A guide for high deductible health plans

The HDHPs combine comprehensive medical and prescription drug coverage with a tax-advantaged HSA. This combination gives you more control over how and where you spend your health care dollars. These plans have higher annual deductibles and lower employee contributions for coverage. You do not have to designate a primary care physician or get referrals to specialists. Stanford offers two HDHPs. 

Stanford Choice High Deductible Health Plan 

The Stanford Choice High Deductible Health Plan offers more comprehensive coverage than the ACA Basic HDHP, which means you’ll pay less out-of-pocket. Under this plan, if you elect an HSA (at least $0), Stanford contributes to your HSA each pay period to help offset out-of-pocket health care expenses.

Employees outside of California or outside of the Kaiser HMO service area may enroll in the Out of Area Stanford Choice High Deductible Health Plan, which is the same health plan at a lower employee contribution.

ACA Basic HDHP

The ACA Basic HDHP has higher out-of-pocket costs than the Stanford Choice High Deductible Health Plan. This plan option meets the minimum essential coverage requirements under the Affordable Care Act (ACA) federal health care reform. 

Stanford does not contribute to your HSA if you elect the ACA Basic HDHP. 

Preventive Care

You pay $0 for covered in-network services, such as preventive care visits, immunizations, and screenings. Out-of-network preventive care is not covered.

Annual Deductible

You pay the cost of medical and prescription drug expenses until you meet the full annual deductible.

• Stanford Choice High Deductible Health Plan: $1,750/$3,500 combined in-network and out-of-network
• ACA Basic HDHP: In-network: $3,250/$6,500/Out-of-network: $6,500/$13,000

Coinsurance

The plan pays the majority of the cost until the out-of-pocket maximum is met.

• Stanford Choice High Deductible Health Plan: Plan pays 80% in-network/60% out-of-network
• ACA Basic HDHP: Plan pays 60% in-network/50% out-of-network

Out-of-Pocket Maximum

This is the most you will pay in a year. Once the out-of-pocket maximum is met, the plan pays 100% of eligible expenses.

• Stanford Choice High Deductible Health Plan: $3,750/$7,500 combined in-network and out-of-network
• ACA Basic HDHP: In-network: $6,500/$13,000/Out-of-network: $13,000/$26,000

Health Savings Account (HSA)

HSA dollars can be used to pay for eligible health care expenses. Stanford contributes $48 employee-only coverage/$98 for employee + dependents coverage each pay period if you enroll in the Stanford Choice High Deductible Health Plan ($1,152 employee-only coverage/$2,352 for employee + dependents coverage annually). You can make contributions by payroll deduction. To receive Stanford’s contribution, you must elect the HSA, even if you contribute $0.

Save for the Future

Because the plan pays 100% of your costs if you meet your out-of-pocket maximum, any leftover HSA funds will roll over to the next year to be used for future health care expenses.

Under the Stanford Choice High Deductible Health Plan and ACA Basic HDHP, you can visit the provider of your choice without a referral, but you will save money using in-network providers who have contracted agreements with Aetna.

In-Network Coverage

The Stanford Choice High Deductible Health Plan and ACA Basic HDHP, administered by Aetna, offers a nationwide network of providers including Stanford Health Care (SHC), Palo Alto Medical Foundation (PAMF)/Sutter Health, and University of California San Francisco (UCSF). Aetna has negotiated rates with in-network providers to ensure you receive high-quality care at a more affordable cost. In-network providers are not allowed to bill you more than the plan will reimburse for any service. Preventive care from in-network providers is covered at 100%.

Out-of-Network Coverage

The HDHPs will cover a portion of the cost when you use out-of-network providers, but you’ll pay more than if you stay in-network. Out-of-network doctors and facilities do not have negotiated rates with Aetna, which means they may charge more for your care than what the plan defines as reasonable and customary, and some of those costs may be passed on to you. This is known as balance billing. Keep in mind that preventive care from an out-of-network provider is not covered.

Finding In-Network Providers: If you enroll in either the Stanford Choice High Deductible Health Plan or ACA Basic HDHP, knowing how to find in-network providers who are accepting new patients is essential to receiving the care you need at the lowest cost. Contact Aetna Advocacy Services by calling 888-922-3862 or visiting the Aetna Choice POS II network webpage or the Aetna Open Access Select network webpage to identify in-network providers. If you have a health issue and would like a second opinion on treatment you can access Included Health's experts to review your case and provide an opinion.

Explanation of Benefits (EOB): When you receive medical care, Aetna will send you an explanation of benefits (EOB) to inform you that a claim has been filed. The EOB is not a bill, but it has important information about the services you received, including the type of service, date received, amount billed by your provider, the amount paid by your insurance, amount of the claim that counts toward your deductible, and the amount you can expect to owe to the provider. Be sure to review your EOB to ensure you understand how your claim is being processed and your costs. You can choose to receive EOBs in the mail or digitally through Aetna’s member site. If you’re unsure whether you are receiving an EOB or a bill, reach out to Aetna’s Advocacy Services for help. 

