How the HSA Works
The UHC Enhanced and Basic medical plans both offer a tax-advantaged opportunity to pay your qualified medical expenses and save for future health care expenses: the Health Savings Account, or HSA. Both you and Eaton can contribute before-tax money to this account, and you can decide when to use these dollars — on expenses you incur now, or in the future. The best part? The account is yours to keep so if you don’t use the dollars now, you can invest your account balance for potential future growth!
The HSA is Triple Tax-Advantaged. What does that mean?
- You contribute before-tax. You can contribute up to the IRS limit, and Eaton’s contribution to your HSA is not taxable.
- Your earnings are tax-free.*
- Your withdrawals are tax-free when you use the money to pay for qualified medical expenses.*
*Note: With respect to federal taxation only. Contributions, investment earnings and distributions may or may not be subject to state taxation. See your tax advisor for more information on the state tax implications of HSAs.
So, how does the HSA work?
- If you’re enrolled in either the Basic or Enhanced Medical Plan option, Eaton will contribute before-tax money to your account when you open an HSA with Fidelity. With either medical plan option, you’ll receive $500 per year for Employee Only coverage, or $1,000 per year for Employee + Other(s) coverage. If you open a Health Savings Account after January 1, Eaton’s contribution will be pro-rated based on your hire date as follows: The company contribution amount is calculated as $500/$1,000 divided by 12 months multiplied by the number of months remaining in the plan year. For example, if you enroll on March 18th in Employee Only coverage, you will receive $375 in your HSA.
- You can also choose to contribute to your HSA up to the 2024 IRS annual limit of $4,150 for Employee Only coverage or $8,300 for Employee + Other(s) coverage. If you are age 55 or older, you can make an additional catch-up contribution of $1,000.
- Because you own your account, including the contributions that Eaton makes, you choose how to invest the money in your HSA. Through Fidelity, you have access to more than 4,000 mutual funds and other investments including stocks, bonds and CDs. Keep in mind that some of the mutual funds require a minimum balance. We recommend speaking with a Fidelity representative before making your selections.
- There is no “use it or lose it” provision. All unused funds roll over from year to year. And if you retire or leave Eaton, you take your HSA money with you. While you remain an active employee, Eaton pays the monthly fees associated with maintaining the HSA.
- When you’re ready to use your funds, you can use them for qualified medical expenses for anyone you claim or could claim on your tax return, even if you don’t cover them under Eaton’s medical plan. You don’t need to submit receipts every time you withdraw money. However, you will need to reflect HSA expenses on your tax return, so save your receipts.
To get started, review the Understanding a Health Savings Account guide. For more information, details and videos regarding the HSA, please log on to netbenefits.com. You can also visit fidelity.com/healthsavingsaccount or call 1‑800‑544‑3716.
Eaton HSA and Medicare
You have the option to enroll in Medicare as early as 90 days prior to your 65th birthday or you can delay enrollment until you retire if you are planning to continue employment beyond age 65. While you remain a current employee, you do not need Medicare coverage as long as you are enrolled in an Eaton active employee medical plan and you remain employed by Eaton.
Neither you nor the company can continue to contribute to your HSA if you are enrolled in any part of Medicare, but the funds in the HSA remain available to you. If you are continuing employment with Eaton beyond age 65, are enrolled in active employee medical benefits coverage through Eaton, and wish to make or receive contributions to your HSA, you should decline participation in any part of Medicare until you retire or no longer wish to make or receive contributions to your HSA.
If you will be turning 65 and are preparing to apply for Medicare benefits, you may want to consider stopping contributions to your Health Savings Account (HSA) six months before applying for Medicare. This is because Medicare Part A will be retroactive for up to six months from the date of your application.
See the Pre-Retiree/Retiree page to find out what you should know and what steps you should take.
How the Health Reimbursement Account Works
Certain employees who are participating in the UHC Enhanced or Basic Medical plan may not be eligible to make or receive contributions to the HSA. If this is the case, you may then be eligible to participate in the Health Reimbursement Account (HRA). The HRA is administered by HealthEquity.
How the HRA Works
- Eaton contributes before-tax money to your account. With either medical plan option, you’ll receive $500 per year for Employee Only coverage, or $1,000 per year for Employee + Other(s) coverage. If you become eligible for the HRA after January 1, Eaton’s contribution will be pro-rated based on your eligibility date.
- You cannot contribute your own money to the HRA.
- The company contributions credited to your account do not earn interest or accrue earnings.
- If you do not use the full amount of Eaton’s 2024 contribution for 2024 expenses, you may be able to use that money in the future.
- You will not pay any tax on the money when you withdraw it as long as it is used for qualified health care expenses for:
- You,
- Your spouse, if enrolled in the Eaton Medical Plan at the time the expense is incurred, or
- Other individuals who are your dependents for federal tax purposes if enrolled in the Eaton Medical Plan at the time the expense is incurred.
You need to keep receipts for all debit card purchases and may be asked to provide the receipts to HealthEquity. In addition, you will have to submit receipts for any reimbursement claims that you file with HealthEquity.
Other Reimbursement Accounts (offered through HealthEquity)
|
TYPE |
ALLOWED EXPENSES |
ANNUAL CONTRIBUTION LIMITS |
|---|---|---|
|
Dental & Vision (limited purpose for Basic/Enhanced plans) |
Eligible dental and vision expenses for you or your dependents (for consumer health plan participants) |
Between $120 - $3,050 |
|
Dependent Care |
Eligible child or elder care expenses |
Between $120 - $5,000 |
|
Health Care |
Eligible health expenses for you or your dependents when not enrolled in the consumer health plans |
Between $120 - $3,050 |
Health Care Reimbursement Account (HCRA)
This account, administered by HealthEquity, allows you to set aside money—up to IRS limits—to pay for qualified medical, prescription drug, dental and vision expenses. You can participate in this account if you are enrolled in the MyChoice Medical plan or if you elect to have no medical coverage with Eaton. When you open this account, you’ll receive a debit card that you can use to make qualified purchases. The debit card is a convenient payment option that deducts directly from your HCRA. Be sure to keep your receipts, because in most cases, you will be required to submit receipts for expenses paid with your debit card.
For information about eligible expenses and to access your account, go to the HealthEquity website available through werally.com/eaton.
Dental/Vision Reimbursement Account (DVRA)
This account, administered by HealthEquity, allows you to set aside money—up to IRS limits—to pay for qualified dental and vision expenses only. You cannot use this account for reimbursement of medical or prescription drug expenses. Unlike the HCRA, you can enroll in this account if you are also enrolled in the UHC Enhanced or Basic Medical plan. Most employees who are participating in a Health Savings Account (HSA) would choose this account only after contributing the maximum annual allowed amount to the HSA.
Like the HCRA, you can receive reimbursements using your reimbursement debit card. The debit card is a convenient payment option that deducts directly from your DVRA. Be sure to keep your receipts, because in most cases, you will be required to submit receipts for expenses paid with your debit card.
For information about eligible expenses and to access your account, go to the HealthEquity website available through werally.com/eaton.
Dependent Care Reimbursement Account (DCRA)
This account, administered by HealthEquity, allows you to set aside money—up to IRS limits—to pay for day care (non-medical) expenses for your children or other eligible dependents so that you—or if you are married, you and your spouse—are able to work. If you are married, generally, your spouse must be working or attending school full-time in order for your day care expenses to be eligible for reimbursement.
The IRS determines which expenses qualify for reimbursement from each of the three accounts. For information about eligible expenses, go to the HealthEquity website available through werally.com/eaton.
For information about eligible expenses and to access your account, go to the HealthEquity website available through werally.com/eaton.