Health Savings Account

Important Update: 2018 Health Savings Account Contributions

As was communicated during Benefits Open Enrollment, employees enrolled in the PPO Savings Plan with the Health Savings Account (HSA) for 2018 will receive Penn State’s contribution in January 2018.

The timing of the contribution is based on the payroll cycle of the employee, which means that the contribution will be made to HealthEquity accounts for bi-weekly-paid employees on January 5 and monthly-paid employees on January 31, 2018.

As a reminder, the 2018 University contribution will be based on salary:

Annual Base Salary

HSA Seed (Individual/Family)

  Less than or equal to $45,000


  $45,001 - $60,000


  $60,001 - $90,000


  Greater than $90,000


If you are retiring at the age of 65 1/2 or older

If you are currently enrolled in the PPO Savings plan with the Health Savings Account, plan to retire within the next year, and are age 65 1/2 or older, please read and take action as needed regarding a conflict between IRS regulations and Medicare requirements.

An explanation of the issue and the solution is outlined below:

The issue: Anyone age 65 1/2 or older who is enrolled in a qualified high-deductible health plan (PPO Savings plan) with a Health Savings Account (HSA), who retires and enrolls in Medicare Part A, will experience a Medicare-required "look-back period" of 6 months. That "look-back period" overlaps with the timeframe during which you may have had either or both employer and employee contributions made to your HSA. IRS regulations state that an individual cannot receive or contribute to a HSA if covered by Medicare or any other health care insurance. If the individual were to be audited by the IRS, taxes and penalties could apply to the amount contributed to the HSA.

The proposed solution: In order to avoid potential tax issues, you want to STOP YOUR HSA CONTRIBUTIONS so that you have 6 months of NO contributions before you FILE FOR MEDICARE. For example, if you are retiring as of December 31 of any given year, you need to stop your contributions beginning with the June payroll of that same year. In order to move into the University-sponsored Medicare plan after you retire, you must first enroll in Medicare parts A and B. Therefore, you must "file" for Medicare during the month of your retirement, which is December in this example. Social Security uses the filing date in December as part of the look-back period, which means you need to have NO HSA contributions from June - November.

Please log into Workday through the Worklion portal to stop, start, or change your HSA contributions. Any questions relating to Medicare guidelines, please contact your local Social Security office or your tax advisor.

All questions regarding the HSA should be directed to HealthEquity at (866) 346-5800.

Health Savings Account

Penn State employees who enroll in the PPO Savings Plan will automatically have a HealthEquity Health Savings Account (HSA) created on their behalf.

The HSA, administered by HealthEquity, may be used to pay for qualified medical expenses.

Employees looking to learn more details about Health Savings Accounts, can do so by visiting HealthEquity. For employees currently participating in the HSA, you can manage your account by visiting My HealthEquity.

Features of HSAs:

  • Account holders may contribute to an HSA on a pre-tax basis with payroll deductions
  • Both the account holder and the employer may contribute to an HSA
  • Funds in the HSA can be withdrawn tax-free to pay for qualified medical expenses
  • The balance rolls over from year to year and grows tax-free with interest, allowing account holders to build savings over time
  • Account holders decide how much to contribute to their HSA, up to the annual IRS maximums, and may change their contributions at anytime during the plan year
  • HSA funds may be used today as needed, or may be left in the account to grow future savings
  • The account holder may keep the funds in the event he/she retires from or leaves Penn State, or switches health plans at Open Enrollment each year

If an employee's HSA is not established December 15 of any given year and that person is eligible for the Penn State contribution, he/she will receive the contribution in the following calendar/tax year, provided that the  HSA is established at that time.

Account holders must have the money in their HSA before it is available for use.

For example, if an individual has used all of the available funds in his/her account and that person then receives a medical bill for $80, he/she cannot pay the claim from of the HSA until there are sufficient funds in the account to cover the bill. 

Account holders will be issued a debit card which may be used to pay for medical claims. While HSA members do not have to substantiate purchases made with their HSA debit card, it is recommended that they keep all receipts in the event of an IRS audit.

With the HealthEquity HSA, all banking regulations apply and no funds will be deposited until the account is established. 

HealthEquity charges a monthly account maintenance fee of $1.75, which will be automatically deducted from the account.

Account holders may transfer the monies deposited into their Penn State HSA to the HSA of their choice. For more information on how to transfer to or from your HealthEquity HSA, please contact HealthEquity at (866) 346-5800.

