What you need to know
Health Savings Accounts, or HSAs, are like personal savings accounts that are tax-free as long as you use the money to pay medical, dental, vision, and prescription expenses. You control the money in your HSA. The funds can be used to pay current eligible health care expenses, or you can invest your money to use later, such as during retirement.
5 ways you win with an HSA
- BAE Systems will contribute to your HSA, even if you don’t. If you enroll in HSA Standard or HSA Select, and you are eligible to contribute to an HSA, BAE Systems will contribute to your HSA too. The company contribution varies depending on if you only enroll yourself in medical benefits with individual coverage, or you cover your dependents through family coverage.
- It’s a tax-savings trifecta! With an HSA, you save on taxes three ways:
- The money you contribute to your HSA is made on a pretax basis, before federal and state1 taxes are calculated. Maximum contribution amounts are based on IRS limits set each year.
- Your HSA account can grow tax-free.
- You don’t pay taxes on money you take out of your HSA to pay for qualified health care expenses.
- Your HSA belongs to you – always. Your account balance is yours to keep and use. It remains yours even if you leave BAE Systems, and there’s no use-it-or-lose-it rule like the one with FSAs. As a result, you can use the HSA to save for future health expenses, including those in retirement.
- Catch up on savings! If you are age 55 or older, you can save even more in your HSA. The IRS also sets annual limits for additional contributions for this age group.
- Once your HSA account balance reaches $1,000, you can invest your money in a variety of investment options to help your savings grow.
1 In California and New Jersey, HSA contributions are subject to state tax.
Are you eligible to contribute to an HSA?
If any of these situations apply to you, you are not eligible to contribute to an HSA that year:
- I will be covered by Medicare or TRICARE.
- I will be covered by another non-high deductible plan (a plan with a deductible less than $1,500 for individuals and $3,000 for families in 2023, or less than $1,600 / $3,200 in 2024, respectively).
- I will receive reimbursements for medical expenses from someone else’s general purpose flexible spending account.
- I will be claimed as a dependent on someone else’s tax return.
If you are not eligible to contribute to an HSA, you cannot receive the BAE Systems HSA employer contribution. However, you are eligible to enroll in a Health Care Flexible Spending Account (FSA). This means you will be able to use your FSA funds for qualified expenses such as medical, dental, vision, and prescriptions.
Special note: You are still eligible to contribute to an HSA if you are not covered by Medicare but your spouse is.
Growing your HSA
If you’re enrolled in the HSA Standard or HSA Select plan and you are eligible to contribute to an HSA, BAE Systems will contribute to your HSA too.
The company contribution amounts vary depending on if you enroll just yourself in medical benefits with individual coverage, or if you cover your dependents through family coverage. The company funds will be deposited to your HSA in January, and no action is required to receive this annual company funding.
No adjustments are made to company contributions if you experience a qualified life event or transfer among BAE Systems businesses during a calendar year. If you are new to one of our HSA plans, an HSA account will be opened for you if you don’t already have one.
Note: New hires starting on or after October 1, will not receive a company contribution for the initial plan year. However, if you remain enrolled in an eligible HSA plan, your applicable company contribution will be deposited in your HSA account at the beginning of the following plan year. For all other employees, the full amount of BAE Systems contribution will be deposited in your HSA within two to three weeks of your coverage effective date or enrollment date, whichever is later.
You can add your own pretax1 contributions to your account, too. The IRS limits how much can be contributed to your account each year from all sources – this includes any company contribution. Keep in mind that you can change your personal HSA contribution amounts throughout the year as long as you don’t exceed the annual IRS limits. If you are or will turn age 55 during the year, you can contribute an additional amount as allowed by the IRS for this age group. Here's a look at the 2023 and 2024 contribution amounts and IRS limits.
|Pretax1 Contributions Amounts Per IRS||2023 Plan Year||2024 Plan Year|
|Your maximum contribution||$3,100 |
|BAE Systems contribution2||$750 |
|IRS maximum allowable contributions from all sources||$3,850 |
|Age 55+: Your additional allowable contribution||$1,000||$1,000|
|Age 55+: Your pretax maximum contribution||$4,100 |
|Age 55+: BAE Systems contribution2||$750 |
|Age 55+: IRS maximum allowable contributions from all sources||$4,850 |
1 HSA contributions and earnings are not subject to federal taxes; however, a few states treat the contributions as taxable income. Those employees residing in California and New Jersey will have applicable state taxes withheld from their contributions each pay period. Employer contributions to the HSA are also subject to state taxes in these two states. The HSA employer contribution for employees residing in California or New Jersey will be taxed in full within two months of the contribution being made. Note: If you are married and your spouse is also enrolled in an HSA, your combined HSA contributions may not exceed IRS limits.
2 The full amount of BAE Systems contribution will be deposited in your HSA within two to three weeks of your coverage effective date or enrollment date, whichever is later.
Using your HSA
Manage your account online through Smart-Choice Accounts, a website you access through BenefitsNavigator that lets you check your balance, submit a claim for reimbursement, check claim reimbursement status, etc., online at any time.
Pay for expenses directly from your HSA with your Smart-Choice card (a debit card) that you’ll receive shortly after enrolling. After receiving medical services, you will receive an Explanation of Benefits from Cigna showing the portion of the provider’s bill that you’re responsible for paying. You can use your Smart-Choice card to make a payment directly from your HSA to the provider.
Tip: Keep receipts for any expenses you pay with your HSA. A good practice is to store them with the same year’s tax return information, in case you are audited by the IRS.
A few more details about HSAs
Restrictions on Flexible Spending Accounts (FSA) participation
While enrolled in an HSA-compatible plan, you can participate only in a Limited Purpose Health Care FSA that can be used to pay only dental and vision expenses, not medical expenses.
Not eligible to contribute to an HSA?
If you plan to enroll or are currently enrolled in Medicare, or enrolled in TRICARE, you are not eligible to contribute to an HSA. However, you are eligible to enroll in a full Health Care Flexible Spending Account (FSA) instead of a Limited Purpose FSA. This means that you will be able to use your FSA funds for qualified expenses such as medical, dental, vision, and prescriptions.
Make sure you use your HSA only for qualified expenses for you and eligible family members. If you use your HSA to pay nonqualified expenses, you’ll pay taxes plus an additional 20% penalty if you’re under age 65.
You can use your HSA balance to pay for expenses for yourself and certain family members (for example, a child who can be claimed as a dependent on your tax return). Keep in mind that while you can cover adult children (up to age 26) on your health plan, they may not be considered dependents for HSA purposes, and you might not be able to use your HSA balance dollars to pay for services provided to that child.
Withdrawals after age 65
After you reach age 65 or become disabled, you may withdraw money from your HSA for nonmedical purposes without penalty. These withdrawals will be subject to normal income taxes.
The HSA is not part of BAE Systems employer-sponsored benefit plans and is not subject to the Employee Retirement Income Security Act of 1974 (ERISA). The HSA is provided to you solely for your convenience.