Benefit Connections    FAQ
About the Health Savings Accounts (HSA)

  What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is an interest bearing account that will allow you to pay for medical expenses. The HSA is designed to work with a High Deductible Health Plan (HDHP or SDHP). Funds that are deposited into the HSA account can be used to pay your deductibles, coinsurance, and other future medical expenses that are not paid or covered by the health plan. Funds you put in an HSA are tax deductible and the funds are not taxed when you withdraw them to pay for health care expenses. The HSA account is transferable, which means if you change employers or retire you have the ability to continue use of the funds which are never forfeited. The HSA funds can be carried over from year to year.

  How do I sign up for a Health Savings Account?

It is the responsibility of each individual to establish their Health Savings Account (HSA). Once you have enrolled in the SDHP plan (our HSA-eligible plan) you can establish a Fidelity HSA. To open the account go to www.netbenefits.com. You can also enroll by accessing www.401k.com. After log on, click the “open” link next to your Health Savings Account. Submit the Fidelity HSA online application and request the Fidelity HSA debit card. If you have further questions contact Fidelity directly at 1-800-544-3716.

There are additional resources available at www.irs.gov regarding the guidelines for High Deductible Health Plans and HSA rules. You can also find additional information in IRS Publication 969.

  What are the key features of the CITGO SDHP with an HSA?

The SDHP with your HSA is a health plan that gives you more control over how you spend your health care dollars, or save for future health care expenses with a tax-advantaged HSA. Additional SDHP Plan features are:

  • 100% coverage for in-network preventive care that is not subject to the deductible.
  • Preventive drugs will be covered at 100% with no copay. This feature is available only in the SDHP plan. A list of covered preventive drugs will be available online.
  • A debit card to access your funds
  • Your payroll HSA contributions are pre-tax deductions
  • Interest earned on your account is tax free
  • Tax-free withdrawals may be made for qualified healthcare expenses
  • Unused funds and interest are carried over, without limit, from year to year
  • You own the HSA and it is yours to keep – even when you change health plans, jobs or retire
  • Nationwide coverage with the freedom to choose your providers
  • Traditional medical plan coverage of 80% in network and 60% out of network once the Plan deductible has been met
  • An Out-of-Pocket Maximum limits the amount of your annual out-of-pocket exposure

  What is an HSA and how does it work?

An HSA is a tax-advantaged account established to pay for qualified medical expenses for those who are covered under a qualified high deductible health plan. With money from this account, you pay for health care expenses until your deductible is met. Then, in accordance with the terms of your health care plan, your insurance company pays for covered expenses over the amount of your deductible. Any unused funds are yours to retain in your HSA and accumulate toward your future health care expenses or your retirement.

  Can an HSA account gain or lose money similar to my 401K account?

Yes, keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

  Who is eligible to participate in the HSA?

All CITGO Employees enrolled in the SDHP medical plan are eligible to open an HSA account and contribute up to the statutory maximum limit on an annual basis.

  What kind of other health coverage makes an individual ineligible for an HSA?

Generally, an individual is ineligible for an HSA if the individual, while covered under an SDHP, is also covered under a health plan (whether as an individual, spouse, or dependent) that is not an SDHP.

  What other kinds of health coverage may an individual maintain without losing eligibility for an HSA?

An individual does not fail to be eligible for an HSA merely because, in addition to an SDHP, the individual has coverage for any benefit provided by “permitted insurance.” Permitted insurance is insurance under which substantially all of the coverage provided relates to liabilities incurred under workers' compensation laws, tort liabilities, liabilities relating to ownership or use of property (e.g., automobile insurance), insurance for a specified disease or illness, and insurance that pays a fixed amount per day (or other period) of hospitalization. In addition to permitted insurance, an individual does not fail to be eligible for an HSA merely because, in addition to an SDHP, the individual has coverage (whether provided through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care.

  What can I use the HSA for?

An HSA account can be used to pay for qualified medical, dental, vision and prescription drug expenses as defined in IRS Publication 502.

  Can I enroll in both an HSA and a health Flexible Spending Account (FSA)?

If you enroll in both an HSA and an FSA or Health Reimbursement Arrangement (HRA), you cannot make deductible contributions to the HSA for that coverage period if the FSA or HRA are “general purpose” arrangements that pay or reimburse for qualified medical expenses. However, you still may be able to make deductible contributions to an HSA and to the Limited FSA which permits reimbursements for vision, dental or preventive care expenses.

