BROUGHT TO YOU BY:

Understanding YourHealth Savings Account

(HSA)

What is a high-deductible health plan (HDHP)?

• Intended to cover serious illness or injury • Tax free growth• IRS sets parameters on plan design • Tax free distributions (for qualified expenses)

Examples: Minimum deductible levels; no copayments for office visits

• Preventive care can be covered at 100%

Deductible varies based on plan design

After you reach the out-of-pocket maximum, the health plan pays 100% of

covered chargesHSA funds can be used for qualified medical expenses

You Pay100% of the deductible

Preventive Care covered at 100%

Health Savings Account

Health Plan PaysAfter you reach the out-of-pocket

maximum, the health plan pays 100% of covered charges

Qualified High Deductible Health Plan

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HDHP 2013 Limits

Maximum out-of-pocket expenses (in-network)

$1,500 – Individual

$3,000 – Family

What is a Health Savings Account (HSA)?

Tax-advantaged savings accountDesignated for medical expenses

Who is eligible to open an HSA?

You must be covered by a qualified high deductible health plan, or HDHP

You cannot be covered by another non-HDHP health care plan

You cannot be claimed as a dependent on another individual's tax return

You cannot participate in a general purpose health care FSA

Limited coverages allowed – i.e. dental, vision, LTC

Why should I establish an HSA?

Lower health insurance premiums

Tax advantages Contributions, earnings, and distributions are tax free

Flexible and portable

No “use it or lose it” rule

Savings for future

Who is eligible to contribute to your HSA?

Anyone! You Your family members Or a combination of all

Maximum annual contribution $3,250 – Individual $6,450 – Family $1,000 “catch-up” contribution (55 and older)

How is money deposited into my HSA?

Payroll deduction option

Lump sum After-tax dollars Deductible on income tax return Above-the-line deduction

When does my eligibility to contribute end?

You can no longer make contributions to your HSA if: You no longer participate in a high

deductible health plan

You enroll in Medicare Including Part A, Part B, or Part D Enrollment in Part A is automatic

at age 65 for some individuals

When do I use my HSA?

Any qualified medical expenses

No requirement to use HSA funds

What health care expenses does my HSA cover?

Doctor visitsHospital staysPrescription drugsDental expensesVision expensesAnd much more!

What health care expenses does my HSA cover?

Refer to IRS Publication 502. Child Care

Controlled Substances Nutritional Supplements

Effective January 1, 2011, HSAfunds cannot be used to purchase

over-the-counter medications.

Who manages the HSA?

YOU!!!Keep track of your HSA balance

Save all receipts

Examples of How HDHP & HSA Work

Doctor office visit Provide Insurance card at appointment Receive Explanation of Benefits Receive Bill from provider & pay directly to provider

Prescription Drug Not a copay – discounted rate Pay using your HSA card

ABC Insurance

Company

How Does This Save You Money

HDHP has:

Lower Monthly Premiums

Lower Max-Out of Pocket Limits

Premium Comparison

Coverage PPO Bi-Weekly

Deduction

HDHP Bi-Weekly

Deduction

Annual Savings

Single $60.57 $55.73 $116.16Emp. & Spouse $302.99 $278.76 $581.52Emp. & Child(ren)

$259.49 $238.73 $498.24

Family $330.45 $304.02 $634.32Med Only

Emp. & Spouse $262.05 $241.09 $503.04Emp. & Child(ren)

$224.42 $206.47 $430.80

Family $285.80 $262.93 $548.88

Max Out of Pocket

PPO Single - $2,000 Employee & Family - $4,000

HDHP Single - $1,500 Employee & Family - $3,000

Overall Savings

Coverage SavingsSingle $616.16

Emp. & Spouse $1,581.52

Emp. & Child(ren) $1,498.24

Family $1,634.32

For ONE time and ONE time only!!!

Switch to the HDHP plan for 1 year. If you don’t like it then you can switch back to the PPO next

year.

Summary

HSAs work in conjunction with a HDHP. Contributions are tax free, earnings are tax free, and

distributions are tax free if used for qualifying medical expenses. You decide how to spend your health care dollars; be a better

healthcare consumer Lower health plan premiums (the money saved can be deposited

into your HSA account!) HSA belongs to you and is portable – employees currently

contributing to Section 125 FSA could deposit that same amount in an HSA. With the HSA, there is no “use it or lose it” rule

Potential retirement savings Employee is responsible for tracking expenses, monitoring HSA

contributions/distributions

More Information

For more information, please refer to the United States Department of Treasury website:

http://www.treasury.gov/resource-center/tax-policy/Pages/Health-Savings-Accounts.aspx

Amy Spenos 544-6045