Health Savings Account ENROLLMENT GUIDE. Health Savings Account Enrollment Guide C1

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1 Health Savings Account ENROLLMENT GUIDE Health Savings Account Enrollment Guide C1

2 Table of Contents Health Savings Account Your online account... 3 Using your HSA... 5 HSA calculator... 7 Benefits of an HSA HSA expenses... 9 New account holder information Investment information... 12

3 Health Savings Account The advantages Paying for health care is now easier and less expensive with a BlueFund Health Savings Account (HSA) from CareFirst BlueCross BlueShield or CareFirst BlueChoice, Inc. (CareFirst). This program is powered by ConnectYourCare, an independent company providing funding account administration for Consumer Directed Health Care (CDH) accounts. What is a Health Savings Account (HSA)? A Health Savings Account (HSA) is like a 401(k) for health care. HSAs are tax-exempt accounts that accumulate interest and can earn investment returns. The funds can be used to pay for qualified medical expenses today or can be saved for future expenses. It s owned by you and is 100 percent vested from day one, so you can build up savings for future needs. Easy to access Funds in the account are easily accessed with the health care payment card. Or, you can submit withdrawal requests online when using the card is not convenient. Take it with you Because your HSA is owned by you, if you change jobs or health plans, your account stays with you. You can even use your account for retirement expenses when you reach age 65. Triple tax savings 1. Pre-tax contributions whether they are made by you or your employer 2. Tax-free withdrawals for eligible expenses 3. Tax-free growth while money is in your account Interest and investments Not only will your HSA balance earn interest each month, but once you meet the minimum balance, you will have the option to invest in nationally recognized mutual fund families. Multiple uses There are hundreds of eligible health care expenses for your HSA funds, including prescriptions, some over-the-counter medications, doctor office copays, health insurance deductibles and coinsurance. Funds may even be used for qualified expenses for your spouse or tax dependents. Health Savings Account Enrollment Guide 1

4 Health Savings Account The advantages Rules and regulations To be eligible to open and contribute to an HSA, you must be covered by a qualified High Deductible Health Plan (HDHP). Your employer may offer a limited-purpose Flexible Spending Account (FSA), along with an HSA, that can be used to cover preventive care, dental and vision expenses. HSA funds may be used for any eligible health care expense not covered by insurance or any other plan for yourself, your spouse or tax dependents. HSA funds can be withdrawn for non-health care items, but will be subject to regular income taxes and a 20 percent excise tax penalty. The IRS may request itemized receipts for HSA purchases during tax time. So, always save your itemized receipts! HSAs remain with you even if you change health plans or companies. If you open an HSA and later become ineligible to make contributions, you can still use your remaining funds. HSA enrollment eligibility Most taxpayers are eligible for an HSA. However, you are ineligible for an HSA if: You can be claimed as a dependent on another person s taxes. Generally, this excludes children under age 19 (or 24 for students), or other household members with limited income who are supported by the taxpayer. You are enrolled in Medicare. You are covered by your own or a spouse s non- HSA-qualified health plan, Flexible Spending Account (FSA), or Health Reimbursement Arrangement (HRA). You received any Veteran s Administration health benefits in the last three months. Contribution limits For 2016, contributions may not exceed $3,350 for individual coverage or $6,750 for family coverage. Individuals age 55 or older can make additional catch-up contributions of up to $1,000 each year for You may contribute the maximum allowed for the year at any time up until the tax-filing deadline (generally April 15) of the following year. 2 Health Savings Account Enrollment Guide

5 Your online account How to manage your contributions You can make non-payroll contribution changes using the Contribution Center in your online account. This option allows you to make or change contributions on a recurring basis or on a one-time basis. Where to begin Go to Sign in with your User Name and Password. If it is your first time visiting the site, choose New then Register Now to create your User Name and Password. After logging in, select the My Coverage tab, followed by BlueFund Administration. You can also select BlueFund Administration from the Quick Links section on the home page. Please Note: Contributions via the Contribution Center are made post-tax and can be deducted at tax time. Maximum contributions for members who become eligible to contribute to an HSA mid-year (not January 1) You may make a full year s contribution into your HSA, even if you are eligible for only part of the year. If you make a contribution for the full year when you only had partial year HSA-eligibility, you must remain HSA-eligible through the last month of the following calendar year to avoid paying taxes and penalties. Making changes to HSA contribution amounts during the plan year You can change the amount you contribute to your HSA at any time during the plan year. If you are changing the amount contributed via payroll on a pre-tax basis, check with your employer. Employer contributions Contributions to HSAs can be made by you, your employer or both. All contributions are aggregated to determine whether you have contributed the maximum allowed (see page 2). If your employer contributes some of the money, you can make up the difference. If your employer makes a contribution to your HSA, the contribution is not taxable to you, the employee it s excluded from income. The annual employer contribution, if any, is determined by your employer. Please see your plan documents or consult with your Human Resources office for more information. Health Savings Account Enrollment Guide 3

