Frequently Asked Questions. High Deductible Health Plan (HDHP) with Health Savings Account (HSA)

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1 Frequently Asked Questions High Deductible Health Plan (HDHP) with Health Savings Account (HSA) There are two components to the High Deductible Health Plan (HDHP) with HSA Medical Plan the HDHP Health Savings Account the HSA MEDICAL PLAN HDHP Eligibility Q1: Who is eligible to participate in a HDHP with a HSA? Professional-administrative, management and executive active employees and pre-age 65 Retiree Choice Retirees residing in the U.S. and on U.S. payroll are eligible for a HDHP with HSA. The following requirements are based on IRS Guidelines. Employees and Retirees (the HSA account holder) must: Not be enrolled in Medicare. However, dependents may be enrolled in Medicare. Not be covered under any other health plan that is not an HDHP. However, dependents enrolled in the HDHP with HSA may have other non-hdhp coverage. Not be claimed as a dependent on someone else s tax return. Plan Coverage Q2: What medical services are covered at 100%, not subject to my deductible and co-insurance? Preventive care services that meet the Preventive Service Guidelines are covered at 100%. Covered preventive services are based on national medical association preventive care and FCA benefit guidelines. See Preventive Service Guidelines located on Dashboard / Health Plans. Q3: What medical services are subject to my deductible and co-insurance? All covered hospital, surgical, medical services including foot care, mental health and substance abuse services, prescription drugs and durable medical equipment are subject to deductible and co-insurance up to the out-of-pocket maximum. Federal law requires health plans coupled with a HSA must have a high dollar deductible. Q4: Are there individual deductibles or out-of-pocket maximums for a family contract with the HDHP? On a family contract, the full family deductible and out-of-pocket maximum can be met by one or by a combination of family members before the Plan pays.

2 Preventative Care Q5: Is preventive care covered? Recommended preventive care services per FCA guidelines are covered by the HDHP with HSA in full (paid at 100%) for in-network providers. This benefit is not subject to the deductible. Preventive services received out-of-network are covered subject to the out-of-network plan design. Age and frequency limitations apply. See Preventive Service Guidelines located on Dashboard / Health Plans for a listing of covered services. Q6: How is diagnostic care covered? Diagnostic services performed to investigate existing symptoms or monitor ongoing conditions are subject to your deductible and co-insurance up to your out-of-pocket maximum. Q7: What is the difference between preventive care and diagnostic care? Preventive care includes routine screenings to promote disease prevention and early detection. Preventive care does not include maintenance for diagnosed medical conditions or services performed to diagnose a probable medical condition when symptoms already exist. Diagnostic tests are performed to investigate existing symptoms or monitor ongoing conditions. If a medical condition is diagnosed or considered probable during a preventive exam, any supplemental tests/medical services will be coded as diagnostic. Q8: How will I know if my preventive screening will be paid at 100%? Review the recommended Preventive Service Guidelines for age and frequency limitations to identify the services you are eligible to receive. Advise your health care provider that preventive care is paid at 100% and should be coded as preventive when care meets the Preventive Services age and frequency restrictions and preventive care definition. Q9: What if my preventive service is billed with a diagnostic and a preventive code? A covered preventive service that is billed with multiple diagnoses which includes both a covered preventive and diagnostic billing code will be paid at 100% as preventive care. If you are billed for a covered preventive service with multiple diagnoses, you may need to contact your health plan to request your preventive claim be processed as preventive. Q10: Are the preventive frequency limitations allowable by calendar year or by the exact date of service? For example, if I have my annual physical on August 1st, do I need to wait until August 1st of the following year to have another annual physical? Preventive services are allowable by calendar year and are not limited by exact dates of service. They are reset every year on January 1. Therefore, you do not have to wait until the exact date the following year to have another annual physical. Network Providers Q11: Is my doctor in the network? To find a provider, search this network:

