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2
Basic HSA Plan Concept
Part 1: High Deductible Health Plan
Part 2: Health Savings Account
Made by: Employer, Employee, and/or other party
HSA Concept
Intended to cover serious
illness or injury
Can pay for eligible expenses not covered by the health plan
For 2009 Single Family
Min. Deductible $1,150 $2,300
Max. Out of Pocket $5,800 $11,600
For 2010 Single Family
Min. Deductible $1,200 $2,400
Max. Out of Pocket $5,950 $11,900
For 2009 Single Family
Max. Contribution $3,000 $5,950
For 2010 Single Family
Max. Contribution $3,050 $6,150
Individuals can contribute the maximum regardless of their deductible.
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HSA Eligibility
Covered by qualified high-deductible health plan (HDHP)
Not covered by any other non-HDHP
Not claimed as a dependent on another person’s tax return.
Not enrolled in Medicare
*Section 152 of the Internal Revenue Code excludes spouses from the definition of dependent.
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What is the catch-up contribution?
Accountholders who are age 55 or older and not enrolled in Medicare can make catch-up contributions.
Year Catch-up Amt.
2009+ $1,000
Note: Spouses of accountholders who are 55 or older and meet the IRS eligibility requirements can open their own HSA and make a catch-up contribution.
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What are Qualified Expenses?
A Qualified Expense is generally a medical expense incurred for you, your spouse or your dependents.
A complete list is provided in IRS Publication 502 http://www.irs.gov/pub/irs-pdf/p502.pdf As described in IRS publication 969
http://www.irs.gov/pub/irs-pdf/p969.pdf, over-the counter medications are also considered eligible expenses for HSA purposes.
Note: HSA does not provide tax advice. Please consult a qualified tax advisor with questions.
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Other eligible medical expenses Premiums for long-term care insurance
Limited to amount listed in 213(d)(10)
Premiums for "COBRA”
Premiums for coverage while receiving unemployment compensation
Premiums for individuals over age 65 Retirement Health Plan Premiums Medicare Premiums
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Tax Treatment of HSAs…
For Employees/Accountholders
Contributions Excluded (pre-tax) or
deducted (after tax) from federal taxable income
Earnings HSAs grow in the same
tax-deferred manner as IRAs
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Tax Treatment of HSAs (Continued)
For Employees/Accountholders Distributions
Withdrawals for qualified medical expenses are always tax-free. After age 65, funds may be withdrawn for any reason without penalty, subject to regular income tax.
Upon death of accountholder If the spouse is the beneficiary, the HSA may transfer
to the spouse’s name and remain a tax-favored account
If the beneficiary is not the spouse, the funds are paid to the beneficiary as a taxable transactionIf the HSA does not have a beneficiary, the funds
are paid to the estate of the accountholder
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Tax Savings Example
Contribution $3,000 per year for 25 yrs
Annual medical expenses
$500 per year
Tax Bracket 28% (Federal)
Average interest rate 2%
TAX SAVINGS ON CONTRIBUTIONS = $17,500.00
TAX SAVINGS ON DEFERRED GROWTH = $4,921.21
ACCOUNT BALANCE AT THE END OF 25 YEARS =$80,075.75
For illustrative purposes only. Actual savings may vary. Visit www.hsabank.com and click on Calculate Savings for a personalized estimate.
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HSAs, HRAs, FSAs
HSA HRA FSAAccount Owner
Employee Employer Employee
FundingEmployee, Employer,
OtherEmployer
Employee,Possible
Employer
Roll Over Year-To-Year
YesGenerally
NoNo
Portable YesGenerally
NoNo
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Advantages of an HSA
For an Employee
Funds roll over year to yearNo need to “use it or lose it”
Tax benefits on the contributions, earnings, and distributionsPotential for increased take-home pay
Long-term investment opportunity
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Savings Account Option
Interest bearing “bank” account Accounts are opened as an FDIC-insured
bank account through Webster Bank, N.A. Current interest rate and annual
percentage yield information is available on our website, www.hsabank.com or by calling (800) 357-6246.Interest Rate and APY are subject to
change, at our discretion, at any time. Fees may reduce earnings.
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Self-Directed Investment Option
TD Ameritrade Corporate ServicesAccess to stocks, bonds and over 11,000
mutual fundsTrades are made online or over the phoneTransfer funds from your HSA to your
investment account:Online through Internet BankingBy calling the Client Assistance Center
Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the
principal amount invested.
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Mutual Fund Selection
Devenir Investment AdvisorsSelection Options
Employer can offer our standard selection of historically top-performing mutual funds
For an additional fee, employers can select mutual funds similar to their 401(k) offering
Trades are completed online through HSA Bank’s Internet Banking system
Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the
principal amount invested.
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Accountholder Communication and Reporting
Account statements Periodic account inserts with valuable legislative
information, account features, and more
IRS reporting Year-end status report 1099-SA (distributions) 5498-SA (contributions)
Online Account Access through Internet Banking Account balance and transaction history
(Up to 18 mo. for convenient tax reporting) View cancelled checks Year-to-date information (Including a breakdown of contributions by
source.) Ability to download transaction history to Quicken or Money Email confirmation of account opening and ongoing activity Online address changes Access to Online Contributions
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Calculation Tools
Is an HSA Right for MeAllows you to compare a traditional health plan and
an HSA qualified plan to determine potential savings http://hsabank.com/HSABank/Education/HSA_Right_For_Me.aspx
Future Value CalculatorCalculates tax savings on contributions and tax-
deferred growth as well as the future value of your Health Savings Account http://hsabank.com/HSABank/Education/futurevalue
HSAFORM
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Account Support
Toll-free Bankline 24-hour account access via
touchtone phone
(800)-565-3512
Toll-free Client Assistance Center (800) 357-6246
7 a.m. – 9 p.m., Central Time, Monday – Friday
Toll-free Spanish Language Assistance Line
(866) 357-6232 7 a.m. – 9 p.m., Central Time, Monday – Friday