7 CITY OF LAMAR Under Age 55 Age 55 and Older Coverage Tier Employee Only Employee + 1 Family Employee Only Employee + 1 Family IRS Maximum $4,300 $8,550 $8,550 $5,300 $9,550 $9,550 Advantages of the High Deductible Health Plan (HDHP) with an HSA The HDHP option is designed to encourage you to be more conscientious of your healthcare expenditures. It also offers a number of special features, for example: • It has a lower monthly payroll contribution • You have access to a Health Savings Account (HSA) that allows you to put aside money, tax-free, to pay for eligible medical expenses. You choose when to use the money in your HSA account. It rolls over from year to year, allowing the balance to increase. Setting Up an HSA Account You can open and contribute to an HSA if you: 1. Are covered by an HSA-qualified health plan (HDHP); 2. Are not covered by other health insurance (with some exceptions); 3. Are not enrolled in Medicare; 4. Are not eligible to be claimed as a dependent on another person’s tax return; 5. Have not received health benefits from the Veterans Administration with the exception of services for a “service related disability” or an Indian Health Services facility within the last three months; and 6. Are not covered by your own or your spouse’s Healthcare Flexible Spending Account. Contributing to Your HSA Health Savings Accounts have a triple tax advantage: • Contribute tax-free • Invest tax-free • Make withdrawals for eligible medical expenses, or for any use after age 65 tax-free Using Your HSA Funds Money you use from your HSA to pay for qualified medical expenses is federally tax-free. If you use money for reasons other than qualified medical expenses before age 65, that money is taxable and subject to a 20 penalty. This isn’t a complete list of rules and requirements for HSAs. More info can be found in the publication 969 of the IRS, at www.irs.gov. HEALTH SAVINGS ACCOUNT If you enroll in the HDHP 2500 medical plan, you are eligible to contribute to a Health Savings Account. A Health Savings Account is an individually-owned, tax-advantaged account that you can use to pay for current or future IRS-qualified medical expenses. With a HSA, you’ll have the potential to build more savings for healthcare expenses or additional retirement savings through self-directed investment options. Your contribution amount cannot exceed the IRS maximum for HSA contributions during a calendar year. Below is a chart reflecting the IRS calendar year maximums for 2025: Special Considerations: 1. You CANNOT use HSA dollars on Domestic Partners unless they are your legal tax dependent. 2. Your adult children 19-26 MUST be a tax dependent to be eligible to use your HSA dollars for their expenses. If they are not tax dependents, they may open their own HSA and contribute up to the full family maximum.
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