Health Savings Account Administrator
San
Introduction to Health Savings Accounts (HSA)
®
TABLE OF CONTENTS
• What are (Health Savings Accounts (HSA)?– Overview– Eligibility– Contributions– “Catch Up” Provision– Medicare– Death of Account Holder
• How do High Deductible Health Plans (HDHP) work?– HDHPs– Savings
• Usage of HSA Funds– Investment Options and Claims
• “Medical IRA”– Use tax free* money to pay for current medical expenses and
save for retirement– Interest and distributions for qualified expenses are tax free*
• Choice & Flexibility– Tax free* money to pay for medical, dental, vision, long term
care, Medicare and COBRA premiums• 2003 Medicare Modernization Act
– Provides for more affordable coverage– Promotes cost conscious
healthcare consumption
*State taxes apply in AL, CA and NJ
WHAT ARE HSAs?
HOW DOES THE BLUESHIELD 2000 PPO WORK?
Pre Annual Deductible
Insured pays 100% of negotiated costs
(Except preventative care and wellness benefits)
100% Coverage*
(70% Out of Network)
100% Coverage*
Annual Deductible &
Out of Pocket Max
In Network
$2,000/$4,000
Out Of Pocket Max**
Out of Network
$4,000/$8,000
Dental, Vision and COBRA, Long term
Care, Medicare Premiums
HSA
Diagram for illustration purposes only. Please see coverage materials for more details.*100% of negotiated rate In-Network. ** Balance billing may apply Out-of-Network.
ADVANTAGES TO EMPLOYERS
• Reduce actual spend and rate of growth for healthcare costs, now and in the future
• Reduce FICA, FUTA match and Workers Comp base
• Help employees fund retiree medical benefits without recording a liability on the employer’s books
• Support employee involvement to abate escalating cost of health care
ADVANTAGES TO EMPLOYEES
• Reduce healthcare premiums today
• Reduce healthcare premium increases in future
• Pay for medical, dental, vision services, alternative medicine, long term care, Medicare and COBRA premiums
• Contributions and earnings grow tax free* and portable
• Accounts can accumulate over time in tax sheltered investments*
*State taxes apply in AL,CA and NJ
ELIGIBILITY
• Account holder must have HSA compatible HDHP coverage
• Account holder cannot have dual (non HSA compatible) health coverage
• Account holder cannot be on Medicare
• Account holder cannot be claimed as a dependent on someone else’s tax return
• Account holder cannot have a general purpose healthcare FSA or HRA
LIMITED PURPOSE HEALTHCARE FSA
• Employees who enroll in the H.S.A. may participate in a Limited Purpose FSA*
• All medical expenses must be paid from HSA until minimum statutory HDHP deductible has been met ($1,200/$2,400 2011)**
• Limited Purpose FSA can pay for dental and vision prior to minimum statutory HDHP deductible
• Medical expenses may be reimbursed from FSA once minimum statutory HDHP deductible has been satisfied using HSA funds***
• Employee can waive FSA benefits if enrolling in HSA
*Employee cannot have a general purpose FSA with an HSA (includes FSA through a spouse’s employer). Limited purpose provision does not apply to dependent care FSA. ** Minimum statutory deductible set by IRS, see FSA plan administrator. *** Assumes post deductible limited purpose healthcare FSA.
HSA CONTRIBUTIONS
• Federal Maximum Limits 2011
– $3,050– $6,150
– No need to pro-rate based on months enrolled– Must be covered for a full year or pay penalties**
*Defined by IRS as anything more than employee only with the exception of domestic partnerships which are not recognized by the Federal Govt. at this time. ** Account holder must stay on HDHP for “testing period” or “recapture rules” and prorating of contributions will apply.
CATCH-UP CONTRIBUTIONS(FOR INDIVIDUALS AGE 55+)
• Pre-tax* “catch up” contributions
– $1,000 in 2011
– Separate account required for spouse to make a
catch up contribution– No need to pro-rate based on months enrolled**
*State taxes apply in AL, CA, NJ and WI. ** As long as insured has HDHP compatible coverage on 12/1 of any given year. Account holder must stay on HDHP for “testing period” or “recapture rules” and prorating of contributions will apply.
