Health Savings Account (HSA)


If you have an existing HSA account with Optum Bank, CLICK HERE for important information and instructions on the HSA transition process.


COVID-19 Update
The CARES Act, signed into law on March 27, 2020, expands and broadens the use of FSAs/HSAs/HRAs for certain types of healthcare products and services, including:

  • The inclusion of additional over-the-counter (OTC) items as qualified medical expenses, specifically menstrual care products. This change affects any purchases made after December 31, 2019 and is a permanent change to the list of eligible expense items that can be purchased with FSA/HSA/HRA funds.
  • Relaxation of the rules related to purchases of over-the-counter (OTC) medications, so that items such as non-prescription cold medications, antihistamines, antacids, anti-inflammatories, and other items can now be purchased with FSA/HSA/HRA funds. The CARES act essentially reverses the impact of the 2010 Affordable Care Act provisions which restricted the use of FSAs and HSAs to the purchase of prescription medications.

Please visit the News & Announcements page for the latest updates and guidance regarding COVID-19.


What Is an HSA?

An HSA is a tax-advantaged account that allows you to save money for qualified medical expenses for this year and the future. To qualify for an HSA, you must be enrolled in a high-deductible health plan – i.e., Anchor Choice Plan with HSA.

Effective January 1, 2020, your HSA is managed by Blue Cross & Blue Shield of Rhode Island (BCBSRI). Watch the introductory video, read the HSA FAQ, and review the details below to learn more about how an HSA works with the Anchor Choice Plan.

Why Does an HSA Help Me Save?

  1. You get a discount on your health care expenses
    When you use your HSA, it's like using a 25–35 percent coupon for your health care expenses* since HSA contributions are tax-deductible. For example, suppose you recently visited your dentist and received a $400 bill. When you pay with your HSA, you are saving between $100 and $140 dollars based on your tax rate.
  2. The State puts money towards your HSA
    The State contributes up to $1,500/$3,000 for individual/family coverage each plan year**, and you can make pre-tax payroll deduction contributions as well.
  3. TRIPLE tax advantage
    An HSA is one of the only taxings vehicle that allows you to make payroll contributions tax-free, grow your savings tax-free (interest and investment earnings are not taxed), and withdraw funds income tax-free for qualified medical expenses.
  4. You get to keep the money in your HSA, no matter what
    HSA funds not spent during the plan year carry over to subsequent plan years, and they are yours to keep even if you change jobs or health plans, or retire.
  5. You can invest your HSA dollars (tax-free!)
    Once your HSA reaches the investment threshold of $1,000***, you may choose to invest a portion of your HSA dollars in mutual funds. Remember – any investment earnings such as interest or dividends are income tax-free.
  6. You can use your HSA for anyone in your family
    You can use your HSA to pay for the qualified medical expenses of anyone you claim on your taxes, even if you're only enrolled with single coverage. This is a great way to plan for unexpected medical expenses for the whole family.

* Assuming a 25–35 percent combined payroll and income tax rate.
** Contributions are made biannually with half deposited on January 1 and the other half deposited on July 1. The State’s HSA contributions are NOT pro-rated for employees that enroll after those dates.
*** Effective January 1, 2020.


HSA Details

On January 1, 2020, Blue Cross & Blue Shield of Rhode Island (BCBSRI) will become the new State medical plan and HSA administrator.

If you have an existing HSA account with Optum Bank, CLICK HERE for important information and instructions on the HSA transition process.

In order to open and contribute to an HSA, you must meet all of the following conditions:

  • You must be covered by an HSA-qualified high deductible health plan (HDHP) – i.e., Anchor Choie Plan with HSA
  • You must not be covered by any other health plan that is not a HDHP (this includes a general purpose health care FSA);
  • You must not be enrolled in Medicare, TRICARE or TRICARE for Life;
  • You must not be claimed as a dependent on someone else’s tax return; and
  • You must not have not received VA benefits within the past three months, except for preventive care (this exclusion does not apply if you are a veteran with a disability rating from the VA).
Contribution Limits

The IRS sets annual limits on how much you and your employer can contribute to your HSA. If you exceed these limits, you may be liable for IRS tax penalties unless you remove excess contributions before you file your taxes. (If you need to remove excess contributions, please contact BCBSRI.)

2019 Limits* 2020 Limits*
Individual coverage $3,500 $3,550
Family coverage $7,000 $7,100
Additional catch-up contribution for age 55 and over $1,000 $1,000

* Includes any contribution from the State. For example, if you have individual coverage for 2020 and the State contributed $1,500 to your HSA, you have $3,550 - $1,500 = $2,050 available to contribute on your own.

Did you know? If you do not contribute up to the max for the tax year, you can make additional contributions up until the tax filing deadline in the following year. Coordinate additional contributions at bcbsri.com.

Opening and Contributing to Your HSA

The more you contribute to your HSA today, the more you have for health expenses tomorrow and retirement in the future. Know the limits that apply to you and consider contributing up to the max.

  1. Opening your HSA
    If you enroll in the Anchor Choice Plan with HSA, you will automatically have an HSA opened with UMB Bank, the custodian of the BCBSRI HSA.
  2. Contributing to your HSA
    The State contributes up to $1,500/$3,000 for individual/family coverage each plan year.* To make additional voluntary contributions, please complete and submit the HSA Employee Payroll Deduction Authorization Form. You may adjust your HSA contribution amount at any time by submitting a new form.