Your Costs: Employee Contributions and Care 

Your total costs include your employee contributions — what you pay for medical coverage — and what you pay out-of-pocket for services. Under the Stanford Choice High Deductible Health Plan, your out-of-pocket costs may be higher at the beginning of the plan year until you meet your deductible and accumulate your Stanford HSA contributions, which you can use to offset the deductible and other out of pocket expenses, but lower over the year depending on how much you access care. 

*Up to $3,000 of an individual’s claims (you or one of your covered dependents) will apply toward the family deductible. Once that threshold is met, the plan will begin sharing the costs for that individual.

**Prior authorization is required for select formulary and non-formulary drugs. Failure to obtain prior authorization may result in non-payment of benefits. Certain preventive medications are not subject to the deductible, and you will only be responsible for paying coinsurance.

If you have unexpected medical costs and experience a financial hardship, you may apply for assistance with Stanford’s financial support programs, such as the Employee Emergency Assistance Fund, which can help you cover up to $5,000 of your out-of-pocket health care expenses.

An HSA is a unique tax-advantaged account that you can use to pay for current and future eligible health care expenses, such as doctor and hospital visits, deductibles, coinsurance, prescriptions, vision care and dental care for yourself and your eligible dependents. Contributions to your HSA are made pre-tax through payroll deductions. 

Eligible Health Care Expenses

Your tax-free HSA dollars can be used to pay for qualified health care expenses as defined by the IRS, such as deductibles and coinsurance. A qualified health care expense helps maintain your health and that of your family, including:

• Doctor and hospital visits
• Prescription medications
• Medical equipment
• Dental care (basic services, major services, orthodontia)
• Vision care (exams, glasses, contacts)
• Expenses in retirement, including your costs for Medicare Part A and Part B

For a complete listing of eligible expenses, visit IRS Publication 502.

HSA Benefits

Your HSA also gives you the following benefits:

• Stanford Contribution: If you enroll in the Stanford Choice High Deductible Health Plan and establish an HSA with Fidelity, Stanford contributes to your HSA each pay period to help offset health care expenses: $1,152 for employee-only coverage/$2,352 for employee + dependents coverage.
• Federal Tax Savings*: All contributions, earnings, and withdrawals are excluded from federal income tax and FICA (Social Security and Medicare). 
• Flexibility: You can change or stop your contributions any time throughout the year.
• Ownership: Your HSA is yours to keep, even if you leave Stanford or retire. HSA balances roll over yearly; there’s no “use it or lose it” policy.
• Investment Options: HSA funds can be invested and earn interest tax-free.**

*State taxes apply in CA and NJ

**State taxes on earnings apply in TN and NH

Investment Options

Enrolling in your HSA through Fidelity offers a variety of investment options:

• Stocks, bonds, and mutual funds to select from (trading fees may apply)
• Investments can be allocated into one fund or multiple funds
• Online trading 
• Track balances online or with convenient monthly statements

Keep in mind, you cannot use invested funds to pay for your qualified health care expenses. You must transfer the money out of your investments and back into your HSA before you can pay for expenses.

HSA Contributions

Your HSA is funded by Stanford (if enrolled in the Stanford Choice High Deductible Health Plan) and through your contributions. You may elect to contribute funds to your HSA through payroll deductions; your contribution combined with Stanford’s count toward annual IRS limits. 

*Stanford’s contributions are pro-rated for all mid-year HSA enrollments. 

Are you age 55 or older?

You can contribute an additional $1,000 per year as a catch-up contribution if you are eligible to contribute to an HSA. 

Take Action to Receive Stanford’s HSA Contribution: When you enroll in the Stanford Choice High Deductible Health Plan, you must elect to contribute to your HSA — at least $0 — to receive Stanford’s contribution. Stanford allows you to make a lump-sum contribution for the year from your first paycheck in January. Call the University HR Service Team for assistance.

How to Pay for Qualified Health Care Expenses

When using your HSA to pay for eligible expenses, you have two options:

• Debit Card: Use the Fidelity debit card. You can also get cash at ATMs to reimburse yourself for qualified expenses paid with personal funds. 
• Online Bill Pay: Pay medical expenses directly from your HSA. Monitor, manage, and schedule payments at fidelity.com. Payments can be scheduled on a one-time or recurring basis.

Be sure to save your receipts in case the IRS asks you to show proof of your expenditures.