3 Blue Cross Blue Shield HSA Member: Non-members: Q12: When should I pay my network provider for medical services? Always show your health plan member ID card when receiving care or purchasing prescriptions to ensure that you get the in-network discount. For doctor s office visits or facility charges, have your provider submit the claim to the health plan to ensure you get all network discounts you are entitled to and to determine the appropriate member responsibility before you pay the expense. When you receive the bill from your medical provider, you can use your HSA debit card or pay out of your own pocket and save your HSA funds. HEALTH SAVINGS ACCOUNT HSA Q13: What is a Health Savings Account (HSA)*? A Health Savings Account, referred to as an HSA, is an account set up to pay for qualified medical expenses, including dental and vision, with tax-free dollars. The HSA provides significant tax advantages since contributions and interest earned are not taxed and withdrawals are not taxed as long as used to pay for qualified medical expenses. Unlike flexible medical spending accounts, you are not obligated to use the money contributed each calendar year. The money can remain in an account and earn interest until you need it. *All HSA tax references and certain eligibility requirements are regulated by the IRS. Consult a tax advisor. Eligibility and Enrollment Q14: What is the enrollment process for an HSA? Within 5 to 10 business days of account opening, you will receive: Welcome kit from Bank of America that will include information on account management and on-line access Visa Debit Card Q15: Who qualifies to receive distributions for qualified medical expenses from my HSA? You, your spouse and all dependents claimed on your tax return are eligible to use the money in your HSA. Note: If you have an adult child that you don t claim on your tax return (i.e. they file their own return), they are not eligible. Q16: Am I eligible to use the money in my HSA account if I am no longer enrolled in a HDHP? Yes, if you switch plans and have money in your HSA, the account is still yours to use for any current or future qualified medical expense incurred by the account holder, your spouse, and qualifying

4 dependents. However, no future contributions to your HSA are allowed while you are not enrolled in a HDHP. Q17: Am I eligible to participate in a Limited Purpose Flexible Spending Account (FSA) while I am enrolled in a HDHP with HSA? Yes; however, IRS regulations stipulate that you cannot use FSA funds to pay your HDHP plan deductible. You may only submit for expenses that are in excess of your annual deductible for reimbursement through your FSA. Q18: Is there a cost to establish an HSA? There is no cost to establish an HSA. A monthly administrative fee is paid for by FCA while you are employed. The monthly fee is also paid for FCA retirees. If you terminate employment with FCA and wish to maintain your HSA account, it will be ported to a retail account and you would be responsible for any account fees. Contributions Q19: How much can I contribute each year to an HSA? The maximum amount you can contribute is determined by the Internal Revenue Service each year. The HSA contribution maximum for 2015 is $3,350 for single coverage and $6,650 for family coverage. Q20: Are additional contributions allowed for those ages 55 or older? Yes. Those ages 55 or older may contribute an additional $1,000 to their HSA. Q21: Can I change my HSA contribution amount during the year? Active employees can start, stop or change the pre-tax contribution amount you are contributing through payroll deduction by calling Benefit Express at or logging on to Your Benefit Resources (YBR). Eligible retirees can schedule contributions through the on-line website. Review the links under Common Requests to Schedule an HSA Contribution. Q22: Can I make a lump sum employee contribution through payroll deduction? Yes, lump sum payroll contributions can only be elected during annual enrollment and will occur with the first payroll deduction of the year. Q23: How are employer contributions made? A lump sum employer contribution will be made in January. Once available, employer contributions belong to you. Employer contributions are made directly to Bank of America and are recorded on your pay statement for proper tax reporting. Q24: Is there a minimum amount I must contribute to my HSA each year? You can choose whether to contribute and how much you want to contribute to your HSA, but the total cannot exceed the annual maximum contribution amount that is set by the IRS.