* Contributions are made biannually with half deposited on January 1 and the other half deposited on July 1. The State’s HSA contributions are not pro-rated for employees that enroll after those dates.

How Much Should You Save?

You can get a personalized estimate of how much you may need to save for medical expenses by talking to ALEX!

Managing Your HSA Contributions

NEW! Starting January 1, 2020, download Blue Solution, the dedicated app for your BCBSRI HSA. With just one touch you can access your HSA account anywhere time.

Blue Solution allows you to:

  • Check your HSA account balance and all transactions
  • Pay a provider or make a withdrawal to reimburse yourself for medical bills
  • Snap a photo of receipts and submit a claim
  • Add a contribution from your checking or savings account
  • Scan a bar code to see if something is a qualified medical expense
  • Use the savings calculator to make informed spending choices
Grow Your HSA Dollars

Once your HSA reaches the investment threshold of $1,000*, you may choose to invest a portion of your HSA dollars in mutual funds. You can choose from a wide variety of mutual funds, and any investment earnings such as interest or dividends are income tax-free.

To start investing or to manage your HSA funds, login to your account at bcbsri.com and click "Your HSA" for all the investment tools you'll need.

* Effective January 1, 2020.

Interest Rate

Not ready to invest your HSA funds? You can still earn the following interest rates on your non-invested HSA balance:

HSA Balance Annual Percentage Yield
(thru 12/31/2019)
Annual Percentage Yield
(effective 1/1/2020)
$0–$1999.99 0.05% 0.10%
$2,000.00–$4,999.99 0.10% 0.20%
$5,000.00–$14,999.99 0.20% 0.35%
$15,000.00 and over 0.40% 0.45%
Triple Tax Advantages

An HSA is a great way to save for qualified medical expenses because of it is one of the only savings vehicles that allows you to put money in tax-free, grow your savings tax-free (interest and investment earnings are not taxed), and take the money out income tax-free for qualified medical expenses.

Know Your HSA Tax Forms

There are three IRS forms you should be familiar with if you have an HSA:

  1. Form 8889 is filed with IRS Form 1040 of your federal income tax return to report your total HSA contributions and distributions for the tax year. You can get this form by logging in to your account at bcbsri.com and clicking "Your HSA".
  2. Form 1099-SA provides the total distributions that were made from your HSA during the year. If you had any distributions, BCBSRI will send you this form in January following your plan year. If you did not have any distributions, you will not receive this form.
  3. Form 5498-SA reports the total contributions made to your HSA for the tax year covered by the form. BCBSRI will submit this form directly to the IRS, as required by law; you do not need to file this form with your tax return. BCBSRI will send you a copy of this form in May following your plan year. These forms are also available online when you log in to your account at bcbsri.com and click on "Your HSA".
State Taxes

Contributions, account earnings/interest and distributions for qualified medical expenses are exempt from federal and RI state taxes. As these guidelines can change, it’s important to consult your tax or financial advisor for the latest information.

Know Your Qualified Medical Expenses

To take advantage of income tax-free spending/distributions, you must make sure your HSA funds are spent on qualified medical expenses. Any HSA funds used to pay for goods or services that are not qualified medical expenses are taxable income. And, if you are under age 65, they can be subject to an additional 20 percent tax penalty.

For a complete list of qualified medical expenses, see IRS Publication 502, Medical and Dental Expenses.

When you make purchases or pay bills with your HSA, be sure to keep your receipts in case of an IRS audit. You can easily upload images of your receipts online at bcbsri.com or via Blue Solutions, the dedicated app to your BCBSRI HSA.

Correcting Withdrawal Errors

If you mistakenly use your HSA for a non-qualified expense, you can return the funds to your HSA to avoid the penalty. Log in to your account at bcbsri.com, click "Your HSA" and download the Withdrawal Correction Form. BCBSRI must receive it by April 15 for any withdrawals made in error during the tax year.

Tools & Contacts

If you haven't already, review the HSA FAQ for detailed information about how your HSA works.

NEW! Starting January 1, 2020, download Blue Solution, the dedicated app for your BCBSRI HSA. With just one touch you can access your HSA account anywhere time. Blue Solution allows you to:

  • Check your HSA account balance and all transactions
  • Pay a provider or make a withdrawal to reimburse yourself for medical bills
  • Snap a photo of receipts and submit a claim
  • Add a contribution from your checking or savings account
  • Scan a bar code to see if something is a qualified medical expense
  • Use the savings calculator to make informed spending choices

If you have other questions or need further assistance regarding your HSA, please contact BCBSRI:

  • Call the State of Rhode Island Employee CARE Center:
    • (401) 429-2104 or 1-866-987-3705 (also available on the back of your BCBSRI medical ID card)
    • CARE Center hours are Monday–Friday, 8am–8pm and Saturday, 8am–12pm.
  • Visit your Blue StoreSM in East Providence, Lincoln and Warwick. Learn more at bcbsri.com/yourbluestore.
  • Stop by the BCBSRI mobile service unit at certain State locations to get information and speak with representatives. Check back here in early 2020 for when the mobile service unit will be visiting a State location near you.