Citi Benefits Handbook
- You "own" your HSA; your account is portable.
- Contributions to an HSA can be made by individuals, employers or both.
- Contributions (subject to limits) can be changed at any time, as long as you continue to be enrolled in a qualified HDHP.
- Contributions (subject to limits) and earnings are tax-free under federal and many state income tax laws.
- Withdrawals (to pay for qualified medical, dental and vision expenses, as determined by the Internal Revenue Code [the "Code"]) are tax-free under federal and many state income tax laws.
- Withdrawals can be used to pay for qualified medical, dental and vision expenses, as determined by the Code, for you and your tax dependents.
- You do not forfeit funds that you do not use by year-end. Instead, HSA funds remaining in your account will roll over to the following year.
- However, you will pay a penalty of 20% on the disbursed amount that is not used for qualified health care expenses or health care expenses for dependents not considered as tax dependents under Section 152 of the Code.
Note: The HSA is not part of the Citigroup medical plans or any other employee benefits plan sponsored by Citi and it is not subject to ERISA.
The HSA and the LPSA
If you enroll in the HDHP and make tax-free contributions to an HSA, you cannot participate in an HCSA. HCSA enrollment is considered "impermissible medical care coverage" and disqualifies your contributions to an HSA. According to IRS regulations, if you enroll in the HDHP, you can enroll in the LPSA to reimburse yourself for eligible expenses such as those for vision, dental and preventive medical care. You may also enroll in an LPSA if you enrolled in the HDHP but are not enrolled in an HSA.
An LPSA works like an HCSA, except only certain types of expenses are eligible for reimbursement. See the "LPSA" subsection in the Spending Accounts section for more information.
For more information about the LPSA, contact your tax adviser or visit the IRS website at www.irs.gov. From the home page, go to the search feature at the top of the page and enter "Ruling 2004-45."