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Thank your for your interest in learning more about High Deductible Health Plans (HDHP) with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA). Each health plan has unique features. For complete details refer to the individual plan brochure, available on the Federal Employees Health Benefits Program (FEHB) website.
For a quick comparison chart showing the differences between an HSA, an HRA, and a Health Care Flexible Spending Account (HCFSA), use the Comparison Chart for HSA, HRA and HCFSA .
To view all plans available in your area, use the OPM Tool to Compare Plans by ZIP Code
A High Deductible Health Plan (HDHP) is a health plan product that combines a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) with traditional medical coverage. It provides insurance coverage and a tax-advantaged way to help save for future medical expenses.
The HDHP/HSA or HRA gives you greater flexibility and discretion over how you use your health care dollars.
HDHPs have a higher annual deductible than traditional health plans. For 2015, an HDHP in the FEHB Program has a minimum annual deductible of $1,300 for Self Only coverage and $2,600 for Self and Family coverage (the deductible amount is indexed every year).
HDHPs in the FEHB Program have annual out-of-pocket limits which do not exceed $6,450 for Self coverage and $12,900 for Self and Family coverage.
Service delivery in the HDHP program within the FEHB Program may be offered with a: Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), or Point of Service (POS) plan.
The health plan determines eligibility for a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA).
Depending on the HDHP you elect, you may have the choice of using either in-network and out-of-network providers. Using in-network providers will save you money. With the exception of preventive care, the annual deductible must be met before the plan benefits are paid.
In-network preventive care services are provided at no cost.
If your medical expenses are generally limited to preventive care, you should definitely consider an HDHP, especially if you also have the ability to make additional voluntary contributions to your HSA to accelerate the accumulation of funds for future medical expenses. If your in-network medical expenses would trigger the catastrophic limit, you may also want to consider an HDHP, if the nature of those expenses is such that you continue to pay out-of-pocket costs in your traditional plan even after you hit your traditional plan's lower catastrophic limit. This can happen because traditional plans may exclude drug and other costs from their catastrophic limits but an HDHP cannot. With an HDHP, once you hit the catastrophic limit, there is no out-of-pocket expense for covered in-network services. If you have significant medical expenses that do not approach catastrophic limits, you are probably better off in a traditional plan.
In addition, there are a number of steps FEHB members should take to assist them in making an informed decision as to whether or not an HDHP/HSA or HRA is the right health program option for them.
You own your account, so you keep your HSA, even if you change health plans or leave Federal Government. However, if your HSA was fully funded and you leave the HDHP during the year, then you will have to withdraw some of the contribution from the account. You must pay income tax on your excess contributions and income tax on any earnings of the excess contribution. There is no 20% penalty on excess contributions.
If you no longer are enrolled in an HDHP you are not eligible to make contributions to your HSA, but you may request withdrawals for qualified medical expenses.
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The IRS sets the maximum contribution limits. The maximum annual contribution limit for HDHPs in the FEHB Program are $3,350 for Self Only coverage and $6,650 for Self and Family coverage.
If your HDHP was effective on January 1st, the total amount you can contribute to your account is the maximum contribution amount set by the IRS.
If your HDHP is effective after the first day of the month, you may make or receive a full year's contribution to your HSA for partial year coverage as long as you maintain your HDHP enrollment for 12 months. If enrollment is less than 12 months, the tax benefit is lost and a 10% penalty is imposed. There is an exception for death or disability. Previously, enrollees' contributions were pro-rated based on the number of full months their HDHP was in effect.
Catch-up contributions are only available to those between the ages 55 and 65. The chart below indicates the amounts you can contribute to your HSA under catch-up contributions, without being penalized. If you are covered by your HSA for the entire year, you may deposit the entire catch-up amount starting with the year you turn 55. In the year you enroll in Medicare, you must pro-rate your catch-up contribution for the number of months you had your HSA, prior to the month your Medicare enrollment is effective.
In 2013 and subsequent years, an additional $1,000 contribution is allowed.
Your HSA can be used to pay for "qualified medical expenses," as defined by IRS Code 213(d). These expenses include, but are not limited to, medical plan deductibles, diagnostic services covered by your plan, long-term care insurance premiums, and health insurance premiums if you are receiving Federal unemployment compensation, LASIK surgery and some nursing services. Please note only some insurance premiums are considered "qualified medical expenses."
When you become Medicare enrolled you can use the account to purchase any health insurance other than a Medigap policy. You may not, however, continue to make contributions to your HSA once you are Medicare enrolled.
For the complete list of IRS-allowable expenses, you can request a copy of IRS Publication 502 by calling 1-800-829-3676, or visit the IRS website at www.irs.gov and select "Forms and Publications." Please note, however, while health insurance premiums are listed as an allowable expense they are not reimbursable from HSAs, unless you are receiving Federal unemployment compensation.
Tax benefits are three-fold: your additional voluntary contributions are pre-tax or tax-deductible*, interest earned is tax-free, and HSA distributions are tax-free if they are used to pay for qualified medical expenses.
* Contributions are tax-deductible on your Federal tax return. Some states do not recognize contributions to an HSA as deduction. Your own HSA contributions are either tax-deductible or pre-tax (if made by payroll deduction). See IRS Publication 969. You should consult your tax advisor.
Expenses are limited to eligible dental and vision care services/products that meet the IRS definition of medical care. Eligible expenses include your out-of-pocket costs for such services/products as:
Vision correction procedures
Dental and vision care expenses are the only reimbursable expenses covered under the FSAFEDS LEX HCFSA. Cosmetic services even if dental or vision related are not eligible expenses. All of the other expenses normally eligible under a "general" health care flexible spending account are NOT eligible under a LEX HCFSA.