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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), can 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 deductible to an active State employees' HSA You may also contribute an additional $3,750 for individual; or $7,450 for family, to your HSA through pre-tax payroll deductions or post-tax direct payment.

FY2026 -Tax Year

Under Age 55

Age 55 and Older

 

Individual

Family

 

Individual

Family

Employer Contribution =

 $550

$1,100

Employer Contribution =

$550

$1,100

Employee Contribution =

$3,750

$7,450

Employee Contribution =

$4,750

$8450

Max IRS Allowed Contribution =

$4,300

$8,550

Max IRS Allowed Contribution =

$5,300

$9,550

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

  • Active State employees can make tax-free withdrawals to pay for qualified medical expenses, for you and your eligible dependents.
  • HSAs are portable. 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 can be used for future healthcare expenses including out-of-pocket expenses after retirement, Medicare, and long­-term care (LTC) premiums, up to IRS limits and certain LTC expenses. There are no income limitations.

Qualifying for an HSA

To be an eligible individual and qualify for an HSA, you must:

  • 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), a provision of the USA Patriot Act, for identity verification purposes. Optum Financial may send correspondence requesting specific documentation be provided via upload. The employee must pass CIP before any HSA contributions can be deposited.

 

Health Savings Account (HSA) Forms and Publications