Health Savings Accounts

1

• Health Savings Accounts
• What are they?
• Why your financial institution should offer them.

2
What is an Health Savings Account?

• A Health Savings Account is an alternative to
  traditional health insurance it is a savings
  product that offers a different way for consumers
  to pay for their health care. HSAs enable you to
  pay for current health expenses and save for
  future qualified medical and retiree health
  expenses on a tax-free basis.
• You must be covered by a High Deductible Health
  Plan (HDHP) to be able to take advantage of HSAs.
  An HDHP generally costs less than what
  traditional health care coverage costs, so the
  money that you save on insurance can therefore be
  put into the Health Savings Account.
• You own and you control the money in your HSA.
  Decisions on how to spend the money are made by
  you without relying on a third party or a health
  insurer. You will also decide what types of
  investments to make with the money in the account
  in order to make it grow.

3
What Is a High Deductible Health Plan
(HDHP)?

• You must have an HDHP if you want to open an HSA.
  Sometimes referred to as a catastrophic health
  insurance plan, an HDHP is an inexpensive health
  insurance plan that generally doesnt pay for the
  first several thousand dollars of health care
  expenses (i.e., your deductible) but will
  generally cover you after that. Of course, your
  HSA is available to help you pay for the expenses
  your plan does not cover.
• In order to qualify to open an HSA, your HDHP
  minimum deductible must be at least 1,000
  (self-only coverage) or 2,000 (family coverage).
  The annual out-of-pocket (including deductibles
  and co-pays) cannot exceed 5,100 (self-only
  coverage) or 10,200 (family coverage).

4
How much can I contribute to my HSA each
year?

• Your annual HSA contribution cannot exceed
  the deductible of your HDHP. For example, if you
  choose a plan with a deductible of 1,000, you
  may not deposit more than 1,000 in your HSA for
  that year. If you want to save more, you must
  choose an HDHP with a higher deductible. If you
  are age 55 or older, you can also make additional
  catch-up contributions (see catch up).
• The most you can put into your account for
  2005 is 2,650 if you have single coverage and
  5,250 for a family. These amounts will be
  increased for inflation in future years.

5
If over 55, you can make catch-up
contributions to your HSA.

• Individuals 55 and older who are covered by an
  HDHP can make additional catch-up contributions
  each year until they enroll in Medicare. The
  additional catch-up contributions to HSA
  allowed are as follows
• 2005 - 600 2006 - 700 2007 - 800 2008 -
  900 2009 and after - 1,000
• If both spouses are eligible individuals for the
  catch up they must each established an HSA in
  their name. If only one spouse has an HSA in
  their name, only that spouse can make a
  catch-up contribution.

6
HSA Qualified Expenses

• Dental
• Prescription Drugs
• Vision
• Doctors office visits
• Hearing
• Hospital bills
• and many more qualified health care expenses

7
Recent HSA News

• Beginning in 2006, Allen County employees will
  have the option of choosing a health-care savings
  account, or HSA, instead of a more traditional
  insurance plan for the countys nearly 1,900
  employees
• A single employee would pay a 2.50 monthly
  premium but would have to meet a 1,000
  deductible. The county would contribute 500 to
  the account.
• An employee plus one or more dependents would pay
  5 a month and have a 2,000 deductible. The
  county would put in 1,000 annually.

8
Recent HSA News

• State of Florida Employees
• Under the new HSA option, in the DMS example, the
  premium is 64 a month, or 768 a year. That's a
  savings of 1,392 - some of which the employee
  could prudently put into an HSA. The state then
  kicks in 1,000 to the account for family
  coverage (for single employees, state
  contribution is 500 a year and the premium is
  15 monthly).

9
Recent HSA News

• A survey by America's Health Insurance Plans
  (AHIP) of its members selling Health Savings
  Accounts (HSAs) found 1,031,000 people were
  covered by HSA/HDHP (high-deductible health plan)
  products as of March 2005. That is more than
  double the figure reported by AHIP members in
  September 2004.
• Eight percent of 555 large employers surveyed by
  the human capital consulting firm Watson Wyatt
  and the National Business Group on Health
  currently offer HSAs, and 18 percent plan to
  offer them in 2006.

10
Recent HSA News

• Proponents of Health Savings Accounts (HSAs)
  predicted they would revolutionize the health
  marketplace. Now, less than two years after
  becoming law, more than a million people own
  HSAs. That's twice as many as in September 2004,
  according to a study released in May by the trade
  group America's Health Insurance Plans.
• By most accounts, HSAs are having an enormously
  beneficial effect on the design of health
  insurance in this country. Instead of an employer
  or insurer paying medical bills, more than one
  million people are managing some of their own
  health care dollars.

11
Trustee or Custodian Responsibility

• It is the final responsibility of the account
  holder, not the trustee or the custodian, to
  determine if deposits have exceeded the maximum
  allowable amount.
• It is the responsibility of the account owner to
  notify the custodian or trustee if there has been
  excess deposits made, and it is the
  responsibility of the account owner to request
  the withdrawal of those funds, and the payment of
  income tax on those funds and the a pro-rata
  share of the earnings, and the payment of the 10
  penalty tax.

12
Trustee or Custodian Responsibility

• The trustee or the custodian is not required to
  determine whether the distribution is for the
  payment or reimbursement of qualified medical
  expenses.
• Only the account owner is responsible for
  substantiating that any distribution is for
  qualified medical expenses and must retain
  records sufficient to show, if required, that the
  distribution is for a qualified medical expense.
• Reporting requirements for financial entities
  holding HSA funds are relatively simple.
  Trustees, custodians and health savings account
  administrators need to file two IRS forms, one
  for distributions from the HSA (1099-sa), and one
  for contributions to the HSA (5498-sa).

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• Website
• HSA forms
• 800 number
• 10 hour customer service
• hsa Rx Drug Card-Real Time Pricing
• Investment options available optionsXpress
• Section 125 plan
• IRS updates 
• Help with seminars and speakers

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• Letters
• Brochures
• IRS Updates
• PowerPoint
• Press releases
• hsa Road Rules

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Fees Interest Rates

• HSA set up fee
• Monthly Fee?
• Interest Rates
• Investment Options
• You decide what's right for you.

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• Call 262-348-1300 to see how you could be
  offering HSA to your customers.