Tax-Advantaged Accounts Health Savings Account (HSA) & Limited Purpose Flexible Spending Account (LPFSA)

University of Rochester March 2017

Today’s presentation will cover:

• YOUR HSA Plan • Health Savings Account (HSA) • Limited Purpose FSA (LPFSA) • Using your account funds • The PayFlex Card®

• Helpful tools and resources • PayFlex Mobile® App • Tax Information

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YOUR HSA-Eligible Plan

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Your HSA-Eligible Plan - Pharmacy

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What’s a Health Savings Account (HSA)? An HSA is an account you can contribute to with pre-tax money deducted from your paycheck. This money is used for eligible health care expenses. Why do people love the HSA? • Helps reduce your taxable income and increases your take home pay! • Use your funds for current health costs and future costs. • Benefit from employer contributions. • Unused funds roll over from year to year. • Account funds are used for you, your spouse, and your tax dependents. • You HSA stays with you, even if you switch employers, change insurance

plans or retire. • Contribute pre-tax and post-tax dollars. • If you have an HSA somewhere else, you can transfer the balance to your

new HSA. • You money can earn interest plus, you can enjoy investment options.

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Eligible Health Care Expenses Common eligible expenses include: • Deductibles, co-insurance, and co-pays • Prescription drugs • Certain over-the-counter items

(with a prescription) • Glasses, LASIK eye surgery, and

contact lenses • Dental and orthodontic services • Chiropractic and acupuncture treatments • Certain fertility enhancement services • And more!

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View a list of common eligible expenses on payflex.com, your member website.

HSA Contributions Each year, the Internal Revenue Service (IRS) sets maximum contribution limits. • The maximum limits include all contributions made to your HSA. • You can change your contribution. • Funds become available as they are deducted from your paycheck, and deposited into your

account. • You can make a one-time transfer from your IRA. This transfer amount won’t be taxed. This

amount does count toward your HSA contribution limit for the year. • If you’re age 55 or older, you can contribute up to another $1,000 annually.

Note: Carefully evaluate your own personal health and financial situation before deciding on your HSA contributions. Review your health care expenses you’ve had previously, and what you expect to have in the coming year. Employer contributions are pro-rated throughout the year.

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Coverage Current HSA Limit

Single Coverage $3,400

Family Coverage $6,750

Employer Contribution – Individual Coverage

Employer Contribution – Family Coverage

$200 $400

HSA Investment Options

Once you have at least $1,000 in your HSA you can open an investment account. • There are a variety of mutual funds available. • There are no transfer or trading fees and no minimum investment

amount per trade request. • Mutual funds and investments are not FDIC-insured. Invested funds

are subject to risks, including changes in the value and the possible loss of the amount you invested.

• Funds in your investment account can’t be used to pay for eligible health care expenses. However, contributions can be transferred back to your HSA at any time.

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By transferring funds into an HSA investment account you can potentially benefit from capital appreciation in the value of mutual fund holdings. However, you will also be exposed to a number of risks, including the loss of principal, and you should always read the prospectuses for the mutual funds you intend on purchasing to familiarize yourself with these risks.

Are you eligible for an HSA?

To elect an HSA, you must be enrolled in a qualified high-deductible health plan (HDHP), which is YOUR HSA-Eligible Plan. In addition: • You can’t have other health coverage that pays for out-of-pocket

expenses before you meet your plan deductible. • You or your spouse can’t have a Flexible Spending Account (FSA) or a

Health Reimbursement Account (HRA) in the same year. • You can’t have Medicare, TRICARE, or Veterans Administration (VA)

health benefits. • You can’t be claimed as a dependent by someone else.

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Limited Purpose FSA

You can use an LPFSA to pay for eligible out-of-pocket expenses. • Eligible expenses include:

• Medical coinsurance expenses after you meet your deductible (expenses applied to your deductible are not eligible)

• Dental and orthodontia care; like fillings, X-rays, and braces • Vision care, including eyeglasses, contact lenses, and LASIK surgery • Prescriptions

• The annual maximum contribution amount is $2,550 • You need to contribute at least $100

• You can change your contribution amount if you have a change in status (marital status, tax dependents, employment, etc.)

Benefits of an LPFSA • An LPFSA helps you save money on taxes for certain eligible expenses. • Your entire contribution is available at the beginning of the plan year. • Works great with an HSA. - Helps save your HSA funds for future/other expenses.

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Your PayFlex Coach What’s PayFlex Coach? It’s a free* 4-week texting program that shares quick tips about your HSA. And you’ll get helpful links to tools and resources -- like short videos, educational tidbits, and ways to help maximize your account. To learn more, check out this video. Start your coaching session today Just use your mobile phone to text PAYFLEXHSA to 57320. Then, reply YES to participate. *Standard text messaging and other rates from your wireless carrier still apply.

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How to use your funds

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How to use your funds

HSA Funds Once funds are available you can: • Use the PayFlex Card®, your account

debit card. • Pay for an eligible expense out-out-

pocket with cash, check, or personal credit card.

• Then use the withdrawal tool to pay yourself back from your HSA.

• This will be directly deposited into your checking or savings account.

• Use the online payment tool to pay your provider directly from your HSA.

Limited Purpose FSA Funds You will need to file a claim with the following additions:

• Carryover up to $500 in unused funds! Any unused funds over the $500 carryover amount are forfeited.

• You have until April 30th to file a claim for the prior year (grace period).

