Your High Deductible Health Planand Health Savings Account

Presented by:

Iowa Bankers Insurance and Services

IBBP HSA High Deductible Plan

• Deductible – Single $2000– Employee/Spouse $4000– Employee/Child $4000– Family $4000

• Maximum Out-of-pocket– Single $2000– Employee/Spouse $4000– Employee/Child $4000– Family $4000

Deductible – Maximum out of Pocket

If you notice, the deductible and maximum out of pocket limits are the same on the IBBP High Deductible Health Plan. There are no co-payments after the deductible is met. The insurance plan picks up at 100% after the deductible is met.

$4000 Deductible

• For those with multiple insured/participants– Employee plus Spouse– Employee plus Child(ren)– Family

• Total $4000 must be met before claims are paid– Total amount can be met by one person– Total amount can be split between all covered insured

Deductible Waived For:

• Well child care– immunizations

• Specific preventative services– One routine physical and related lab/x-ray

• Newborn initial hospitalization– Practitioner services

Covered Services Applied to Deductible

• Prescriptions

• Visions – one exam per year

• Office visits

• Inpatient/outpatient hospital and physician

• Emergency services

• Maternity care

• Chiropractic care

• Mental health

• Infertility

Reminder!

There is NO 4th quarter carryover of the deductible.

Same IBBP Coverage of:

• Blue Card coverage will follow you• Disease Management program• Pregnancy Care program• Private Member online services found at

– www.bankers-ins.com – Myhealth@wellmark.com

Office Visit Claim − Before Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $96.00

Amount Paid by Plan $67.40

Deductible 0.00

Copayment 0.00

Coinsurance $9.60

Amount Not Covered 0.00

Member Responsibility $9.60

Network Savings $19.00

Traditional Plan

Amount Charged $96.00

Amount Paid by Plan 0.00

Deductible $77.00

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility $77.00

Network Savings $19.00

High Deductible Health Plan

Office Visit Claim − After Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $96.00

Amount Paid by Plan $67.40

Deductible 0.00

Copayment 0.00

Coinsurance $9.60

Amount Not Covered 0.00

Member Responsibility $9.60

Network Savings $19.00

Traditional Plan

Amount Charged $96.00

Amount Paid by Plan $77.00

Deductible 0.00

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility 0.00

Network Savings $19.00

High Deductible Health Plan

Outpatient Claim − Before Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $1974.37

Amount Paid by Plan $468.49

Deductible $1000.00

Copayment 0.00

Coinsurance $52.05

Amount Not Covered 0.00

Member Responsibility $1052.05

Network Savings $453.83

Traditional Plan

Amount Charged $1974.37

Amount Paid by Plan 0.00

Deductible $1520.54

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility $1520.54

Network Savings $453.83

High Deductible Health Plan

Outpatient Claim − After Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $1974.37

Amount Paid by Plan $1368.49

Deductible 0.00

Copayment 0.00

Coinsurance $152.05

Amount Not Covered 0.00

Member Responsibility $152.05

Network Savings $453.83

Traditional Plan

Amount Charged $1974.37

Amount Paid by Plan $1520.54

Deductible 0.00

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility 0.00

Network Savings $453.83

High Deductible Health Plan

Pharmacy Claim − Before Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $260.00

Amount Paid by Plan $90.00

Deductible $100.00

Copayment $40.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility $140.00

Network Savings $30.00

Traditional (Blue Rx) Plan

Amount Charged $260.00

Amount Paid by Plan 0.00

Deductible $230.00

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility $230.00

Network Savings $30.00

High Deductible Health Plan

Pharmacy Claim − After Deductible Is Met

Traditional Plan vs. HDHP

Amount Charged $260.00

Amount Paid by Plan $190.00

Deductible 0.00

Copayment $40.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility $40.00

Network Savings $30.00

Traditional (Blue Rx) Plan

Amount Charged $260.00

Amount Paid by Plan $230.00

Deductible 0.00

Copayment 0.00

Coinsurance 0.00

Amount Not Covered 0.00

Member Responsibility 0.00

Network Savings $30.00

High Deductible Health Plan

HDHP & HSA

Must have a High Deductible Health Plan

before

you can open a Health Savings Account

What is an HSA?