  How do I make contributions?

Contributions can be made through payroll deduction with CITGO. You may also make after tax deposits by setting up recurring transfers from your bank account, or by mailing a check and deposit coupon to the Fidelity address provided on your customized deposit coupons.

  What happens when HSA contributions exceed the maximum amount that can be deducted or excluded from gross income in a taxable year?

Contributions by individuals to an HSA, or if made on behalf of an individual to an HSA, are not deductible when they exceed the limits. Contributions by an employer to an HSA for an employee are included in the gross income of the employee if they exceed the limits or if they are made on behalf of an employee who is not an eligible individual. In addition, if not withdrawn in a timely manner, an annually assessed excise tax of 6% is imposed on the accountholder for excess individual and employer contributions. Once you reach the statutory maximum, CITGO will no longer deduct contributions and Fidelity will no longer accept contributions.

  When can HSA contributions be made? Is there a deadline for contributions to an HSA for a taxable year?

For an established HSA, contributions for the taxable year can be made in one or more payments at any time after the year has begun and prior to the individual’s deadline (without extensions) for filing the eligible individual’s federal income tax return for that year. For most taxpayers, this is April 15 of the year following the year for which contributions are made.

  Will HSA contributions that I made via mail deposit or electronic transfer from my bank show up on my W-2?

No. Contributions made by either of these methods are considered after-tax contributions for purposes of W-2 reporting. In order to receive the tax benefit of after-tax contributions, you must claim them on your tax return

  My HSA deduction is shown in Box 12 of my W-2 as Code W. Why is it designated as an employer contribution when I have contributed the money to the account?

Consistent with applicable IRS guidelines, HSA deductions reported on your W-2 in Box 12 as Code W (employer contribution) include employer and employee contributions made through the section 125 cafeteria plan as a pre-tax salary deferral. This includes all contributions made via salary deferral whether the funds came out of your paycheck or from your employer. Because of the portability of this deduction, you are required to complete an additional tax form. Form 8889 and instructions are available at www.irs.gov.

  Can I change my contributions to my HSA during the year?

Generally, if you make contributions through CITGO pre-tax deductions, you will not be subject to the “change in status” rules applicable to other qualified benefits. If this is the case, you will be able to make changes in your contributions by providing the applicable notice of change provided by your employer. If you do not contribute to your HSA through a cafeteria plan, you are free to start, stop, or modify your contributions at any time. You can now make changes to your HSA contribution amount through the Employee Self-Service Portal (ESS).

  If I open my HSA on June 1, what is my permitted contribution amount for that year?

Maximum annual HSA contributions can be made anytime during the year, regardless of when, during that year, the HSA was opened. For example, if an individual opens an HSA on June 1, the full contribution of $3,500 can be made for that year, and then another full contribution can be made after January 1 of the following year. Penalties may apply if SDHP coverage does not continue for 12 months. Tax-deductible limits and SDHP qualifying deductibles are indexed for inflation on an annual basis. Visit www.treas.gov and click on "Health Savings Accounts" for updates.

  What is the maximum amount a family can contribute if each spouse has family coverage under a separate plan?

If each spouse has family coverage under a separate plan, the contribution limit for 2019 is $7,000.00. If both spouses are 55 or older and not enrolled in Medicare, each spouse’s contribution limit is increased by $1000.00. If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $9,000.00. Each spouse must make the additional contribution to his or her own HSA.

  If my spouse is age 55 or older, am I eligible to make the catch-up contribution?

No. The primary accountholder must be age 55 or older in order to make the catch-up contribution.

  If I enroll in Medicare am I still eligible to contribute to the HSA?

No, you may no longer contribute to your HSA, but you may continue to use the funds in your account.

  How much can I contribute to my HSA?

In 2019 your annual HSA contribution may not exceed IRS limits of $3,500.00 for individual coverage or $7,000.00 for family coverage. IRS limits are indexed for inflation on an annual basis. Visit www.treas.gov and click on “Health Savings Accounts” for updates.

  Can I contribute funds from my Individual Retirement Arrangement (IRA) to my HSA?

During your lifetime, you are allowed a one-time contribution from one of your IRA(s) to one of your HSA(s). The contribution must be made in a direct trustee-to-trustee transfer. The IRA transfer will not be included in income or subject to additional tax due to early withdrawal. The transfer is limited to the maximum HSA contribution for the year and the amount contributed is not allowed as a deduction. Penalties may apply if SDHP coverage does not continue for 12 months.

