FAQ: Learn More About Health Savings Accounts (HSAs)

Open Enrollment is the time to see if the Medica HSA can save you money while providing access to same network providers as the Medica Choice National plan. Learn more to see if switching to the Medica HSA medical plan could be a good choice for you in during Open Enrollment.

Frequently Asked Questions:

What is a Health Savings Account (HSA) and how does it work?

An HSA is used to save for medical expenses while also reducing your taxable income. To qualify to contribute to an HSA, you must be enrolled in a qualified high-deductible health plan like the Medica HSA plan. This video from OptumBank explains more about HSAs and related tax benefits.

People who participate in an HSA receive a debit card that they use to pay for medical expenses with their HSA funds as they are added with each payroll during the calendar year. The funds in the HSA roll over from year to year and earn interest. Eligible expenses for an HSA include your deductible, coinsurance, and prescription eyeglasses.

Is an HSA a good fit for me?

A Health Savings Account might not be a good fit if you or your family:

  • Aren’t comfortable with the possibility of being faced with a large medical bill up front.
  • Are currently enrolled in any part of Medicare or another non-qualified high deductible medical plan. You can have an HSA account after Medicare enrollment, but you can no longer contribute to the account.
  • Could be applying for Medicare or Social Security Benefits in the next 6 months.

A Health Savings Account is worth considering if you:

  • Want to take advantage of the tax benefits. Contributing to an HSA will reduce your taxable income, and provides another way to save for health care expenses in retirement.
  • Want to take advantage of tax-free withdrawals. Withdrawals from our HSAs are not subject to federal and most state income taxes if you use them for qualified medical expenses.
  • Want the option to keep funds that you’ve saved and didn’t use, and roll them over for your healthcare each year.
  • Can afford the higher deductible if it’s early in the year and you do not have all of your funds deposited from payroll yet.
  • Want access to the same statewide Medica Choice network and the United Healthcare Options PPO network if you travel or work outside of Minnesota. 

Will the University contribute to my account?

The University of Minnesota contributes $750 annually for employee-only coverage and $1,500/annually for family coverage (either tier) to the HSA on your behalf. You also have the option to contribute additional pre-tax dollars to your HSA.

What are the differences between the Medica HSA and the other medical plans the University offers?

The Medical Plan Comparison (pdf) provides an overview of the medical plans offered by the University.

How do the Medica HSA and Medical Choice National compare on cost?

The employee premiums for Employee and Spouse with or without children for the Medica HSA is $3,796 less annually than Medical Choice National in 2020. If you made the choice to use the premium savings to contribute to the HSA, the employer and employee contributions to the HSA would cover the cost of the annual deductible. Review the per pay period cost for all of the University medical plans.

Can I estimate my costs and savings?

If you’re not sure if an HSA is the right option for you, you can use Optum Bank’s Health Savings Account Calculator. Optum Bank administers the health savings accounts. The site will help you estimate your tax savings and see how your savings could grow over time.

Can I make changes to my contribution amount once I'm enrolled?

Yes, changes can be made to your contribution amount throughout the year, even multiple times. Email benefits@umn.edu to start this process. 

If you are making a change during the annual Open Enrollment period, this can be done within your Open Enrollment benefit event in MyU. This new contribution amount will be reflected in your first paycheck of the following year.