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Medicare and Health Care


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Medicare is health insurance for people age 65 or older, under age 65 with certain disabilities, and any age person with End-Stage Renal Disease (ESRD). There are many different parts to Medicare; with all of these options, it can be confusing.

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usmc0151  
#1 Posted : Friday, March 02, 2012 3:05:24 AM(UTC)
usmc0151

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Posts: 31

Quick question. I'm a new employee and looking at the different healthcare plans. I noticed this in the FAQ regarding HDHP plans and FSAs.

Military Veteran

To qualify for an HSA you cannot be enrolled in a health care program already. If this is correct, does being a Veteran enrolled in the VA Health Care System prevent me from being eligible for an HSA? I am a Federal employee.
IRS guidance states you are not eligible to make contributions to your HSA for three months after each use of VA medical or prescription drug services.

A husband and wife are covered under FEHB with Self and Family coverage. The husband is the employee and receives VA disability benefits due to a military - related injury. Do VA disability benefits disqualify the husband from HDHP/HSA? If yes, should the husband and wife choose Self Only coverage and choose an HDHP/HSA?
Individuals receiving a VA disability benefit are entitled to enroll in an HDHP and establish an HSA. However, IRS guidance states they cannot make a contribution to their HSA for 3 months after each use of VA medical or prescription drug services.

Could you clarify the definition of VA benefits? Is it medical care only or other benefits?
VA benefit refers to any medical services and prescription drug benefits.


My question is does this restriction on contributions include the pass through contributions made by the plan from the premium payments?

For example, I have a plan like this, the plan steadily deposits the pass through amount for several months. Then I go to the VA for medical services due to a service connected disability. So, do I still get the pass through contributions for the next three months? Or is it just that I'm not allowed to contribute during that time period, personally?


Alright, well, I guess I have another question as well. I see that HRAs are offered as alternatives. I don't have any other insurance, can I sign up for an HRA right off the bat instead of an HSA to avoid this issue with occasional visits to the VA? Or should I just avoid the HPHD altogether and pick a different plan because I already receive care through the VA?  I'm going to need a family plan because I have dependants.  I'm in Priority Group 1 in case you need to know in order to advise.

usmc01512012-03-02 11:12:22
upandup  
#2 Posted : Friday, March 02, 2012 3:48:51 PM(UTC)
upandup

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First off, you need to differentiate between FSAs (Flexible Spending Accounts) and HSAs (Health Savings Accounts). They are not the same thing. An FSA is use-it-or-lose it pretax payroll-deducted funds used for medical expenses for that current year. An HSA allows direct contributions or payroll deductions; funds can be retained indefinitely and any investment/interest earnings are tax-free.

The restriction against contributions to HSAs if one has coverage other than an eligible HDHP applies to the pass-through contributions. In order to provide you with the funds, the plan will establish an HRA for you instead of an HSA. The HRA is similar to the HSA, but there are two important distinctions: 1) The member cannot make additional contributions to it; 2) The balance can be rolled over from year to year, but it is forfeited should the member change plans.
usmc0151  
#3 Posted : Friday, March 02, 2012 9:14:45 PM(UTC)
usmc0151

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Alright, I see that I made a mistake in making the title of the thread and in my question.  I meant HSA, because that is what comes with the HDHP.  Thank you for your answers and advice.

Here is a follow up question.  Could I enroll in an HDHP with an HSA and just go to non VA facilities for medical treatment?  It appears from the FAQ I quoted that that would be an option.  "Individuals receiving a VA disability benefit are entitled to enroll in an HDHP and establish an HSA." If I never use them then I should never be ineligible to make contributions.


upandup  
#4 Posted : Saturday, March 03, 2012 2:43:49 AM(UTC)
upandup

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Correct. If you don't use VA facilities or have other medical insurance coverage, then you are HSA eligible. If you do decide to seek treatment from the VA, then you would have to terminate HSA contributions (including those from the plan).
usmc0151  
#5 Posted : Saturday, March 03, 2012 4:53:37 AM(UTC)
usmc0151

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What would happen to the balance in the HSA?  Would it just hang out for three months and then the contributions would start again?  I could still use it during that time frame, right?  I wouldn't lose it or it wouldn't be converted to an HRA?

Thanks again for sharing your knowledge.

Of course, all this just makes the decision even more complicated.


upandup  
#6 Posted : Saturday, March 03, 2012 11:07:56 AM(UTC)
upandup

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An HSA is yours to use for eligible expenses at any time you would like. You can keep the HSA and its funds (and investment earnings, if any) to use at any point into the future...even if you no longer have an eligible HDHP or are otherwise unable to contribute to an HSA.

Nothing would happen automatically. Both stopping HSA contributions and restarting them would require you to coordinate with your insurance plan (for the passthrough contributions) and your payroll office (for any payroll deductions you have in place for HSA contributions). Excess contributions would be subject to a penalty at tax time should they be made.
usmc0151  
#7 Posted : Saturday, March 03, 2012 11:46:35 AM(UTC)
usmc0151

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Thanks again for all your help. It was helpful in coming to a decision.  After looking through the plans and using www.plansmartchoice.com that I found linked to on this board I decided to go with the GEHA Standard plan.  This avoids the issue of HSAs and VA health care, but I can still get an FSA.



KimPossible  
#8 Posted : Tuesday, November 20, 2012 8:33:12 PM(UTC)
KimPossible

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Posts: 51

I am a Veteran, can I have an HSA?

If you have received any health benefits from the Veterans Administration or one of their facilities, including prescription drugs, in the last three months, you are not eligible to contribute to an HSA. If you have only received dental, vision or preventive care services from a VA facility or clinic within the past three months, you will remain eligible to contribute to an HSAKimPossible2012-11-21 04:38:46
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