(with an HSA)
You may have questions about how Medical Plan Option C with an HSA works.
Here's information to help you understand if it's the right choice for you.
Option C has the lowest paycheck contribution rates and comes with a Health Savings Account (HSA). While Option C has the highest annual deductible and out-of-pocket-maximum amounts, the HSA can be used to offset eligible health care expenses — and the money in the HSA is yours to use now or in the future, even if you leave the Firm or retire.
The money you contribute goes in before taxes.
Your money can grow tax-free.
You don't pay taxes on the withdrawals when you use them for eligible health care expenses.
Any unused HSA funds roll over from year to year and earn interest. Once your balance reaches $500, you can also invest HSA funds over that amount, choosing from a range of investment options.
If you leave the Firm or retire, your HSA funds are yours to keep and use whenever you need them.
Consider opening a Limited Purpose Flexible Spending Account for even greater tax savings on dental and vision expenses. A Limited Purpose FSA is available only to members enrolled in Option C.
Options A, B and C all use the same network of doctors and cover the same health care services through either Cigna or UnitedHealthcare.
You contribute money to your HSA to help pay for care. Contributions come out of each paycheck, tax-free.
You either use your HSA funds or pay out of pocket until you spend your deductible amount ($2,300 for individual, $4,600 for family in 2020).
After you reach your deductible, the Firm's Medical Plan starts paying a percentage of the cost of care, called coinsurance. If you still have money in your HSA, you can use those HSA funds to pay your share.
Once you reach your annual out-of-pocket maximum, the plan pays 100% of your costs for the rest of the plan year.
If you don't have enough funds in your HSA to cover the full bill when you go to the doctor, you may adjust your paycheck contributions* or make a one-time contribution to pay for the expense with before-tax dollars — which may save you 25% to 40%, depending on your tax bracket.**
*Paycheck contributions are made on a before-tax basis: Any lump-sum contributions will be treated as an after-tax deduction on your federal taxes. Note: If you make a lump-sum contribution, no taxes are withheld and you will have to pay FICA taxes.
**If you adjust your contributions or make a lump-sum contribution, ensure your annual HSA contributions don't exceed the IRS annual limit.
You can use HSA funds to pay for eligible health care expenses for you and your tax dependents, such as:
When you open your HSA, you'll receive a debit card you can use to pay for care, so you don't have to submit receipts for eligible HSA expenses, unlike an FSA.*
*You should keep your receipts in case you're ever audited by the IRS.
There is no time limit to reimburse yourself from your HSA. You can pay yourself for eligible expenses incurred when you retire years later, which may allow you to earn more interest over time.
Please watch this important video on your 2016 Morgan Stanley Benefits.