Answers to Your HSA Plan Questions

As you think about enrolling in the UnitedHealthcare Health Savings Account (HSA) Plan, keep in mind these great benefits.

Your premium cost for this plan is usually lower than traditional copayment plans. One of the biggest benefits is that you will often pay lower plan premiums. A health plan with a high deductible will usually cost less than a low deductible plan.

You have protection from high out-of-pocket costs.The plan gives you financial protection with an out-of-pocket maximum. If you reach the maximum, the plan will pay 100 percent of all eligible expenses for the rest of the plan year.

Your preventive care is covered 100 percent in our network. Preventive care services will include routine wellness exams, well-child exams, physicals, mammograms, flu shots and other immunizations. See your plan benefit documents for specific details on preventive care coverage.

You have the option of opening a personal health savings account, or HSA.When you enroll in the HSA Plan, you have the option of opening a personal HSA to save money, income tax-free, to pay for qualified medical expenses which may count toward your deductible and other related health care expenses.

You can use the HSA to save for future health expenses, including expenses you may have after you retire. All the money in the HSA is yours to keep and spend on qualified medical expenses, even if you change jobs or health plans. There is no “use it or lose it” rule.

The HSA can save you on taxes. There are tax advantages to an HSA. It is what we call “triple tax savings.”

1. Your deposits are exempt from federal income tax and most state income tax.*

2. Your savings grow tax-free.

3. Money you spend on qualified medical expenses is income tax-free, too.

Health reform and HSAsWith the passing of the health reform law, two important changes affecting HSAs became effective January 1, 2011:

• You can no longer pay for over-the-counter (OTC) medicines with an HSA unless you have a prescription. HSAs can still be used to pay for insulin and for many OTC supplies.

• If you use an HSA to pay for items or services that aren’t qualified medical expenses and you are under age 65, the tax penalty increased from 10 percent to 20 percent of the HSA distribution.

* There are currently three states that require you to pay state income tax on the HSA: Alabama, California and New Jersey.

What is a plan deductible? Th e plan deductible is a fi xed amount of money that must be paid before your health plan begins to pay for health care expenses. Th e only exception is preventive care, because the plan will pay 100% for those services when received in network, without requiring you to pay the deductible. As you pay for out-of-pocket medical expenses, these expenses may apply to the deductible. Th is can include payments using your HSA. If you reach the deductible, the plan will start paying its portion of covered medical expenses. Th e deductible will start over again in the new plan year.

What is a qualifi ed medical expense?Th ese are medical, dental or vision expenses that the IRS says can be paid for from an HSA without having to pay income taxes. Examples of qualifi ed medical expenses include doctor’s offi ce visits, drug prescriptions, dental treatments and X-rays, along with eyeglasses and vision exams. Even certain health plan premiums qualify, including:

• COBRAhealthinsurancepremiums

• Qualifiedlong-termcareinsurancepremiums

• Coveragewhilereceivingfederalorstateunemployment benefi ts

• Otherdeductiblehealthplansforthoseage65andolder(except a Medicare Supplemental policy)

Th e IRS may modify the list of qualifi ed medical expenses from time to time. For example, recently the IRS added breast pumps and lactation aids to the list of qualifi ed expenses. Visit irs.gov for more information. You should save all receipts for medical expense payments with your tax records. Th at way, you have proof that you used your HSA only to pay or reimburse yourself for qualifi ed medical expenses.

What expenses don’t qualify for tax benefi ts?Examples of expenses that do not qualify include cosmetic surgery, health club memberships, teeth whitening and over-the-counter medicines purchased without a prescription. If you use an HSA to pay for an expense that is not qualifi ed, you will have to pay taxes on the expense and may also have to pay a 20 percent penalty. So, if the expense was $100, you would pay an extra $20, plus taxes.

Do I have to use the bank my employer chooses?No, you may open an HSA with the bank of your choice. You own your HSA, and you decide where to open your account.