6 Your online account How to manage your contributions Online account features Once you log in to My Account, our online member website (BlueFund Administration) puts account information and health education tools at your fingertips. Get account balance View payment card charges View HSA interest payments Enter a request for withdrawal View withdrawal requests Manage HSA investments Access communication center messages View reimbursement schedule Find answers to frequently asked questions 4 Health Savings Account Enrollment Guide

7 Using your HSA Making health care payments easier We make it easy to access and use your account funds. There are two ways to pay for health care. Use your health care payment card This is the simplest way to pay for health care! Use your health care payment card and log on to your online account regularly to check your balance. What you pay When you pay for health care at the doctor, dentist, eye doctor or hospital, always be sure to present your health insurance ID card first to ensure proper processing of charges. Copays: If you are asked to pay a copay, you may pay with your health care payment card, or you may pay out-of-pocket and request reimbursement online. Additional charges: If you re asked to pay for additional charges, do not pay your provider until the claim is processed by your health plan and you receive your Explanation of Benefits (EOB) in the mail. This helps avoid overpayment. Compare your EOB with the provider bill to verify the amount being charged by your provider is the same as the patient balance on the EOB. You may then pay using your card, or pay out-of-pocket and request reimbursement online. Pay out-of-pocket and request reimbursement Pay using your own personal credit card, cash or check. Then, log on to your online account to file for reimbursement. Remember to save your itemized receipts in case they are requested during tax time. Prescriptions: When purchasing prescriptions, always present your health insurance ID card to the pharmacy to make sure you receive your health plan discount. Over-the-counter items: You may also purchase eligible over-the-counter items at the pharmacy and pay with your health care payment card. Or, you may pay out-of-pocket and request reimbursement online. TIP: Set up direct deposit online to receive quicker reimbursements. Health Savings Account Enrollment Guide 5

8 Using your HSA Making health care payments easier How the health care payment card works We provide a convenient health care payment card to access account funds. You will receive this card in the mail. 1. Pay for qualified expenses with your card Pay for qualified products and services directly at approved merchants. The money comes right out of your health care account. Your card includes a preset PIN, which is the last four digits of your card number. To use the card without a PIN, select Credit at the payment terminal. 2. Get your balance By frequently checking your account balance online, you will have a good idea of the funds available in your account. When you swipe your health care payment card, the system makes sure that your coverage is active and that you have sufficient funds in your account for the full amount. If not, the transaction will be denied. You can swipe the card for the amount left in your account and pay the difference with another form of payment. Use your card at approved merchants Your card has been programmed to work only at merchant locations that are designated as health care merchants based on their Merchant Category Code (MCC). Examples of qualified merchants include doctor s offices, hospitals and some retailers. The card should only be used to pay for eligible medical expenses, and you should always save your receipts. You will not be able to use your health care payment card at locations that are not approved health care merchants. Visit for a list of approved merchants. For purchases at those locations, you can pay with other means, then submit a request for reimbursement through your online account. 3. Know what s eligible Familiarize yourself with what expenses are eligible using the list of Eligible Expenses on page 9 in this guide, your online account, or your employer s plan documents. Examples of eligible expenses are doctor visits, prescription drugs and many over-the-counter medications. If you use the card for ineligible expenses, you have the option to reimburse the plan or you may be required to pay income taxes and an additional penalty tax. 4. Save your itemized receipts Although your health care payment card eliminates the need to file paper claims, the IRS may require itemized receipts for tax purposes. 6 Health Savings Account Enrollment Guide

9 HSA calculator See how much you can save While there s no such thing as free money, an HSA can help your money go a lot further. Use this worksheet to see how much you can save. Step 1: Estimate out-of-pocket expenses An HSA can cover medical, dental or vision expenses that you would otherwise pay out-of-pocket. Enter the annual amounts you spend on each expense to see how much you typically pay out-of-pocket. Step 2: Calculate tax savings Add up your out-of-pocket expenses plus any additional contributions you plan on making. Then, multiply that total by your tax rate to calculate your tax savings. Office visit copays Chiropractic services Psychiatric services Medical supplies and equipment Laboratory or X-ray charges Surgical or outpatient procedures Hospitalization expenses Prescription drugs Eligible over-the-counter drugs Other medical expenses Dental deductible Dental preventative visits Annual out-of-pocket costs (from Step 1) + Additional HSA contributions = Total annual election Tax rate (from table below) Annual tax savings: (Annual elections x tax rate) Tax Rate Table Annual household income Less than $30,000 $30,000 $39,999 $40,000 $69,999 $70,000 or Greater Estimated tax rate* 25% 29% 31% 33% *Tax rates are estimated based on a combination of Social Security, federal and state income taxes using national averages and may not reflect your actual tax rate. Orthodontia expenses Other dental expenses Vision exam Try our online calculator at Glasses, contact lenses, supplies Other vision expenses Other expenses Annual out-of-pocket costs: Health Savings Account Enrollment Guide 7

