Health Savings Account (HSA)

Health Savings Accounts (HSA) for Active State Employees

Companion to the Consumer Driven Health Plan (CDHP)

An HSA, administered by Optum Financial, is like a 401(k) for healthcare, yet the HSA tax benefits are far greater. It is a tax-favored, interest-bearing account that active State employees can use to pay for qualified medical expenses now, or in the future. Active State employees who qualify (see Qualifying for an HSA below), may save or invest the account funds. Paired with the Consumer Driven Health Plan (CDHP), an HSA is a powerful financial tool that gives you more control of your healthcare decisions.

An HSA offers triple tax savings.

• Pre­tax or tax-deductible contributions
• Tax-free interest or investment earnings
• Tax-free distributions, when used for qualified medical expenses

The State of Illinois will contribute one-third of the CDHP deductible to an active State employee’s HSA.  Employer contributions are prorated for mid-year hires based on the new-hire or change-of-other-coverage effective date:

• 1st Quarter (July – September): 100% of the designated employer contribution
• 2nd Quarter (October – December): 75% of the designated employer contribution
• 3rd Quarter (January – March): 50% of the designated employer contribution
• 4th Quarter (April – June): 25% of the designated employer contribution

During the FY27 Play Year, members under age 55 may also contribute an additional $3,833.33 for an individual-only plan; or $7,616.66 for a family plan, to your HSA through pre-tax payroll deductions or post-tax direct payment.  Members aged 55 and older may contribute yet an additional $1,000.00.

FY2027

Contributions to your HSA can be made through pre-tax payroll deductions or post-tax direct payment.

• Active State employees may make tax-free withdrawals to pay for qualified medical expenses, for you and your eligible dependents.
• An HSA is portable and owned by the individual. Unlike an FSA, there is no "use-it-or-lose-it" rule with HSAs. Unused contributions remain in the account each year, earning tax-free interest.
• If the employee invests HSA funds, those funds remain in the investment account. HSAs offer the potential for long-term, tax-free savings that may be used for future healthcare expenses including out-of-pocket expenses after retirement, including Medicare and Long-Term Care (LTC) premiums, up to IRS limits and certain LTC expenses. There are no income limitations.

Qualifying for an HSA

HSA Eligibility Requirements:

• Be covered under a high-deductible health plan
• Have no other health coverage (except what is permitted under other health coverage:  https://www.irs.gov/publications/p969#en_US_2019_publink1000204039)
• Not be enrolled in Medicare; this includes Part A
• Can not be claimed as a dependent on someone else’s tax return
• Be vetted through the Customer Identification Program (CIP), an identity verification provision of the USA Patriot Act. Optum Financial may send correspondence to the individual requesting specific documentation be provided via upload. The employee must pass CIP before the HSA account is active and any HSA contributions can be deposited.

Health Savings Account (HSA) Forms and Publications

• Investing Opportunities for-your-HSA
• Optum Financial - Investing with your HSA
• Optum Account Refund Form
• Optum Financial Fee Schedule
• Optum HSA Beneficiary Form
• Optum HSA Claim Form
• Optum HSA Contribution Form
• Optum HSA Excess Contribution Removal Form