• A tax exempt trust or custodial account established exclusively for the purpose of paying or reimbursing qualified medical expense

• Must be administered by a bank, insurance company or a Third Party Administrator (TPA)

• Can not be opened without coverage under a qualifying high deductible health plan

2012 Federal Limits for Savings Account & Health Plan

• Maximum contribution to the HSA– $3100 for individual coverage (2011 - $3050)– $6250 for family; employee+spouse or children (2011 - $6150)– Plus an additional $1000 catch up contribution for eligible individuals 55 or over

• Minimum deductible for Health Plan– $1200 for individual coverage– $2400 for family; employee+spouse or children

• Maximum out-of-pocket for Health Plan– $6050 for individual coverage (currently $5950)– $12,100 for family; employee+spouse or children ($11,900)

Qualifications to Open Account

• Must have qualifying coverage on first day of the month• Must not be receiving Medicare or Social Security• Must not be listed as a dependent on another tax return• Must not be a participant in a Medical Flex Spending

account. Your spouse must not be a participant in a Flex Medical Spending Account

• Must not have other qualifying insurance coverage

Other Acceptable Coverage

• Dental, vision or Limited Scope Medical Flex Spending• Disease Management or Preventative Care• Employee Assistance Programs• Worker’s Comp, disability• Auto coverage for medical, travel insurance, etc• Supplemental insurance such as accident or cancer• Business liability

Benefits of the HSA

• Contributions are:– Tax deductible or– Pre-tax

• Can change payroll deduction amount during year as allowed by payroll

• Distributions are:– Tax Free

• If for qualified expenses, will carry a 20% penalty plus tax if not qualified and before age 65

• Earnings grow:– Tax deferred

Contributions• Who may contribute?

– The account owner– The spouse or family member– The employer

• Federal Limits for 2012:– $3100 for individual coverage– $6250 for family; employee+spouse or children

• Both account holder and spouse may open an account. Total contributions between two accounts must not be more than $6250

– $1000 catch-up contribution for those 55 or older• If both account owner and spouse are covered under health plan and 55 or

older, then both may contribute, but spouse must open an account

Date Account is Opened

• The date the account is opened is critical for claim payments. The first contribution must be made after the coverage begins, however, claims incurred before the account is open are not eligible distributions. The HSA account becomes effective the date the account is opened and funded.

Total Contributions

• IRA rollovers/transfers do count towards your total annual contribution limits for the year

• Items that do not count towards your total annual contributions are:– Rollovers from other HSA accounts– Direct trustee to trustee transfers– Rollovers form an Archer MSA– Direct rollovers from Health FSA or HRA

Funding Your Contributions

• Deposit the savings between your current health plan premium and the premium for the new HDHP coverage

• Instead of funding your Medical Flex Spending Account, revert your dollars to your new Health Savings Account

• If money allows, do an additional contribution through payroll deduction up to the maximum allowable annual contribution

Excess Contributions• Contributions made in excess of your annual allowable

limit for the current tax year are subject to a 6% excise tax each year they remain in the account

• A correction can be made to the account to remove the excess contribution by April 15th of the next year (federal tax filing deadline)

• Check with your custodian for procedures• Amount of the excess contribution PLUS the earning

must be removed• Removal of amount is not reported as a distribution

Distributions

• Tax Free– If made for a qualified medical expense

• Taxable– If made for a non-qualified medical expense

• Carries a 20% penalty if made before age 65

Qualified Medical Expenses

• Premiums for – COBRA, Long Term Care (expense also); Medicare

• Medical doctors, Nursing services

• Dental and optical

• Physical therapy, chiropractic

• Emergency care

• Acupuncture, alcohol or drug treatment

• Prescribed weight loss program, birth control

• Prescription drug, medical equipment

• Costs associated with seeking treatment

• Others as listed on the IRS website

Non-Qualified Expenses

• Cosmetic surgery, teeth whitening• Maternity clothes, diaper services• Health club dues• Electrolysis, hair transplant• Household help, babysitting• Marijuana or other controlled substances• Food supplements or vitamins if not prescribed by a Dr.• Swimming lessons or weight loss programs• Funeral expenses• Others as listed on IRS website

Distributions Used For

• Account owner

• Account owner’s spouse– Spouse not required to be on HDHP insurance

• Account owner’s dependent(s)– Dependent not required to be on HDHP insurance

Distributions Made After 65

• For medical expenses are totally tax free

• For non-medical expenses, pay income tax only– No more penalty

Mistaken Distribution

• Must be corrected before April 15th of the following year (federal tax filing deadline)

• Must follow the rules of the custodian• Replacement of the distribution is not counted as a

contribution for reporting purposes

Tax Reporting

• W-2 from employer if contributions are made on a pre-tax basis through payroll

• 5498-SA (contributions) form prepared by custodian• 1099-SA (distributions) form prepared by custodian• 8889-HSA completed by account holder and filed with

Federal Tax Return.– This is a simple reporting of account activity, balance,

contributions, and distributions

Presented by:

Iowa Bankers Insurance & Services

8800 NW 62nd Avenue

PO Box 6210

Johnston, IA 50131-6210

Phone: 515-286-4300

Toll Free: 800-258-1415

Fax: 515-286-4244

Email: flexadmin@bankers-ins.com