10 Benefits of an HSA Example Meet Jim Jim s employer is offering two Preferred Provider Organization (PPO) plans. Which one makes the most sense for Jim? Let s compare the options: Option 1: PPO Deductible $500 Jim s contribution to premium Jim s total expense (premium and deductible) $2,700/year $3,200 Option 2: High Deductible PPO with HSA Deductible $1,500 Jim s contribution to premium Contribution savings (Compared to Option 1) $2,200/year $500 Contribution savings used to fund HSA $500 Jim s additional contribution to his HSA $500 Employer s contribution to Jim s HSA $500 Total HSA contributions $1,500 Jim s total expense (premium, deductible, HSA contribution) $3,200 With Option 1, Jim has predictable copays and a lower deductible. However, an HSA plan lets Jim combine his medical coverage with an HSA to give him more control over his health care spending, while saving for the future. Benefits of an HSA If Jim is healthy and doesn t use the funds in his HSA he will have up to $1,500 in his HSA at the end of the year. In fact, Jim can contribute up to $3,350 (for 2016) to his HSA and increase his savings. Jim gets a tax benefit since HSA contributions are pre-tax. This lets Jim increase his disposable income, helping his money go further. For qualified health care expenses, Jim can use his HSA funds tax-free both now and in the future. Unlike regular savings accounts, the interest Jim earns on his HSA funds is tax-free. Jim s HSA funds are not use it or lose it and can roll over year to year. Jim even has the option to use his HSA funds in retirement (after age 65). Because an HSA is portable, it stays with Jim even if he changes employers or leaves the work force. 8 Health Savings Account Enrollment Guide

11 HSA expenses What s eligible and ineligible Use your Health Savings Account for hundreds of qualified expenses. Eligible HSA expenses There are hundreds of eligible expenses for your HSA funds, including prescriptions, over-the-counter medications, doctor office copays, health insurance deductibles and coinsurance. HSA funds may even be used for eligible expenses for your spouse or dependents. Acupuncture Alcoholism treatment Ambulance Artificial limb Automobile modifications for a physically handicapped person Birth control pills Blood pressure monitoring device Braille books and magazines (above the cost of regular printed material) Breast pumps and lactation devices Chiropractic care Christian Science practitioner COBRA premiums Contact lenses and related materials Crutches Dental treatment Dentures Diagnostic services Drug addiction treatment Eye examination Eye glasses and related materials Fertility treatment Flu shot Guide dog or other animal aide Hearing aids Hospital services Immunization Insulin Laboratory fees Laser eye surgery Long-term care premiums or expenses (post-tax) Medical testing device Nursing services Obstetrical expenses Organ transplant Orthodontia (not for cosmetic reasons) Oxygen Physical exam Physical therapy Prescription drugs Psychiatric care Retiree medical insurance premiums Smoking cessation program Surgery Transportation for medical care Weight loss program to treat obesity Wheelchair Ineligible HSA expenses These items are never eligible for tax-free purchase with HSA funds. Concierge service fees (billed for future services; no treatment actually provided) Cosmetic surgery Exercise equipment Fitness programs Funeral expenses Hair transplants Household help Illegal operations and treatments Maternity clothes Most insurance premiums (COBRA, long-term and retiree medical premiums are allowed) Teeth whitening Health Savings Account Enrollment Guide 9

12 HSA expenses What s eligible and ineligible Your Health Savings Account can also be used for some over-the-counter (OTC) items. Eligible without a prescription Insulin, testing and other non-medicinal health items are available without a prescription, letter of medical necessity or doctor s directive. Examples include: Bandages Braces and supports Catheters Contact lens supplies and solutions Denture adhesives Diagnostic tests and monitors Family planning items First aid supplies Insulin and diabetic supplies Ostomy products Reading glasses Sunscreen and sun block (SPF 15+, broad specturm) Wheelchairs, walkers, canes Dual purpose items Items that can be used for a medicinal purpose or for general health and well-being are considered dual purpose and are eligible only with a prescription, doctor s directive or letter of medical necessity. Examples include: Dietary and weight loss supplements Orthopedic shoes and inserts Snoring cessation aids Vitamins and herbal supplements Eligible only with prescription * Over-the-counter items that contain a drug or medication require a prescription in order to be reimbursed. Examples include: Acid controllers Allergy and sinus medicine Antibiotics Anti-diarrheals Anti-gas products Anti-itch and insect bite Anti-parasitic treatments Baby rash ointments/creams Cold sore remedies Cough, cold and flu treatments Digestive aids Feminine anti-fungal/anti-itch Hemorrhoidal preps Laxatives Motion sickness Pain relievers Respiratory treatments Sleep aids and sedatives Stomach remedies * A prescription means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state. Ineligible over-the-counter expenses Over-the-counter items merely beneficial to general health or for cosmetic reasons are not eligible. Examples include: Cosmetics Deodorant Exercise equipment Fitness programs Moisturizers and wrinkle creams Teeth whitening services and products Toothpaste and mouthwash 10 Health Savings Account Enrollment Guide