If I need to pay for a doctor visit or for a prescription, how do I do so using HSA dollars?

Th e HSA Plan does not require you to pay copayments or other costs at the time of service, especially if you are seeing a network doctor or hospital. Instead, the doctor should fi rst submit the claim to UnitedHealthcare. Th is is to ensure that:

• Wecandetermineiftheclaimisaneligibleexpenseunder your plan.

• Wecandeterminewhethertheclaimwasforpreventivecare,so it can be paid 100 percent.

• Youreceiveanydiscountsforseeinganetworkdoctor.

AnSWerS TO YOUr HSA PLAn QUeSTIOnS

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example When you arrive for a network doctor appointment, be sure to present your health plan ID card so the offi ce staff is aware that you have the HSA Plan. After your visit, the doctor will submit a claim to UnitedHealthcare for the cost of the visit.

1UnitedHealthcare will process the claim at the rate agreed upon by the doctor.

2If the visit was for preventive care, UnitedHealthcare will pay the claim 100 percent.

2If the visit was not preventive care, UnitedHealthcare will notify both the doctor and you of the amount you owe.

3 Th e doctor will then be responsible for billing you directly.

4 Once you receive the bill, you can pay the bill with cash or credit card.

Or

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Once you receive a bill from your doctor or if you are at the pharmacy filling a prescription, you have a few options.

• First,mostbankswillgiveyouadebitcardtomakepayingeasy. You can pay the bill with your debit card by filling out the credit/debit card information on the bill. If you are at the pharmacy or a walk-in clinic, you can swipe the card or hand it to the cashier, just like you would with any other debit card.

• Somebanksmayalsomakechecksavailabletoyou(sometimes at a charge).

• Youcanpayanotherway,suchaswithcashorothercreditcard. Later, you can choose to reimburse yourself from your HSA. Or, let your dollars grow for the future.

Is there a limit on how much I can contribute (deposit) to my HSA?Yes, there is an annual limit, determined by the IRS. For 2011, themostyoucancontributetoanHSAis$3,050ifyouhaveindividualcoverageand$6,150ifyouhavefamilycoverage.For 2012, the most you can contribute is $3,100 if you have individualcoverageand$6,250ifyouhavefamilycoverage.Ifyouare55orolder,youcanmake“catch-up”contributions,too. In 2012, you can deposit an additional $1,000. This helps people who are nearing retirement speed up their savings. Ifyourspouseisalso55orolder,andmeetstheeligibilityrequirements for opening an account, he or she may establish a separate HSA and make “catch-up” contributions, too.While there is a limit on how much you can deposit into your HSA each year, there is no limit on how much you can save in your HSA over the long term.

Can other people contribute to my HSA?Yes, anyone can contribute to your HSA. A family member, for example, may choose to give you money that you can deposit into your account. Wherever the money comes from, though, keep in mind there are annual contribution limits set by the IRS. Contributions above the annual limit are subject to income taxes and a penalty.

What happens to my HSA if I leave my current employer or retire? You keep it. You don’t even have to change banks. If you take a job elsewhere or retire but do not have coverage under an HSA-eligible health plan, you can still use your HSA to pay for qualified medical expenses. However, IRS rules will not allow you to deposit money into the HSA and receive tax benefits if you are not currently enrolled in an HSA-eligible health plan.

Can I use the HSA for my spouse or dependents if they are not covered under my plan?Yes, you can.

If I am still carrying health coverage for my 24-year-old, can I use my HSA to help pay for his qualified medical expenses? It depends. An adult child must still be a tax dependent in order for his or her medical expenses to qualify for payment or reimbursement from a parent’s HSA. If the adult child is not a tax dependent but is covered by a parent’s HSA-eligible health plan, he or she may be able to open his or her own HSA. In these circumstances, it is best to consult with a competent tax advisor.

What if my spouse is also covered by an HSA-eligible health plan and has an HSA? The law says that in this case, the two of you together can only contribute up to the family limit, either to individual HSAs or to one or the other’s HSA.

