This article was updated in 2022 with information for the 2023 plan year.
As you think about the best benefits options for you and your family for the 2023 plan year, we encourage eligible employees to look at the Consumer Driven Health Plan (CDHP) with Health Savings Account (HSA) option. If you do not anticipate having a lot of health care needs for the 2023 plan year and are looking for a sound strategy to save for your retirement health care, this plan may be the most cost-effective option for you.
This health plan is currently only available to faculty, academic staff, executive management, POAM, and non-union support staff with an employment percentage equal to or greater than 50% and an appointment for nine months or more. You may also enroll your benefits-eligible dependents.
About the Consumer Driven Health Plan
While you pay a deductible ($2,000/single and $4,000/ family) first before the plan pays medical and prescription benefits, preventive care and certain generic medications for chronic conditions (asthma, cholesterol, diabetes, and anti-hypertensives) are 100% covered with no deductible or co-pays when using an in-network provider. Review the Health Plan Coverage Summary in the applicable Open Enrollment guide to anticipate your annual costs under this plan – you may find that most of your annual medical costs are 100% covered:
This plan limits the maximum amount you pay for any covered services in a year to $3,000/single and $6,000/ family using in-network providers. After expenses reach this amount, you do not have to pay for any other health care costs for covered services, including prescription drugs.
About the Health Savings Account
Along with the CDHP, you should enroll for the HSA— not to be confused with the Health Care Flexible Spending Account (HCFSA)—during Open Enrollment in October. MSU contributes up to $750 to the HSA each year (prorated by employment percentage) and you may add funds to the HSA tax-free. You can use these HSA funds to pay for any eligible medical expenses or doctor visits you do incur.
Note: If you do not enroll in the HSA during Open Enrollment, you will lose MSU’s contribution.
These contributions are triple tax-free! You make contributions pre-tax, your account balance earns interest tax-free, and your distributions are tax-free if they are used for eligible medical expenses. Do you have an existing HSA from a previous employer? You can add those funds into your new HSA. The money in the HSA is yours to take with you – even if you leave MSU for a different employer or retire. In fact, investing in your HSA now to use in your retirement is a sound strategy to fund your medical expenses in retirement.
How much should you contribute to an HSA?
It can be difficult to plan for health-related expenses, especially when taking unforeseen expenses into consideration. With HSA’s, however, figuring out how much to contribute is rather simple — as much as you can within IRS contribution limits.
The current 2022 IRS contribution limits are:
- $3,650 for single
- $7,300 for family
The 2023 plan year IRS contribution limits are:
- $3,850 for single
- $7,750 for family
- And those 55 or older can contribute even more
Remember, any funds you don’t use immediately earn interest tax-free and can be used by you and your dependents for medical expenses incurred in retirement.
It might make you feel uneasy to contribute as much as you can, but when you consider the tax savings and retirement benefits, it feels more realistic.
Questions? Learn more about the CDHP with HSA plan on the HR website. Also, consider participating in the MSU Benefits Fair or an HR Site Lab in during Open Enrollment in October to ask us questions about this health care plan. Please note: the HR building is not available for drop-ins.
The Solutions Center is available to answer questions via phone or email. In-person assistance is available by appointment only. Email:SolutionsCenter@hr.msu.edu
Phone: 517-353-4434
Toll Free: 800-353-4434
