Your Contribution Options

Any person (an eligible individual, an employer, a family member, or any other person) may make contributions to an HSA on behalf of an eligible individual. See section VI of the IRS website for more information.

Employee Eligibility
In order to make a tax-deductible contribution to an HSA, an employee must be enrolled in an HSA-compatible high deductible health plan (HDHP).

An HDHP is a comprehensive health plan with the following annual deductibles:

• At least $1,050 for an individual
• At least $2,100 for family coverage

However, the HDHP may pay for “preventative care” services with or without copays. Preventative care can include routine pre-natal and well-child care, child and adult immunizations, annual physicals, and services such as mammograms and pap smears.
 

The annual HDHP out-of-pocket expenses for 2006 cannot exceed $5,250 for individuals
and $10,500 for a family. These amounts are indexed annually for inflation.

An employee is not permitted to have any other health insurance coverage not subjected to the
HDHP limits, but types of insurance like specific injury insurance or accident, disability, dental
care, vision care, or long-term care insurance are permitted.

An employee is not permitted to be enrolled in Medicare or be listed as a dependent on
another individual’s tax return.
 

An employee is not permitted to have received VA benefits during the previous three months.

The information on this website about eligibility and contribution limits for HSAs is basic. It is not intended to be comprehensive. Employees must consult their own tax advisor for advice regarding whether they qualify for an HSA and should talk to their insurance provider for details about high deductible health plans. You may also log on to the U.S. Treasury Web site, http://www.treas.gov
offices/public-affairs/hsa for answers to commonly asked questions and more detailed information. Neither UMB nor CMA are providing individuals with tax or insurance advice.

Annual Contribution Limits
Contributions are only accepted in the form of cash; no other forms of payment (such as stocks or property) are accepted.

The federal government has established yearly maximum contribution limits. For 2006, the maximum an employee and/or employer can contribute to an individual’s HSA is up to the lesser of either the plan deductible amount or $2,700 for an individual or $5,450 for family coverage.

Your annual contribution depends on the number of months of HDHP coverage you have during the year (count only the months where you have HDHP coverage on the first day of the month). For example, if the HDHP is opened on 1/1/06, a full contribution can be made in 2006, if the HDHP is opened on 7/1/06, 50 percent of the annual contribution amount can be made in 2006.

In addition to the standard HSA contribution limits discussed above, if an individual is between 55 and 64 years old prior to the close of the calendar year, then the individual may also make a contribution known as a “catch-up” contribution. This limit is also pro-rated for the number of months the HDHP has been open.

The maximum limit for the catch-up contribution is $700 for 2006, and is scheduled to increase through 2009 as shown in the table below.

Employer Initiated Contributions
Employers can elect to contribute to their employees’ HSA accounts. If the employer chooses to make contributions, they must follow IRS guidelines. See Section VI of the IRS website for additional information.

     Electronic Funds Transfer (EFT)—Employer Payroll Deductions
The employer can set up a recurring payroll deduction via ACH (Automated Clearing House) for the employee’s HSA contribution. An ACH can be initiated from the employer’s payroll account directly into the employee’s HSA account as a current year contribution. These contributions will post to the employee’s HSA account on the effective date as provided by the originator. UMB does not send a confirmation receipt back to the originator, however, the employer will see the deduction on their monthly bank statement. If the contribution rejects, it will be returned to the originator according to standard processes for returning ACH credits.

There is no charge to the individual HSA accountholder or the employer for UMB to post an ACH credit.

To make an ACH contribution to an employee’s HSA, the employer must obtain written authorization from the employee to make the contribution, as required by the ACH Rules (similar to a direct deposit authorization). The authorization should include the employee’s HSA account number, the contribution amount, and the frequency. The UMB Bank transit routing number is 101000695.

     Employer Checks
The employer can elect to bundle contributions from all HSA plan participants and send in one contribution check to UMB with the Employer. Click here for a bundled employer contributions form. This form provides a listing which details how to apply the check to the individual HSA accounts. This listing needs to include the following information:

• Employee name
• HSA account number
• Individual contribution amount
• Designation of contribution year

The bundled employer contributions form must be used for completing these contributions. If a list is received without HSA account numbers for each individual, or the list does not balance to the amount of the check, both the check and list will be returned to the employer for revision.

     Wire Transfers—Employer Payroll Deductions
Employers can initiate a wire transfer directly to the employee’s HSA account from the employer payroll account. The contribution would be posted directly to the employee’s HSA account as a current year contribution. Wire transfer charges would apply to the HSA accountholder for an inbound wire transfer (these charges are disclosed in the UMB HSA Deposit Account Terms and Conditions Document). Additionally, the employer may incur fees from their bank for originating the wire transfer for the contribution.

Employee Initiated Contributions

     Personal Check
The employee may send in a contribution, along with a deposit slip, directly to UMB. (The UMB address is provided on the deposit slip.) This process allows the employee to complete any exception transactions such as re-depositing any disbursements they had requested in error. The deposit slip includes check boxes in order for the employee to specify exception contributions (such as prior-year, rollovers and re-deposits). Contribution deposits will be credited on the date of receipt. If these deposited items are returned, the contribution will be reversed, and the employee will be assessed a returned deposited item charge (these charges are disclosed in the UMB HSA Deposit Account Terms and Conditions Document.)

To avoid having a contribution returned, the employee should make sure all information is included on the deposit slip, including their 10-digit HSA account number.

     ACH Process
The employee may have their employer send contributions directly to their individual HSA account by having their employer set up a payroll deduction. The HSA account number and the UMB transit routing number (101000695) will be provided in an account identification letter sent to the employee after the HSA account has been opened. The employee will need to give this information to their employer to set up the payroll deduction. Contributions made from payroll deductions would post on the effective date as provided by the originator. These contributions would be posted to the employee’s HSA account as current year contributions.

The employee can also contact their bank to set up a recurring ACH transfer from their personal bank account to their UMB HSA account through their bank’s bill payment service.

To establish either of these ACH processes, the employee needs to provide the following information to their employer or bank:

• HSA account number
• Contribution amount
• Contribution frequency
• UMB transit routing number – 101000695

     Employer Checks
Your employer can elect to bundle contributions from all HSA plan participants and send in one contribution check to UMB. If your employer has chosen this method of contribution, contact your benefits administrator for instructions as to how to make a contribution. You will need to supply your employer with the following information:

• HSA account number
• Contribution amount
• Contribution frequency
• UMB transit routing number – 101000695

     Rollover Contributions
If the employee has funds in another HSA they can transfer them to UMB.

Important Note: California tax code does not provide the same tax treatment for Health Savings Accounts (HSA) as does the Federal tax code. Therefore, please be aware that a rollover from a Medical Savings Account (MSA) will be considered a non-medically related distribution, subject to penalty and income tax.