B The Bancorp Bank HSA Program Overview. for. Excellus

Transcription

1 B The Bancorp Bank HSA Program Overview for Overview of The Bancorp Bank HSA Solution for Excellus

2 Agenda Introduction to The Bancorp Bank HSA Eligibility, Features and Benefits Contributions, Distributions & Qualified Medical Expenses Summary of Healthcare Reform-Related Changes Bancorp Product Features Statements and Tax Information Enrollment Process for IBC Members Funding Options HSA Withdrawal Methods Online Tools Investment Platform Overview Resources

3 The Bancorp Bank FDIC insured full-service financial institution Headquartered in Wilmington, Delaware Highly experienced banking and technology management team Publicly traded (NASDAQ NM: TBBK) One of the top 6 HSA Custodians - Over 268,000 Health Savings Accounts - $400 Million+ in HSA Deposits - Clients Provide Services to over 22 Million Members A leader in HSA administration since January 2004 Member of the ABA HSA Council, HSA Coalition and NAHU Principle member of both Visa and MasterCard

4 How Does a Health Savings Account Work? High Deductible Health Plan Component (HDHP) Health Savings Account Component (HSA) HDHP + HSA Solution Health Insurance used to cover expenses for illness or injury after meeting a minimum deductible amount Tax-Advantaged account which can be used to cover medical expenses before the insurance deductible is met. Funds may also be saved for future medical expenses Control Healthcare Expenses! Increase Tax Savings! Lower Insurance Premiums! Flexibility & Portability! Savings for Retirement! Lower premiums Protection from big medical bills Covers same eligible expenses Same provider network Helps pay deductible Pre-tax contributions Tax-deferred growth Tax-free withdrawals for medical

5 Key Features of an HSA: HSA Key Features & Eligibility HSA Eligibility: Funds deposited into an HSA are taxadvantaged and owned by the account holder Funds may be rolled over year to year; no use-it or lose-it rule Accounts can accumulate significant assets that can be used for healthcare tax free Funds in the HSA can be invested Funds are portable available through job changes Participants must be enrolled in an HSA-qualified High Deductible Health Plan Individuals cannot be covered by any other insurance that reimburses for health expenses at the same time they are contributing to their HSA. That would include current coverage by a medical Flexible Spending Account. Limited-purpose or Dependent-care FSAs do not conflict with an HSA Cannot be enrolled in Medicare or Medicaid Cannot be eligible to be claimed as a dependent on another person s tax return and must be over 18 years of age

6 Medicare Once enrolled in Medicare, an individual can continue to use their HSA funds, but may not contribute into their account any longer Contributions After Medicare: When someone turns 65 yrs old and goes on Medicare, IRS rules state they can only contribute until the month before they began Medicare. Example: If an individual on a single plan that falls from January 1 st through December 31 st were to go on Medicare in August, they can contribute for 7 months within that calendar year. They would need to calculate the maximum allowable contribution as 7/12 s. (If they wish to contribute a catch-up contribution, that can be added to the total and pro-rated as well).

7 HSA and FSA Comparison Question HSA FSA Do the funds belong to the employee? YES NO Can the money be invested and the employees earn interest? YES NO Can the employees use the funds for things other than medical expenses? YES NO If an employee has committed to direct deposit a portion of each paycheck, can they access the full amount of funds right away (before they are actually deposited into the account) NO YES Can the employee take the money with them if they switch employers? YES NO Do the funds rollover year-to-year? YES Generally, NO Who can contribute to the account? Employers and/or Individuals (anyone) Employee

8 Contributions Contributions are not subject to income tax Contributions can be made by: - Account holders - Employers - Any Third Party Contributions in excess of the allowable limits must be withdrawn or incur a 6% excise tax Individuals 55 or older may contribute catch-up contributions of $ per year until they enroll in Medicare 2010 & 2011 Maximum Contribution Limits Individual $3050 Family $6150 Annual Catch-up* $1000 *For individuals 55 and older before they enroll in Medicare

9 Distributions Money withdrawn from an HSA may be used to pay for eligible medical expenses for the account holder, spouse, or any dependents Reimbursement can be taken from the HSA for expenses from prior years (if the HSA was in place when expenses occurred) Withdrawals for non-medical expenses are possible: Before retirement age = Distribution is taxed as income plus a 10% penalty (20% in 2011) After retirement age = Only taxed as income Save those receipts! Account holders are responsible for ensuring HSA funds are used for qualified expenses and to maintain records

10 Qualified Medical Expenses According to the Internal Revenue Service (IRS), HSA funds can be used to pay for: Most medical care & services, dental services and vision care Alternative care often not covered by traditional insurance Many over-the-counter (OTC) drugs *Starting 1/1/11, Doctor s prescription required for these expenses Health insurance premiums under COBRA continuation coverage or while receiving unemployment compensation Premiums for Medicare Part A/B or qualified long term care insurance Some examples: Rx Drugs Physician s Fees Hospitalization Orthodontia Chiropractic care Acupuncture Reading Glasses Contact Lens Solution Maternity Costs Laser Eye Surgery Oxygen Equipment Band-Aids Dental services

11 How is The Bancorp Bank s HSA Different? Bancorp is FDIC Insured and publicly traded (NASDAQ: TBBK) Competitive rates & no hidden charges - no monthly maintenance fee for Independence Blue Cross members! A user-friendly website and banking portal with 24/7 access to account information A simple online bill payment service available at no cost Free online process for depositing funds from other bank accounts Free Visa debit card and a free first order of checks A free year-end summary of all HSA activity A superior self-directed investment platform 24/7 customer service - HSA experts who are dedicated to your needs

12 Statements: Issued monthly with account activity, quarterly if no activity Go Green by selecting our simple e-statements option!! Free Year-End Summary: Issued to every account holder each January Statements & Tax Forms Annual tax documentation: IRS Form 1099-SA: Details distributions; Bancorp sends to Customer and IRS by January 31 st IRS Form 5498-SA: Details contributions; sent to Customer and IRS by May 31 st IRS Form W-2: Reports employer contributions, including pretax payroll deductions. Employer contributions are not considered part of income. Produced by Employer in box 12 with a code of W.