Using HSA Funds for Other Expenses: Your HSA funds may only be used for eligible health care expenses. If you use your HSA for non-qualified expenses, the distribution will be taxable, and a 20% penalty will apply if you are under age 65. After age 65, funds can be withdrawn for any purpose without penalty, but the amounts withdrawn will be taxable as ordinary income. It is important to keep records of your expenses because you must validate that expenses are qualified in the event of an IRS audit. Track your expenses on fidelity.com.

Already Have an HSA? To take advantage of Stanford’s contribution (if enrolled in the Stanford Choice High Deductible Health Plan), you must first open an account with Fidelity. If you have another HSA, you may transfer your funds to your Fidelity account or maintain a separate account. Remember that the total amount you contribute to all of your HSAs in a tax year, plus all employer contributions, cannot exceed the annual IRS limit.

Saving for the Future

An HSA is a valuable tool in planning for retirement. According to the 2022 Fidelity Retiree Health Care Cost Estimate, the average retired couple at age 65 can expect to spend around $315,000 on health care expenses in retirement. Because HSA funds never expire and can be used to pay Medicare premiums and other health care costs, participating in an HSA can help you build a nest egg for your future. 

HSA or Health Care FSA: What’s the Difference?

While both the HSA and health care FSA allow you to pay for health care expenses with tax-free dollars, there are some differences in how these accounts work. You cannot contribute to both the HSA and health care FSA.

*If you enroll in one of the HDHPs, you may only contribute to the health care FSA if you do not contribute to the HSA.

Jump to a scenario:

• Low Health Care Use
• Pregnancy
• Accident

• Chronic Condition

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Scenario: Low Health Care Use
Miguel is healthy and rarely visits the doctor, other than his annual preventive visits. He only sees his primary care physician (PCP) once for a non-preventive visit and fills a generic prescription.

Miguel’s Total Annual Expenses

Total Medical Claim Cost: $170 | Coverage Tier: Employee Only

Breaking Down the Example

This example is an estimate of the annual costs Miguel will incur and makes the following assumptions:

• Throughout the year, Miguel only uses his medical coverage for a PCP visit and generic prescription. 
• Even if he makes a $0 HSA election during Open Enrollment, Miguel will receive Stanford’s HSA contribution for the full 12 months. 
• Miguel would be able to use the HSA funds for Stanford for his medical and prescription costs and keep $982 in his account for next year.

Scenario: Pregnancy
Martha is having a baby in September. She visits the doctor for prenatal care and diagnostic tests. After a full-term pregnancy, she has a natural (non-caesarian) delivery in an in-network hospital. Martha can expect to pay for her in-network prenatal care, delivery, and postnatal care, including OB-GYN appointments, pharmacy prescriptions, and ancillary services associated with a typical pregnancy.

Martha’s Total Annual Expenses 

Total Medical Claim Cost: $28,760 | Coverage Tier: Employee Only

Breaking Down the Example

This example is an estimate of the annual costs Martha will incur for her pregnancy and makes the following assumptions:

• Martha does not add her newborn to her coverage (the child is added to her spouse’s plan), so she will remain on employee-only coverage for the entire plan year. 
• Throughout the year, Martha expects to have six visits with her OB-GYN, including associated imaging, one PCP visit and six generic prescriptions.
• She will meet her out-of-pocket maximum, which means any other in-network medical expenses she has will be covered 100% for the rest of the plan year.  
  • The out-of-pocket maximum of the Stanford Choice High Deductible Health Plan is $3,750 for employee-only coverage.
  • The out-of-pocket maximum of the ACA Basic HDHP is $6,500 for employee-only coverage.
• Even if she makes a $0 HSA election during Open Enrollment, Martha will receive Stanford’s HSA contribution for the full 12 months. 
• Martha can contribute to either the health care FSA if enrolled in the Kaiser HMO or Stanford Select Copay Health Plan or the HSA if enrolled in one of the HDHPs, to pay for her out-of-pocket medical costs with tax-free dollars.  

If needed, Martha can apply for the Employee Emergency Assistance Fund for financial help. 

Martha’s Costs/Savings per Quarter

Pregnancy   

Scenario: Accident
Jamie and their husband are avid runners and are healthy. They typically use their medical coverage for preventive care. One day in April, Jamie falls during a race and fractures their leg. Jamie receives treatment from the Emergency Room, including an X-ray and crutches, fills a generic prescription, and receives physical therapy afterward. 

Jamie’s Total Annual Expenses

Breaking Down the Example

This example is an estimate of the annual costs Jamie will incur for their accident and makes the following assumptions:

• Jamie and their husband do not incur any other medical expenses during the year. 
• Even if Jamie makes a $0 HSA election during Open Enrollment, Jamie will receive Stanford’s HSA contribution for the full 12 months. If Jamie makes an HSA election during Open Enrollment, they will be able to lower their taxable income and save money to pay for out-of-pocket medical costs. If there are leftover funds, Jamie can save them for future health care expenses.   
• If Jamie enrolls in the Kaiser HMO or Stanford Select Copay Health Plan, they can contribute to the health care FSA to pay for out-of-pocket medical costs with tax-free dollars.  

