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CDHP/HSA Insurance Options

The CDHP/HSA (also called a Consumer-driven Health Plan with a health savings account or HSA) covers the same services and uses the same networks as the PPO options.

New – the HSA vendor will change to Optum Bank beginning Jan. 1, 2021.

Members with a 2020 HSA should continue to use the PayFlex website through December 31, 2020: stateoftn.payflexdirect.com

In December, CDHP/HSA and Local CDHP/HSA members will get a new debit card from our new vendor to use for qualified expenses. Affected members will receive more information later in 2020.   

HSA/FSA vendor will change to Optum Bank beginning Jan. 1, 2021. If you stay enrolled in the CDHP or Local CDHP, you will receive an Optum Bank HSA debit card in December, and you will receive a survey via email from Benefits Administration during October requesting your approval to work with PayFlex to have your HSA balance transferred to Optum. If you agree, your funds will be moved in late February 2021 and be available in your Optum HSA the first week of March 2021. If you do not agree, or if you switch to a PPO for 2021, then your HSA will remain with PayFlex and you will be responsible for the monthly account fee ($5), which PayFlex will automatically deduct from your HSA each month as long as a balance remains. PayFlex HSA debit cards will continue to work through February 7, 2021, then be deactivated for any funds transfer to occur.

Watch this video to learn more about the CDHP/HSA.


With a CDHP/HSA or Local CDHP/HSA:

  • Lower premiums compared to the PPOs, but a higher deductible.
  • You’ll pay your deductible first before your insurance plan pays anything for most services, and then you’ll pay coinsurance, not copays.
  • A health savings account (HSA) can help you save for your healthcare now and in the future, and it offers tax benefits.
  • You can take the savings from your lower premium and put them in your HSA to cover your deductible.
  • Your HSA balance carries over each year―and you can take it with you if you leave or retire!
  • The IRS sets a limit on how much money you can put in your HSA each year (includes employer contributions).
  • Your full contribution amount will not be available to you upfront. You may only spend the funds that have been added to your HSA.

2021 maximum HSA contribution amounts:

  • $3,600 for employee/retiree only (including state or employer contributions)
  • $7,200 for all other tiers (including state or employer contributions)
  • Members 55 or older can save an extra $1,000 each year. It’s called a catch up contribution.

Important! Your full HSA contribution is not available upfront at the beginning of the year or after you enroll. Your pledged amount is taken out of each paycheck each pay period. You may only spend the money that is available in your HSA at the time of service or care. But you can pay out of your own pocket and pay yourself back later with funds from your HSA. 

Enrolling in Social Security at age 65 automatically triggers Medicare Part A enrollment. If enrolled in a CDHP, this may have tax consequences and affect your HSA contribution. Consult with your tax advisor for advice. Neither the State nor your employer may offer tax advice.

State and higher education employees:

CDHP/HSA

  • The state will put money into your HSA at the beginning of the year: $250 for employee only coverage or $500 for family coverage. 
    • If your insurance coverage starts on or after September 2 through December 31, the state will not contribute any money to your HSA.
    • Please note: If you have any issue about receiving your state HSA money (seed funds) you must contact your agency benefits coordinator (ABC) by March 30 of the applicable year, or within 90 days of your benefits effective date. After that, enrollment and seed funds issues are considered settled and will not be researched further unless it is determined an error has occurred which impacted your funding.
  • You can also contribute through payroll deduction or by writing a check to deposit funds in your HSA or linking your personal bank account and adding funds. If you do this, you’re using after-tax funds to add to your HSA, but you can take an above the line deduction when you file your return, which lowers your taxable income.
  • State employees: If you are enrolled in the CDHP/HSA, you MUST update the amount of money you put in your health savings account (HSA) each year in Edison. Also, state employees can put their wellness program cash incentives into their HSA. State employees can make this choice during annual enrollment. Note: Any wellness incentives that are deposited into the HSA will count toward the overall HSA IRS annual maximum. This means that you need to take the 2021 IRS limit and subtract the $250 or $500 seed funds from the state, plus subtract how much you think you will earn in wellness program incentives in 2021 to determine how much money you want to contribute to your account pretax.

Local education and local government employees:

Local CDHP/HSA: 

  • You can contribute to your HSA with pre-tax dollars from each paycheck (if offered by your employer) or you can contribute after-tax funds by check or by linking your bank account to your HSA. You can claim the contributions on your taxes to lower your taxable income.

Retirees:

CDHP/HSA (state and higher education): 

  • No state HSA funds are available. You can contribute after-tax funds by check or by linking your bank account to your HSA. Then, at tax time you can take an above-the-line credit which will reduce your taxable income up to the annual HSA contribution limit allowed by the IRS. Note that once you enroll in Medicare, IRS rules prevent you from contributing to your HSA. However, the funds that you have already accumulated in your HSA remain yours to spend on IRS approved healthcare expenses. For more details, consult your tax advisor.

Local CDHP/HSA (local education and local government):

  • You can contribute after-tax funds by check or by linking your bank account to your HSA. Then, at tax time you can take an above-the-line credit which will reduce your taxable income up to the annual HSA contribution limit allowed by the IRS. Note that once you enroll in Medicare, IRS rules prevent you from contributing to your HSA. However, the funds that you have already accumulated in your HSA remain yours to spend on IRS approved healthcare expenses. For further details, consult with your tax advisor.

The HSA/FSA grid shows details about contributions, tax benefits and how you can use your funds. 


How does the CDHP/HSA work?