If I’m 65 or older and decide to retire, what happens to my HSA? Once you retire, you can continue to receive tax benefits when you use the HSA for qualified medical expenses. If you are 65yearsoldorolder,thereisnopenaltyforwithdrawingyourmoney, even if you enroll in Medicare. When your Medicare coverage starts, you can use your HSA to pay your Medicare premiums,deductiblesandcopayments.Afteryouturn65or become entitled to Medicare benefits, you may withdraw money from your HSA for non-medical purposes without penalty. The withdrawal is treated as retirement income and is subject to normal income tax.

I want my dollars to go as far as possible. So how can I find out how much a treatment or procedure is going to cost? After you enroll, you will have tools on myuhc.com, like the Treatment Cost Estimator, to help you make the best decision regarding your care. The Treatment Cost Estimator can help estimate the cost of treatments and other procedures based on your health plan, a specific doctor or hospital, and your ZIP Code. We also encourage you ask your doctor how much a service or procedure might cost. Doctors and hospitals may charge different rates for the same services depending where you go. So your choice can make a big difference.

AnSWerS TO YOUr HSA PLAn QUeSTIOnS

Can I have an HSA and a health care flexible spending account, or FSA? No. Federal tax law does not permit you to enroll in a health care FSA.Butthelawdoespermityoutoenrollinwhatiscalleda limited-purpose FSA to pay for qualified dental and vision expenses. See your benefit plan to see if a limited-purpose FSA is available to you. You may also open a dependent care FSA if your employer offers this option. A dependent care FSA can help you save to pay for qualified day care expenses for children under 13 or adult dependents who cannot care for themselves.

Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Administrative services provided by United HealthCare Services, Inc., or their affiliates.

Health savings accounts (HSAs) are individual accounts offered by OptumHealth BankSM, Member FDIC, and are subject to eligibility and restrictions, including but not limited to restrictions on distributions for qualified medical expenses set forth in section 213(d) of the Internal Revenue Code. This communication is not intended as legal or tax advice. Please contact a competent legal or tax professional for personal advice on eligibility, tax treatment and restrictions. Federal and state laws and regulations are subject to change.

Please check your health benefit plan materials to determine whether your employer will make supplemental contributions to your HSA.

Information for individuals residing in the state of Louisiana or have policies issued in Louisiana: Health care services may be provided to you at a network health care facility by facility-based physicians who are not in your health plan. You may be responsible for payment of all or part of these fees for those non-network services, in addition to applicable amounts due for copayments, coinsurance, deductibles, and non-covered services. Specific information about network and non-network facility-based physicians can be found at myuhc.com or by calling the toll-free Customer Care telephone number that appears on the back of your health plan ID card.

myuhc.com® is a registered trademark of UnitedHealth Group Incorporated.

MasterCard® is a registered trademark of MasterCard Worldwide. This card is issued by OptumHealth BankSM pursuant to license by MasterCard® International

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OptumHealth Bank is UnitedHealthcare’s health care bank of choice OptumHealthBank,MemberFDIC,isoneof the nation’s leading HSA custodians. Only OptumHealthBankgivesyoutheconvenienceofmanaging your HSA dollars through your health plan website – myuhc.com.

When you log in to myuhc.com, you can do all of your banking: pay bills, make deposits, reimburse yourself, track spending, start investments and see your tax savings. In addition, you also get the Health Savings Account Debit MasterCard® to make it easy to pay from your account and the Health Savings News, an e-newsletter for health care saving and spending tips.

How do I open my HSA with OptumHealth Bank?

You can complete a paper application, if available. Or, you can go to myuhc.com and click on Health Savings Account, under the Information Center. Follow the instructions to complete the online application. You’ll need your health plan information, such as your group number, to complete the application.OptumHealthBankwillsendyouawelcome kit, your HSA Debit MasterCard and PIN.