Tax-Advantaged Savings/Spending Accounts
Health Savings Account (HSA)
If you enroll in the HSA Plus Plan or HSA Basic Plan, you may be eligible to establish a portable, tax-advantaged HSA. The HSA allows you to use tax-deductible funds for eligible medical, dental and vision expenses — today and in the future. In 2022, the IRS will allow up to a $3,650 contribution to an HSA for single coverage and up to a $7,300 contribution to the HSA for family coverage. You may also make up to an additional $1,000 in catchup contributions if you will reach age 55 in 2022. All withdrawals attributable to qualifying contributions to your HSA are tax-free, as long as you use the money to pay for qualified expenses. Additionally all the money in the account is yours and will never be forfeited. You can roll it over at the end of each year. Because you aren’t actively working and receiving a paycheck directly from AEP, you can’t elect to contribute to an HSA through AEP; however, you can open an HSA and make your own contributions directly to the account, up to the IRS limits, and deduct those contributions on your federal income tax.
Your domestic partner’s claims cannot be covered under your HSA without incurring a tax consequence unless your domestic partner qualifies as a dependent for tax purposes. According to the IRS, “qualified medical expenses” with respect to an HSA do not include medical expenses of a non-dependent domestic partner. Therefore, any amount paid from your HSA to cover the medical expenses of a non-dependent domestic partner would be included in your gross income and would be subject to an additional 10% excise tax.
You cannot select the HSA Plus Plan (if eligible for AEP HSA funding) or make your own tax-deductible contributions to an HSA under either the HSA Plus Plan or the HSA Basic Plan if you anticipate meeting any of the following criteria as of January 1, 2022:
You cannot enroll in an HSA if:
- You are covered by any health plan that is not an HSA-compatible health plan. This includes a spouse/domestic partner’s plan as secondary coverage or an executive medical plan.
- You are covered by or planning to enroll in an unlimited Health Care Flexible Spending Account (HCFSA) established by you, your spouse/domestic partner or any other family member.
- You are a veteran who has or plans to receive veterans’ medical benefits within the three months prior to January 1, 2022.
- You have received medical services from the Indian Health Service within the three months prior to January 1, 2022.
- You can be claimed as a dependent by someone else for the 2022 tax year.
- You are enrolled in Medicare or Medicaid.
- You are active in the military.
Contact Health Equity at 1-866-346-5800 or healthequity.com/aep