13 New account holder information Starting your HSA Use this list to make sure you ve taken the necessary steps to open and fund your HSA. C omplete the HSA enrollment form provided by your employer. R ecord your account number and file it in a safe place. S tart saving so you can pay for, or be reimbursed for, qualified medical expenses. R eview your account fee schedule and privacy notice. B ecome familiar with qualified medical expenses. R egister for My Account at (through the BlueFund Administration link) for direct deposit. R eview how to pay bills online. S ave all receipts for qualified medical expenses. Upload to participant website. C onsider paying a few bills out-of-pocket, which leaves more money in your HSA. eview your investment options to further grow R your HSA. I f you re age 55 or older, make additional catch-up contributions of $1,000 each year. Health Savings Account Enrollment Guide 11

14 Investment information Options available for HSA funds UMB Bank* provides an integrated investment platform that allows you to easily invest and grow your HSA funds. You can choose to invest in one or both of the following options: Money Market Sweep Account HSA Investment Account Once you have $1,000 in your HSA deposit account, an Investments link will appear on your BlueFund Administration website. This site contains detailed information about both investment options and allows you to enroll in and manage your investments. Money Market Sweep Account With the Money Market Sweep Account, funds over $1,000 are automatically swept daily from your HSA deposit account to your Money Market Sweep Account. This gives you the potential to earn higher yields than from your HSA deposit account. The Money Market Sweep Account balance is included in your available balance at the time of purchase. Your health care payment card will be approved for a purchase of more than $1,000 if the funds are available in your Money Market Sweep Account. * An independent company providing services to CareFirst members. UMB Bank and UMB Financial Services do not sell BlueCross or BlueShield products. ** Fee schedule for a Money Market Sweep Account: There is no charge to open the Money Market Sweep Account. However, UMB will collect a fee for administering the daily investment of cash into the Fund on your behalf (the Sweep Fee ) equal to.25 of 1% (25 basis points) per year of the value of your HSA s investment in the Fund. This fee, which is reflected as a reduction in the effective yield of the Fund, is accrued daily and deducted monthly from the Fund s dividends prior to such dividends being credited to your HSA Deposit Account. Requirements for opening an HSA Investment Account To open a self-directed brokerage HSA Investment Account, you must have the required $1,000 balance limit in your HSA Deposit Account, plus the initial minimum investment amount for the fund(s) you wish to purchase. For example, if you wish to invest in a fund with a $1,500 minimum initial investment, you would need to have $2,500 in your HSA Deposit Account and/or your Money Market Sweep Account. You may research more information about these funds and their initial minimum investments online. 1. Log into your online account at 2. Click on BlueFund Administration followed by Manage My HSA Investments Fee schedule** There are no trade fees, but once you open an HSA Investment Account, you will be subject to a $24 annual administrative fee. This fee will be drawn directly from your HSA Deposit Account. Managing your HSA Investment Account After opening your account, you may place mutual fund trades through the Investments link in the BlueFund Administration website. You can also research funds, purchase funds, realign your portfolio, view account history and access statements online. Once a trade has been executed, funds will be transferred on the settlement date from or to your HSA Deposit Account. Before making a trade, you should verify that your HSA Deposit Account contains sufficient money to settle the trade. 12 Health Savings Account Enrollment Guide

15 CareFirst BlueCross BlueShield CareFirst BlueChoice, Inc Mill Run Circle Owings Mills, MD CONNECT WITH US: BOK5394-1P (7/15) CareFirst BlueCross BlueShield is the shared business name of CareFirst of Maryland, Inc. and Group Hospitalization and Medical Services, Inc. CareFirst BlueCross BlueShield and CareFirst BlueChoice, Inc. are both independent licensees of the Blue Cross and Blue Shield Association. Registered trademark of the Blue Cross and Blue Shield Association. Registered trademark of CareFirst of Maryland, Inc.