13 Tax Benefits - continued Personal contributions may be made through payroll deduction. If you choose to contribute post-tax funds, they may be take as an above-the-line deduction on your tax return Distributions are tax-free when used for qualified medical expenses Insurance Coverage Tax Bracket Annual Tax Savings by Contribution Max Contrib Plus Catchup $1,200 $2,000 $3,050 $4,050 15% $180 $300 $458 $608 Single Coverage 25% $300 $500 $763 $1,013 28% $336 $560 $854 $1,134 33% $396 $660 $1,007 $1,337 Family Coverage $2,000 $4,000 $6,150 $7,150 15% $300 $600 $923 $1,073 25% $500 $1,000 $1,538 $1,788 28% $560 $1,120 $1,722 $2,002 33% $660 $1,320 $2,030 $2,360 Salary Range Tax Bracket Single Filing Married 15% $8,026-32,550 $16,051-65,100 25% $32,551-78,850 $65, ,450 28% $78, ,550 $131, ,300 33% $164, ,700 $200, ,700

14 HSA Enrollment Process 1 st Step: Enroll in the new High Deductible Health Plan 2 nd Step: Apply for a Health Savings Account (HSA enrollment forms are processed during open enrollment) 3 rd Step: Enrollment data is forwarded to Independence Blue Cross for review 4 th Step: Data is sent electronically to The Bancorp Bank 5 th Step: Application information is processed / account is opened Bancorp receives enrollment data, and immediately reviews information within 24 hours. The account is opened after validation according to Customer Identification Procedures outlined in The USA Patriot Act

15 Enrollment (continued) Within 2 weeks of electing a new HSA, you would receive the following items in the mail: Welcome Kit including User Id (mailed in large white envelope) Password for Online Access (Mailed in business envelope, or may be sent electronically if is available) 409 Silverside Road, Suite 105 Wilmington, DE PIN for Debit Card Cash Access (mailed in small perforated mailer) Checks Book of 50 (mailed in a blue plastic envelope) Visa Debit Card (Mailed in a regular business envelope) NOTE: After account opening, employees are encouraged to watch out for new materials in the mail. For security, accountrelated materials are mailed in generic envelopes simply noted with a return address of: 409 Silverside Drive, Suite 105 Wilmington, DE 19809

16 Employee contribution options Employee Contributions

17 Employee withdrawal options Account Withdrawals

18 Paying for Medical Expenses Payment to a Medical Service Provider (Doctor, Hospital, etc): Show your insurance card and explain that you have a high deductible health plan. Most Doctor s offices will request that you wait and pay for their service after the bill is processed through insurance. It is best to pay after the insurance EOB (explanation of benefits) has been processed and you receive the correct bill from your provider. Always be sure to check provider bills carefully against your EOB so you receive the negotiated carrier rate! Payment at the Pharmacy: Pharmacies have a system in place which enables them to immediately access an insurance carrier s negotiated rate for prescriptions, so payment will be necessary at the time of purchase. Use your HSA debit card or a check for those items. Keep in mind that it is wise to comparison-shop, as costs can vary

19 Online Tools: The Bancorp Bank s Website and Online Banking Portal provide each account holder with access to the following: Funding/Deposits/Transfers Real Time Account Balances Check Images Online Calculators Investment Options Free Online Bill Payment Service Training Opportunities Guides & Tutorials HSA Information, References & Resources

20 Self-Directed Investment Platform HSA Once $2500 is saved in an HSA, the member is able to open a brokerage account offered by The Bancorp Bank through an arrangement with National Financial Services, a wholly-owned subsidiary of Fidelity Investments Click on Investment Account Information on our website to find the application and all necessary information Upon receipt of a brokerage application, Bancorp sends the member a new user id and password to allow trading of HSA monies The HSA and brokerage account are electronically linked, allowing funds to transfer smoothly between the accounts as needed

21 Maximizing HSA Savings Most of us are accustomed to a traditional co-pay system where we are unaware of the real cost of healthcare. The following suggestions can be helpful in developing a more consumerdriven mindset to save more money with a Health Savings Account: Contribute whatever is possible (up to IRS limit) to increase tax savings Try local clinics vs. ERs for minor emergencies; Explore alternatives to physician office visits when it makes sense Buy generic vs. brand-name prescriptions if they are available Compare different locations costs for medical procedures/ testing in advance. It is often possible to find a lower-cost alternatives for the same procedures Bargain shop for medicines Wal-Mart, Sam s Club, Costco, etc. (Check out Wal-Mart's website for their $4.00 prescription list!)

22 Additional Resources Visit our website: Customer Service via 24/7 Customer Service via telephone: For detailed information on HSAs or Qualified Medical Expenses: Visit: IRS: or

23

24 Thank you