  • You pay for your healthcare differently. When you get care or need a prescription, you pay for those expenses until you reach your deductible. Then you pay coinsurance for your medical and pharmacy costs until you reach your out-of-pocket maximum. For all of your care, as long as you use network providers, you get discounted network rates.
    • For certain 90-day maintenance drugs (e.g., hypertension, high cholesterol), you only pay coinsurance, and you do not have to meet your deductible ­first. You must use a Retail-90 network pharmacy (find a list at info.caremark.com/stateoftn) or mail order to fill a 90-day supply of your medication to receive this lower cost benefit. Check with your pharmacist or CVS Caremark if you have questions. Click here to learn more about pharmacy costs with a CDHP
  • You get a HSA to help you save for your healthcare costs! You can contribute money through payroll deduction to your HSA (some local education and local government agencies may not offer payroll deduction*). In some cases, your employer may contribute money to your account. You can put the premium savings between the CDHP and PPO into your HSA each month.
    • You can use your HSA money to pay for your out-of-pocket costs like your deductible and coinsurance for doctor’s visits and prescription drugs.
      • Your HSA money rolls over each year — you keep it if you leave or retire.
      • When you turn 65, you can use money in your HSA for non-medical expenses (before age 65 non-medical expenses are both taxed and subject to a 20% penalty. After age 65, non-medical expenses are taxed, but the 20% penalty does not apply).
  • You save money on taxes! Your HSA contributions can be pre-tax — put money from your paycheck directly into your account by payroll deduction (some local education and local government agencies may not offer payroll deduction*). This lowers your taxable income, saving you money. Any employer contributions are tax free, quali­fied medical expenses are tax free and the account collects tax-free interest on the balance. Once your balance reaches $1,000 you have the option to invest a portion of your HSA in a variety of funds to possibly grow your account further. Note: Investing a portion of your HSA is a personal choice that you can make and there is no guarantee that your investments will generate a return. As with any investment, you may lose money.
    • Retirees: You can contribute to your HSA and claim it on your taxes. Qualified medical expenses are tax free and the account collects tax-free interest on the balance.
  • In 2021, Optum Bank will send you a new debit card to use your HSA funds to pay for qualified healthcare expenses. Or you can pay for your expenses online. Simply log in to your HSA account on the Optum Bank website: optumbank.com/Tennessee

*Local education and local government employees should check with your agency benefits coordinator on if your agency offers payroll deduction for the HSA.


Certain restrictions

You cannot enroll in the CDHP or Local CDHP if:

  • you are enrolled in another plan, including a PPO, your spouse’s plan or any government plan (e.g., Medicare A and/or B, Medicaid, TRICARE or Social Security benefits), or 
  • if you have received care from any Veterans Affairs (VA) facility or the Indian Health Services (IHS) within the past three months. Generally, members receiving free care at any VA facility cannot enroll in the CDHP because a HSA is automatically opened for them. Individuals are not eligible to make HSA contributions for any month if they receive medical bene­fits from the VA at any time during the previous three months. However, members may be eligible if they did not receive any care from a VA facility for three months, or if a member only receives care from a VA facility for a service-connected disability (it must be a disability). Go to https://www.irs.gov/irb/2004-33_IRB/ar08.html for HSA eligibility information.

HSA and FSA restrictions: You cannot enroll in the CDHP/HSA if either you or your spouse have a medical flexible spending account (FSA) or a health reimbursement account (HRA) at either employer. Instead, if you have one available, you can enroll in a limited purpose FSA for dental and vision costs.


Optum Bank logo

Health savings account (HSA)

For 2021, Optum Bank is the banking vendor who helps administer your HSA. 

Optum Bank


CDHP frequently asked questions (FAQ)

The CDHP is a Consumer-driven Health Plan (CDHP) with a health savings account (HSA). It uses the same provider networks and discounted rates as the PPOs and covers the same services. It has lower monthly premiums, but a higher deductible.

You control more of your healthcare dollars. When you get care or need a prescription, you pay for those expenses until you reach your deductible. Then you pay coinsurance for your medical and pharmacy costs until you reach your out-of-pocket maximum. Then you are covered 100 percent.

You also have a HSA, a tax-free savings account that you can use to pay for your deductible, qualified medical expenses and to save for retirement. You can contribute to your HSA and some employers do too. For example, you can take the money you save in premiums for the CDHP versus a PPO and put it in your HSA.

For state and higher education employees, if you enroll in the CDHP/HSA, the state will put money into your HSA: $250/individual and $500/family. If your coverage begins on or after September 2 through December 31, 2020, the state contribution is not available.

Local government and local education employees should check with your agency benefits coordinator to see if your agency will provide funding for your HSA.

A health savings account (HSA) is a tax-exempt account that individuals can use to pay or save money for qualified medical expenses on a tax-free basis. For 2021, our HSA is administered by Optum Bank. The money in the account earns interest and when it reaches $1,000 you can invest it.

The money you save in the HSA (both yours and applicable state or local agency contributions) rolls over each year and collects interest. You don't lose it at the end of the year.

You can use money in the account to pay your deductible, qualified medical, vision and dental expenses and to save for retirement.

The money is yours! You take the HSA with you if you leave or retire.

You will receive two debit cards, one card for you and another card for a dependent to use, or to keep as a spare card. You may order additional cards for your spouse and/or dependent(s) to use for medical expenses.

The HSA offers a triple tax advantage on money in your account:

  • Both employer and employee contributions are tax-free
  • Withdrawals for qualified medical expenses are tax-free
  • Interest accrued on HSA balance is tax-free

The HSA can be used to pay for qualified medical expenses that may not be covered by your plan (like vision and dental expenses, hearing aids, contact lenses and more) with a great tax advantage.

Money in the account can be used tax-free for health expenses when you retire. And, when you turn 65, it can be used for non-medical expenses. Non-medical expenses will, however, be taxed.