CONTRIBUTION TO HSA (Cont.)
• Why Contribute?– Known medical dental or vision expenses– Higher interest rates– Maximize tax deduction– Retirement
• Contributions may be made:– Pre Federal tax via payroll deduction (if allowed by ER*)– Post tax** online (req. account registration)– Post tax** check (req. contribution form avail. online)
*Requires Section 125 Plan **Account holder can make personal deduction off 1040 tax return
EMPLOYER CONTRIBUTION COMPARABILITY RULES
• Must be the same dollar amount or percentage of deductible for “like employees”
• Full/Part time and Union vs. Non Union distinctions allowed
• “Like employees "can be defined as ee, ee+spouse, ee+child(ren) and ee+family
• May be made at any time in any amount
• Higher HSA contributions may be made for non highly compensated employees
MEDICARE
• No further contributions allowed if receiving Medicare A, B,C or D
• Distributions for qualified medical expenses are tax-free
• Distributions for non-qualified expenses are taxed, but are no longer subject to a penalty. Prior to age 65 distributions for non-qualified expenses are subject to a 20% penalty and are taxed.
QUALIFIED EXPENSES
• Medical, Dental and Vision ( account holder and/or spouse and dependents) Sample expenses include:
• Prescription Drugs• Dental (Orthodontics etc.)• Lasik• Doctors Office Visits• Hospital Bills
• COBRA, long term care and Medicare part B & D premiums
• IRS Code Sec 213(d) Publication 502 (www.irs.gov)
TAX TREATMENT OF HSA UPON DEATH OF ACCOUNT HOLDER
• If surviving spouse is beneficiary—HSA continues with spouse
• If non-spouse is beneficiary—Funds in HSA are taxed to beneficiary
• If no designated beneficiary—Funds are taxed to deceased’s estate
INVESTMENT OPTIONS
• Account holder can choose investments
• Strongly recommend keeping annual (OPM) liquid– Accounts kept at Mechanics Bank (FDIC insured to $250,000) – Balances earn market rate interest (effective 2/1/2011)
• >$15,000 = 1.85%• $10,000-$14,999 = 1.25%• $5,000-$9,999 = 1.00%• $501-$4,999 = 0.50%• < $500 = 0.25%
– Additional funds can be used to buy stocks, bonds, mutual funds, CDs
• IRS prohibits funds from being invested in collectibles, premiums (other than COBRA, long term care or Medicare) or pledged as collateral for real estate
ACCESSING FUNDS
• Signature Based MasterCard Debit Card (Optional)– Received 7-10 days after account set up– One card automatically issued if requested– For additional debit cards, please submit a “Request for
Debit Card” form– Works as credit card, but functions as a debit account– “Looks at” retailer codes, IIAS compliant
• Request For Reimbursement– Sterling will pay service provider OR account holder– Disbursement forms available at www.sterlinghsa.com– Ability to make distributions on-line “eChecking”– Ability to schedule deposits on-line
STERLING HSA SERVICES
• Collect contributions from employee and employer
• Automatic review of medical provider bills to verify network discounts
• 24/7 Online access to account information
• English and Spanish website and customer service
• Provide quarterly activity reports
• Scanning and archiving of all paperwork in case of an IRS audit
• Issue 1099SA (disbursements) and 5498SA (contributions)
• Money back guarantee*
*Up to one year of paid maintenance fees
STERLING HSA PRICING
• Set up fee $15 Online/$25.00 Paper One time - Per Account
• Maintenance fee (Per month – Per Account): Two options– $2.50 Value Plan or $8.75 Standard Plan
Core Services Value Plan(A la Carte)
Standard Plan (All inclusive)
Account Management
$2.50 (per month) $8.75 (per month)
Pay Medical Provider
$5 per transaction Included
Debit Card Issuance
$5 (2 cards) Included (2 cards)
Debit Card Usage $1.50 (per transaction)
included
Online Banking Included included
CONTACT INFORMATION
Sterling HSA®475 14th Street, Suite 650Oakland, CA 94612-1928www.sterlinghsa.comCustomer Service Tel. (800) 617-4729 (7am-6pm PST)
THANK YOU!