  Who may contribute to an HSA?

Anyone may contribute to the HSA of an eligible individual. If an employee establishes an HSA, for example, the employee, the employer, or both may contribute to the employee's HSA in a given year.

If a self-employed or unemployed individual establishes an HSA, that individual may contribute to the HSA. 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.

  What if I use my HSA to pay for something other than a qualified medical expense?

If you are under age 65, it will be subject to applicable income taxes and a 20% penalty

  What are catch-up contributions for individuals age 55 or older?

For employees between the ages of 55 and 65, the employee's HSA contribution limit is increased by $1,000. CITGO will only consider the age of the employee in increasing the statutory limit for catch up contributions.

  Are rollover contributions from Archer MSAs and other HSAs permitted?

Yes. Rollover contributions from Archer MSAs and other HSAs are permitted. Qualifying rollover contributions must be made in cash and are not subject to annual contribution limits.

  When can I initiate distributions from an HSA?

Once your account is funded and activated, you can initiate distributions from the HSA at any time.

  What are the "qualified medical expenses" that are eligible for tax-free distributions?

Qualified medical expenses are expenses paid by the accountholder for diagnosis, cure, mitigation, treatment, or prevention of disease. Examples of these expenses are prescription drugs, transportation to care providers, qualified long-term care expenses, and certain health insurance premiums. Such expenses are "qualified medical expenses" only if they are ineligible for insurance or any other type of coverage. For more information, visit www.irs.gov/pub/irs-pdf/p502.pdf.

  How are distributions from an HSA taxed?

Distributions from an HSA used exclusively to pay for qualified medical expenses of the accountholder, his or her spouse, or dependents are tax exempt and not included in gross income. In general, amounts retained in an HSA can be used for qualified medical expenses and will be excludable from gross income even if the individual is not currently eligible to make contributions to the HSA.

However, any amount of the distribution not used exclusively to pay for qualified medical expenses of the accountholder, spouse or dependents is includable in gross income of the accountholder. Such distributions are subject to an additional 20% tax on the amount includable, except in the case of distributions made after the accountholder's death, disability, or attaining age 65.

  How do I pay for medical services?

Medical services can be paid for with your Fidelity debit card or checks you order for your account.

  Is there a PIN associated with the Health Savings Account Debit Card debit card?

A PIN is not necessary since money cannot be withdrawn from ATMs with the Health Savings Solution debit card; however, Fidelity has enhanced the security and you can now set up a PIN and make your HSA debit card even more secure. Call 844-201-8403 from your home phone to set up your personal identification number (PIN) – a 4 digit code that is now required at many pharmacies and healthcare providers. Select Option 1, followed by Option 4, to create your PIN.

Here is what you will need for the call:

  • Debit Card (number, expiration date, and security code)
  • Social Security number of cardholder
  • Date of birth of cardholder
  • Fidelity Health Savings Account Number

If you have supplemental cards associated with your account, PINs must be established for each card by either the account owner or the cardholder as long as they have the required information. Please note that your HSA debit card can be processed as either a debit or credit payment transaction. The card can only be used for qualified medical expenses, and cannot be used at ATMs or to get cash back on purchases.

  What happens if the HSA has insufficient funds for payment?

Overdraft fees may be assessed for returned checks or debit card transactions which are rejected.

  Is tax reporting required for an HSA?

Yes. IRS form 8889 must be completed with your tax return each year to report total deposits and withdrawals from your account. You do not have to itemize to complete this form.

  What are the tax rules of an HSA?

An HSA provides you triple tax savings by allowing:

  • Tax deductions from gross income when you contribute to your HSA
  • Tax-free earnings through interest and investments
  • Tax-free withdrawals for qualified medical expenses.

  How are distributions taxed after the accountholder is no longer an eligible individual?

Distributions used exclusively to pay for qualified medical expenses are not taxed, whether or not the accountholder is eligible to contribute to an HSA at the time of distribution.

  What happens to my remaining account balance at the end of the year?

Any remaining balance will carry over to the next year (no use-it or-lose-it requirement).

  Are health insurance premiums qualified medical expenses?

Generally, health insurance premiums are not qualified medical expenses. Exceptions include qualified long-term care insurance, COBRA health care continuation coverage, any health plan maintained while receiving unemployment compensation under federal or state law, and for those age 65 or over (whether or not they are entitled to Medicare) any employer-sponsored retiree medical coverage premiums for Medicare Part A or B, or Medicare HMO. Conversely, premiums for Medigap policies are not qualified medical expenses.