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A little more about the PayFlex Card®

The PayFlex Card® A super easy way for you to spend the money in your PayFlex HSA account. It’s a convenient way to pay for eligible expenses. The card knows when the expense is eligible. No claim filing!

Simply swipe the card and select either “debit” or “credit.” • If you choose “debit,” you may need a PIN to complete the transaction. • After you swipe the card, our system automatically confirms whether you have enough

funds to pay for the expense.

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What can I purchase with the card? • You can use the card to pay for eligible expenses

allowed under your plan.

Where can I use the card? • Physician and dentist offices, vision care providers,

and hospitals • Grocery stores, discount stores, web-based merchants • Drug stores and retail pharmacies

It’s easy to get started

payflex.com – your member website

Before you enroll, you can view: • My resources: education materials, planning tools, forms, and IRS

publications • Eligible expense items: general list of eligible expenses • Savings calculator: estimate your expenses, help plan your

contribution/s • Frequently asked questions: understand more about each

account, and the PayFlex Card®

• Digital library: learn more about PayFlex accounts, and how they work

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payflex.com or access via Aetna Navigator

Once a member, from My Dashboard you can: • View your account balance(s) • Submit a claim to pay yourself back • Enroll in direct deposit • View upcoming payments and claim history • Print forms & educational materials • Sign up for electronic account notifications • View legislative updates and news

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PayFlex videos to help your learn

Watch videos to learn more about your PayFlex account, and ways to manage your funds! Various videos include: Benefits of an HSA Investing HSA Funds Staying Connected with PayFlex Mobile®

Using your PayFlex Card®

Making the most of your PayFlex account

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PayFlex Mobile® App

PayFlex Mobile®

Manage your account 24/7 with the free PayFlex Mobile® Application Available for iPhone® and iPad® mobile digital devices, as well as Android™ smartphones.

The PayFlex Mobile® app lets you: • Manage your account funds • View PayFlex Card® purchases and transactions • View a list of common eligible expense items • Use the same username and password as the PayFlex member

website

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The iPhone and iPad are trademarks of Apple Inc., registered in the U.S. and other countries. Android is a trademark of Google Inc. Standard text messaging and other rates from your wireless carrier still apply. PayFlex Mobile® is a registered trademark of PayFlex Systems USA, Inc.

Tax Forms

Tax Reporting There are a number of required tax forms for HSA reporting – please contact your tax advisor. Form 1099-SA: reports all account distributions. A distribution from your HSA for a qualified expense is not taxable. Produced by PayFlex and mailed in January. Form 5498-SA: reports all contributions, both employer and employee, and earned interest. The individual has until April 15 to contribute for the tax year. Produced by PayFlex and mailed in May (can pull from PayFlex portal). Form W-2: reports all pre-tax payroll deductions. Produced by Employer in box 12 with a code of W. Form 8889: reports all contributions, withdrawals, interest, excess contributions and any withdrawals for non-qualified expenses. Completed by accountholder and submitted with tax filing. Form 1040: for after-tax contributions.

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Form 5498

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Form 1099

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Form 8889 – Part 1

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Form 8889 – Part II and Part III

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Form 1040 – After-tax contributions

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We’re here to help! Visit payflex.com, click Contact Us. Representatives are available Monday – Friday, 7 a.m. – 7 p.m. CT and Saturday, 9 a.m. – 2 p.m. CT.

Disclaimer This material is for informational purposes only. The information describes the Flexible Spending Account (“FSA”) in general terms. FSA plans are governed by the rules of Section 125 of the Internal Revenue Code and will be administered in accordance with those rules. Estimate fund amounts carefully. Unused funds may be forfeited. Eligible expenses may vary from employer to employer. In case of a conflict between your plan documents and the information in this material, the plan documents will govern. Please refer to your employer’s Summary Plan Description (“SPD”) for more information about your covered benefits. There may be fees associated with an HSA. These are the same types of fees you may pay for checking account transactions. Please see the HSA fee schedule in your HSA enrollment materials for more information. Investment services are independently offered through a third-party financial institution. The HSA investment account is an optional, self-directed service. We do not provide investment advice for HSA investment account participants. You are solely responsible for any investment account decisions you make. Mutual funds and brokerage investments are not FDIC-insured and are subject to investment risk, including fluctuations in value and the possible loss of the principal amount invested. The prospectus describes the funds’ investment objectives and strategies, their fees and expenses, and the risks inherent to investing in each fund. Investors should always read the prospectus carefully before making any investment decision. System response and account access times may vary due to a variety of factors, including trading volumes, market conditions, system performance and other factors. The iPhone and iPad are trademarks of Apple Inc., registered in the U.S. and other countries. Android is a trademark of Google Inc. This material is for informational purposes only. MasterCard® is a registered trademark of MasterCard International Incorporated. Information is believed to be accurate as of the production date; however, it is subject to change. For more information about PayFlex, go to PayFlex.com. Financial Sanctions Exclusions. If benefits or reimbursement provided by this Agreement violate or will violate any economic or trade sanctions, the benefits are immediately considered invalid. PayFlex Systems USA, Inc. cannot make payments for claims or services if it violates a financial sanction regulation. This includes sanctions related to a blocked person or a country under sanction by the United States, unless permitted under a written Office of Foreign Asset Control (OFAC) license. © 2015 PayFlex Systems, USA APN: 69.25.306.1 B (8/15)