Eligibility Requirements for the PPO Savings Plan with the Health Savings Account (HSA)

All full-time, benefits-eligible employees are eligible, however, the EMPLOYEE:

  • CANNOT be enrolled in Medicare or be collecting Social Security benefits. It is recommended that employees who are returning from retirement consult with their financial advisor regarding implications of dis-enrolling from Medicare in order to be eligible for the HSA, as they will not be able to collect Social Security benefits unless they are enrolled in Medicare. Once an individual dis-enrolls from Medicare, that person is able to contribute to the HSA. 
  • CANNOT be enrolled in another health plan
  • CANNOT have a balance in a HEALTH CARE Flexible Spending Account
  • CANNOT have a J1 Visa - J1 Visa holders are eligible for the PPO plan only

Due to IRS regulations governing HSA plans, PPO Savings Plan members are not eligible to enroll in the Health Care Flexible Spending Account (FSA). If an employee currently has money in a Health Care FSA—either through themselves or through a spouse who has elected the PPO Savings Plan—that person must use all of the money in the account before enrolling in the PPO Savings Plan. An FSA that has had a contribution added within 90 days of opening is considered an active account.

If two Penn State employees are married and have elected FAMILY coverage under the PPO Savings Plan with an HSA, a Health Care Flexible Spending Account (FSA) cannot be opened under either employee's name. The IRS does not permit use of a health care FSA when enrolled in an HSA. The Dependent Care FSA is available to either employee up to the IRS limits, however.

Making Contributions to a Health Savings Account

As part of the enrollment in a PPO Savings Plan, an HSA will be automatically opened on the employee's behalf and Penn State will make a contribution to the account that is available to use right away for eligible health care expenses.

In addition, employees who are enrolled in the PPO Savings Plan may make a separate election to contribute funds to the account through payroll deduction. When enrolling in the PPO Savings Plan, the employee will be asked to amount of the per paycheck contribution that they would like to make to the HSA. 

If an employee's HSA is not established by December 15 of any given year, and that person is eligible for the Penn State contribution, he/she will receive the contribution in the following calendar/tax year, provided that the HSA is established at that time.

HSA account contributions made by employees through payroll deduction will be available for use within 5 business days of the actual pay date. For example, if the pay date is a Friday, the HSA funds will be in the account by the following Friday.

Employee are able to contribute post-tax money into their HSA. For more details on this process, you will need to contact HealthEquity at (866) 346-5800.

Paying for Medical Expenses with the HSA

Qualified medical expenses are those incurred by the following individuals:

  • Employee and spouse
  • Dependents who are claimed on the account holder's tax return
  • Any person claimed as a dependent on the account holder's tax return except if:
    • the person filed a joint tax return
    • the person had a gross income of $3,900 or more
    • the account holder, or the account holder's spouse if filling jointly, could be claimed as a dependent on someone else's tax return

Call HealthEquity, or visit their IRS information, to learn more about tax dependent versus non-tax dependent claim eligiblity under your HSA.

Changing The HSA Contribution

Contribution amount changes may be made on a monthly basis through Workday.

Changes will become effective on the next available payroll.

Employees are responsible for ensuring that the annual maximum IRS contribution limit is not exceeded. Penn State is not responsible for tax consequences as a result of the employee contributing beyond the annual IRS contribution limit.  The Penn State contribution is included in the annual IRS contribution limit.

2018 HSA Contribution Limits
Coverage Limit
Single $3,450
Family $6,900

Individuals who will be age 55 or older and who are not enrolled in Medicare have the ability to contribute up to an additional $1,000 in “catch-up” contributions to an HSA.

If the employee covers a spouse who will be 55 or older in 2018 and who is not covered by Medicare, the employee may open a Health Savings Account on their behalf through another qualified financial institution and deposit an additional $1,000. This additional amount will not be payroll-deducted and therefore should be arranged directly through the financial institution of choice.

Employees who Switch Health Plans, Leave Penn State or Retire

Employees who change health plans, leave, or retire from Penn State will not experience any changes to the management of their HSA. At the termination of the employee's Penn State medical coverage, the HSA becomes a "stand alone" HSA, or individual account, with HealthEquity. Notificiation regarding the change to a stand-alone account will be mailed by HealthEquity to the home address on file. Account holders with stand-alone HSAs will have the following:

  • Keep the same account number
  • Be able to manage their account through the HealthEquity website
  • Have access to HealthEquity customer service at (866) 346-5800

Employees who leave the University and wish to transfer your HSA funds from HealthEquity to another HSA account should contact HealthEquity directly for assistance.

Employees who have an HSA from another employer or institution may move their funds INTO the HealthEquity HSA by completing this form.

HSA Fees, Limits, Rates, and Taxes

For a schedule of account fees, contribution limits, interest rates, and year-end tax form information, please contact the HSA plan.

  • Information for HSA plan prior to 10/05/2017: Contact Highmark/Bank of America at (800) 914-4384
  • Information for HSA plan 10/06/2017 and after: Contact HealthEquity at (866) 346-5800