  What happens to the HSA if I die?

Upon death, ownership of the HSA is transferred to your designated beneficiary

  What are the income tax consequences for the beneficiary after the HSA accountholder’s death?

Upon death, any balance remaining in the accountholder’s HSA becomes the property of the individual named in the HSA as the beneficiary of the account. If the accountholder’s surviving spouse is the named beneficiary of the HSA, the HSA is treated as though the surviving spouse were the accountholder, and distributions used for qualified medical expenses are not subject to income tax. If, by reason of the death of the accountholder, the HSA passes to a person other than the accountholder’s surviving spouse, the HSA ceases to be an HSA as of the date of the accountholder’s death, and the person is required to include in gross income the fair market value of the HSA assets as of the date of death.

  Who is responsible for determining whether HSA distributions are used exclusively for qualified medical expenses?

As the HSA accountholder, you must ensure that distributions are used for qualified medical expenses. Records of medical expenses should be maintained as evidence that distributions have been made for these purposes. You are responsible for ensuring contributions to the HSA do not exceed IRS limits.

  If I change employers, what happens to my HSA?

Since you are the owner of the HSA, you may continue to maintain the account if you change employers.

  How will HSA statements be delivered and how frequently?

Monthly HSA statements itemizing deposits and withdrawals will be available online or you may opt to receive paper statements at an additional fee.

  Can I reimburse myself with HSA funds for qualified medical expenses incurred prior to my enrollment in an HSA?

No. Qualified medical expenses may only be reimbursed, tax-free, if the expenses are incurred after the date your HSA was established.

  If the employee and spouse max out their HSA at $7,000.00, can they still put $2,650.00 in the FSA on a tax free basis?

During Annual Election an employee can elect an HSA and a limited purpose FSA. The maximum amount allowed in the limited purpose FSA is $2,650.00 for 2019.

  Will you be able to change your HSA contribution amounts when you receive a merit or bonus like employees can do now in the 401K plan with Fidelity, or is the HSA the same amount if you have changes to your salary or are paid a bonus?

Employees can make changes to the amount they contribute to their HSA account at any time on the Employee Self-Service Portal (ESS). Deductions for HSA contributions will not be allowed from bonus payouts.

  For an initial non-preventive doctor visit, do you wait for the bill to arrive to pay with your HSA debit card? If not, how is payment determined?

Your doctor should verify your insurance coverage with United Healthcare prior to your visit. You should be advised of the cost of your visit at the time the medical service is rendered. Most doctors require payment at that time.

  If employee turns 65 next year, and spouse is 65, what are the HSA rules?

Once the accountholder turns 65 they can no longer contribute to an HSA. The funds remaining in the account can be used to pay for qualified medical expenses.

  Can I move money from my Thrift or RASP plan to my HSA?

No, you cannot move money from a Thrift or RASP plan to an HSA.

  Do hearing aid expenses qualify as a qualified medical expense? If so, can I use HSA funds to pay for those expenses?

Hearing aids and batteries purchased to operate hearing aids are considered qualified medical expenses. You may use HSA funds to pay for hearing aids and batteries for the hearing aids.

  Will prescription claims be automatically filed with HSA accounts like with FSA accounts?

No, prescription claims will not be automatically processed through Health Savings Accounts like they are currently with Flexible Spending Accounts. You can use your HSA Fidelity debit card or checks to pay for your prescriptions. You will need to have funds in your HSA account in order to make a purchase.

  Can I pay for my dependents’ medical expenses with funds in my HSA?

You can generally use the funds in your HSA to pay for qualified medical, dental, vision and prescription drug expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them as defined in IRS Publication 502. However, please NOTE the Affordable Care Act definition of dependent children (up to age 26) which can be covered under CITGO health plans is different than the IRS rules which apply to medical expense deductions and HSA distributions. According to the IRS definition, a person generally qualifies as your dependent on your tax returns for purposes of the medical expense deduction if both of the following requirements are met.

  • The person was a qualifying child or a qualifying relative (as defined by IRS rules), and
  • The person was a U.S. citizen or national or a resident of the United States, Canada, or Mexico.

For complete definitions of “qualifying child” and “qualifying relative” and the rules regarding whose medical expenses you can pay from your HSA, see IRS Publication 502.