If Jamie does not have the funds in April to pay for their medical bills, they can apply for the Employee Emergency Assistance Fund for financial help. 

Jamie’s Costs/Savings Per Quarter

Scenario: Chronic Condition
Anna has a chronic illness and regularly sees a specialist, in addition to her primary care physician (PCP), with regular brand prescriptions throughout the year. Additionally, she has two children, one of which only has a preventive visit each year, and the other has regular visits with a PCP and a specialist. 

Anna’s Total Annual Expenses

Breaking Down the Example

This example is an estimate of the annual costs Anna will incur and makes the following assumptions:

• Anna expects to see her PCP four times throughout the year, as well as her specialist eight times a year. She expects 12 brand prescriptions throughout the year.
• Anna’s first child expects to see a PCP four times a year and a specialist four times a year.
• Anna’s second child only expects to have their wellness visit for the year.
• Even if she makes a $0 HSA election during Open Enrollment, Anna will receive Stanford’s HSA contribution for the full 12 months. If she elects to make personal contributions to her HSA during Open Enrollment, she will be able to lower her taxable income and save money to pay for her out-of-pocket medical costs. 
• If Anna enrolls in the Kaiser HMO or Stanford Select Copay Health Plan, she can contribute to the health care FSA to pay for out-of-pocket medical costs with tax-free dollars.  

If needed, Anna can apply for the Employee Emergency Assistance Fund for financial help. 

Anna’s Costs/Savings per Quarter

Q: Do I have to select a primary care physician (PCP)?

A: While you are not required to select a PCP, it is important to establish your care with a PCP who can get to know you and your family history and monitor any potential health risks. 

Q: Do I need a referral to see a specialist?

A: You do not need a referral to see a specialist in either HDHP.

Q: Where can I use my HSA debit card?

A: You can use your HSA debit card at doctor visits, the pharmacy, or anywhere you need to pay for a qualified expense. The provider must use the appropriate “merchant code” that indicates health care. There is no PIN for the card, so you must select the “credit” option for it to work. You can also use your debit card to withdraw cash at an ATM to reimburse yourself for expenses you paid out-of-pocket. A transaction fee may apply, and you must save your receipts.

Q: Can I keep contributing to an HSA if I change plans or leave Stanford?

A: You must meet the eligibility requirements to contribute. If you are covered under a plan that is not a qualified high deductible health plan, you will not be able to contribute to your HSA. You can continue to use the money in your account to pay for eligible health care expenses.

Q: Who’s Eligible for the HSA?

A: When you elect the Stanford Choice High Deductible Health Plan or the ACA Basic HDHP, you are eligible to elect an HSA, with these restrictions: 

• You are not covered by other health insurance
• You are not enrolled in Medicare Part A or B
• You have not received Veterans Affairs (VA) benefits within the past three months
• You are not listed as a dependent on someone else's tax return
• You do not participate in a health care FSA
• Your spouse is not enrolled in a health care FSA (because the FSA covers spouses automatically per the IRS) 
• You must live in the United States
• You must have a valid Social Security number (SSN)

Q: Where can I find a list of eligible expenses?

A: View a list of qualified expenses on IRS Publication 502. 

Q: Do I need to submit receipts for HSA expenses?

A: Generally, you do not need to submit receipts. However, it is important to save your receipts for tax purposes. You may be asked for supporting documentation by the IRS.

Q: Can I use my HSA for my spouse or children?

A: You can use your funds to pay for qualified health care expenses for yourself, your spouse, and your dependent children, even if they are not covered by your Stanford health plan.

Q: Can I have an HSA and a health care FSA?

A: If you have an HSA, you are not eligible for the health care FSA.

Q: Can I contribute to my HSA if I’m enrolled in Medicare? 

A: Once you enroll in Medicare Part A or Part B, you can no longer contribute to an HSA, but you can continue to withdraw the funds and use them to pay for expenses such as Medicare premiums and out-of-pocket expenses (including Part A and Part B deductibles, copays and coinsurance, and long-term care insurance premiums). You may also use these funds to pay medical expenses for your spouse and your dependent children.

If you are age 65 or older and still working, we recommend that you contact Social Security to understand how long you can defer Social Security payments and Medicare Part A and B in order to continue contributing to your HSA. (Also keep in mind that when you sign up to receive Social Security payments, you are automatically signed up for Medicare Part A. If you sign up mid-year and the Social Security benefit begins retroactively, you are required to repay HSA contributions, possibly back to the beginning of the current calendar year.)