Employees can earn a $500 HSA contribution for completing a second opinion through Best Doctors before having musculoskeletal or bariatric surgery, or for a cancer diagnosis.
The HSA advantage
Make sure to understand the advantages of the HSA to maximize health care dollars — today and in the future.
- Several tax advantages.
- Tax-free contributions: Most money that goes into the account (including contributions from the employee and Liberty Mutual) isn't taxed as income.
- Tax-free earnings: Interest and investment earnings on the account aren't taxed.
- Tax-free distribution: Money used on qualified health care expenses isn't taxed.
- Account holders are in control. Employees decide how much to contribute and when to spend (or save) their HSA dollars. They can change their contribution at any time during the year. For example, employees can increase contributions to maximize their future savings or if they're incurring more health care costs than expected.
- It has growth potential. Once employees have $1,000 in the account, they can invest amounts over $1,000 in a number of different investment options.
- Use it...or save it. Unused balances in the HSA roll over from year to year. This means an employee can use the HSA to pay for current out-of-pocket health care expenses, or save the money in their account to pay for future health care expenses, even into retirement.
- It's portable. If an employee leaves Liberty, they can take their HSA funds with them and use them for qualified health care expenses in the future.
Active U.S. employees enrolled in the Liberty Mutual Health Plan are eligible for the HSA.
In general, employees aren't eligible if they're:
- Enrolled in another health plan that's not an HSA-qualifying plan
- Enrolled in their own or their spouse/domestic partner’s Health Reimbursement Account (HRA) or standard Health Care Flexible Spending Account (FSA)
- Listed as a dependent on another person's tax return
- Currently enrolled in Medicare
- Receiving (or have received in the past three months) any health benefits through the Veterans Administration (or one of their facilities, including prescription drugs) for a non-service related condition
Contributions and IRS limits
Employees and Liberty can contribute up to the combined employer and employee IRS limit. While employees aren't required to contribute to an HSA, it's a good idea because HSAs offer tax advantages that few other savings vehicles do. Employees older than age 55 can contribute an additional $1,000 to the HSA above the IRS maximum total annual contribution.
|Liberty Mutual contribution**||IRS maximum***|
**Pro-rated based on hire date.
***Employees older than age 55 can contribute an additional $1,000 to their HSA above the IRS maximum total annual contribution.
Note: IRS contribution limits
Employees should regularly monitor their HSA balance. While ConnectYourCare provides tools and information to help do this, employees are responsible for ensuring that their HSA balance doesn't exceed the IRS contribution limit.
Make HSA funds go further
Watch a helpful video to learn how Health Savings Accounts (HSA) can help save for health care expenses now and in the future.
Health Care Digital Assistant (Castlight)
Learn more about how employees can use Castlight to compare provider and facility costs and quality in their area.