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UNDERSTANDING HEALTH SAVINGS ACCOUNTS – HSA’S AND

UNDERSTANDING HEALTH SAVINGS ACCOUNTS – HSA’S AND. QUALIFIED HIGH DEDUCTIBLE HEALTH PLANS – QHDHP’S. The Facts. 1996 - MSA’ s (Medical Savings Account) Introduced 1-1-2004 – HSA’s (Health Savings Account) became the new name for MSA’s

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UNDERSTANDING HEALTH SAVINGS ACCOUNTS – HSA’S AND

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  1. UNDERSTANDING HEALTH SAVINGS ACCOUNTS – HSA’S AND QUALIFIED HIGH DEDUCTIBLE HEALTH PLANS – QHDHP’S

  2. The Facts • 1996 - MSA’s (Medical Savings Account) Introduced • 1-1-2004 – HSA’s (Health Savings Account) became the new name for MSA’s • December 2006 additional changes made that improved funding opportunities for HSA’s HSA ENROLLMENT COUNT March 2005 1,031,000 January 2006 3,168,000 January 2007 4,532,000 January 2008 6,118,000

  3. THE FACTS (CONT’D) • Employers with at least half of their workforce enrolled in CDHP’s had a two-year medium cost trend of 3.6% compared to 7% CNN Money – March 18, 2008 Reporting on the Watson Wyatt & national Business Group on Health report 435 employers employing 8.4M workers including GM & Wal-Mart • 46% of those enrolled in HSA/HDHP’s are 40 or older • 217,274 – The number of Hoosiers as of 1-1 2008 enrolled in HSA/HDHP Plans • The 2007 Kaiser Foundation/HRET Employer Health Benefits Survey Reports the following: Single Family Midwest Average Annual Deductible $1,888 $3,776 Percent of Employers Contributing to HSA’s 33% 53% Percent of Deductible Contributed by Employer to HSA 43% 34% • 12 Month Average HSA Account Balance $1,382 (based on 801,393 Accounts) Source 2008 AHIP HSA/HDHP Census

  4. Why Consider an HSA ? • Reduces your health insurance premiums • You or your employer can make tax deductible contributions to your own HSA • You can spend your HSA dollars tax free on Medical, Dental & Vision expenses – 213(d) list • You can roll your unused dollars forward annually • You earn tax deferred interest on your savings. • Financial incentives to control health care cost • You for the first time have a financial incentive to move towards wellness

  5. The 2 Components of the HSA/QHDHP Concept

  6. Component 1 – QHDHPA Qualified High Deductible Health Plan Provides the Following • The Deductibles and Out-of-Pocket SingleFamily 2009 2009 Minimum $1,150 $2,300 Maximum $5,800 $11,600 • Wellness or Preventive Care Can Be Covered at 100%(90% of plans have this feature) • The Insurance Plan Cannot Have • An office visit copay benefit • A prescription drug card copay benefit

  7. Component 2 -- HSA Bank Account • Deposits into your HSA are tax deductible on personal tax return or through your Flex plan through payroll deduction • Maximum contributions to your HSA: • 2009 $3000 single $5950 family • Catch-up contributions 55 and older • 2009 and after = $1000 • Deposits may be made by employers, employees or BOTH • Withdrawals are tax free on all expenses on 213(d) list • Withdrawals before age 65 for non 213(d) expenses are taxed at normal tax bracket and 10% Penalty • Withdrawals after age 65 for non 213(d) expenses have no penalty and are tax free for medical expenses

  8. Allowable*213(d)(Tax-Free) Expenditures from Your Health Savings Account

  9. Allowable* (Tax-Free) Expenditures from Your Health Savings Account Cont’d *NOTE: This list is illustrative and is not meant to be an exhaustive list. There have been thousands of cases involving the many nuances of what constitutes “medical care” under the Internal Revenue Code, which governs health Savings Accounts. A determination of whether an expense is qualified as “medical care” is based on all the relevant facts and circumstances. To be an expense for medical care, the expense has to be primarily for the diagnosis, cure mitigation, treatment, or prevention or alleviation of a physical or mental defect or illness. The determination often hangs on the word “primarily.” Additional information is available from IRS Publication 502 (available through www.irs.gov). Consult your physician and tax advisor, if you have questions.

  10. Non-Allowable (Not Tax-Free) Expenditures from Your Health Savings Account

  11. HSA Advantages • Lower Premiums • Tax Advantages • Savings for Future • HSA balance rolls forward annually • Maximum out-of-pocket cap • Expenses paid w/tax free dollars • Medical – Dental & Vision

  12. HSA Info on the Web • HSA Bank www.HSAbank.com HSA overview Presentation - Video • US Treasury www.ustreas.gov/offices/public-affairs/hsa Contact us: Agency Associates 317-228-3777 www.agencyassoc.com

  13. Your Plan Specifics HDHP NEW PLAN OLD PLAN * Deductible and Coinsurance

  14. Your Plan Specifics H S A 2009 Maximums Single $3000/12=250 monthly Family $5950/12=495 monthly *Based on full twelvemonths of participation in a qualified HDHP

  15. HSA Calculator for

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