5 Accessing the Money in Your HSA Account Q25: When will the funds be available to use? The lump sum company contribution amount will be available in your HSA account in mid-january of the plan year. Your payroll deducted contribution is sent to Bank of America monthly based on your payroll cycle. If you incur medical expenses early in the year before your funds are deposited, you can submit for reimbursement later in the year once you have accumulated sufficient funds. Q26: How do I withdraw money from my HSA? You can use your HSA debit card at point of service or schedule provider payments on-line through the Bank of America website. You may also request electronic or check reimbursement for qualified medical expenses you paid for out-of-pocket if your HSA was in place when the expense was incurred. Be sure to keep copies of your receipts for tax records, as proof that you used your HSA funds for qualified medical expenses! Q27: What types of expenses can be paid from a HSA? Qualified medical expenses are defined by the IRS Publication 502, Medical and Dental Expenses, and are available online at HSA plan supplement information is available online at Q28: How will I know how much is in my HSA? You can review monthly statements for detailed information about your fund balance and claims activity for the month or visit the Bank of America website for secure and convenient access to online statements. Sign up for free or text alerts* to stay informed about your account and transactions anytime, anywhere. *Standard mobile carrier charges and fees apply to any alerts sent by text message Q29: What happens to the money in my HSA if it isn t spent by the end of the year? Any money left in your HSA at the end of the year accumulates from one year to the next to be used for future medical expenses. If you use the money for anything other than qualified health care expenses, it will be treated as taxable income, and is subject to an IRS imposed penalty. Q30: If I have a medical expense that is eligible for payment from my HSA, am I required to use the money? No. You have flexibility to choose how you use the money you ve accumulated in your HSA. You could choose to pay the expense out of pocket with taxable dollars and leave the money in your HSA to grow tax free for use in the future. Q31: What if I have a medical expense that is greater than the amount of money in my HSA? If you have an expense that is greater than the balance in your HSA, only the balance in your HSA will be paid. For example, if you submit a $500 claim for reimbursement but only have $200 in your HSA, only $200 can be paid. To receive the additional $300, you would need to resubmit a new request later

6 when more funds have been deposited into your account. The money does not have to be in your account at the time the expense was incurred as long as you were enrolled in the HSA at the time the expense was incurred. When using your HSA debit card, it is important to know how much is in your account since the transaction will be denied if more than the balance available is requested. Q32: What happens to the money in my HSA if I die? If you are married, your spouse becomes the owner of the account. As owner of the account, your spouse can use the HSA to pay for qualified medical expenses with the same tax advantages. However, if your spouse uses the HSA funds for any other reason, the funds will be federally taxed. If you are not married, the account will pass to your beneficiary or become part of your estate and subject to applicable taxes. Q33: Are HSAs portable? Yes, a HSA is an individual account that belongs to you. You can take your HSA balance with you if you terminate employment or retire. You can also use proceeds from your HSA to fund COBRA premiums. You may be subject to administrative fees if you maintain money in your HSA account but are not enrolled in the corresponding HDHP. Q34: How can I close my account? You can close your account by notifying Bank of America in writing at: Bank of America P.O. Box Lehigh Valley, PA Upon notice of termination, your entire HSA balance (including the proceeds of any HSA Investments you may have) will be distributed. You may be charged an account closing fee as set forth in Bank of America s Schedule of Fees. Tax Information Q35: What are the tax benefits? There are three major tax advantages to your HSA. 1. Cash contributions to an HSA are 100% deductible from your federal gross income (within legal limits). Payroll deducted contributions are pre-tax. 2. Interest on savings accumulates tax deferred. 3. Withdrawals from an HSA for qualified medical expenses are free from federal income tax. Q36: What tax forms will I receive? You will receive a W-2 from FCA which shows in box 12(w) the total company contributions and personal contributions that were payroll deducted. Bank of America will send you the following forms at the end of the year: 1099-SA - showing total annual distributions from your HSA.

7 5498-SA showing total annual contributions and total account value of your HSA. Q36: How does the Healthcare Reform law (Affordable Care Act) affect an HSA? The near-term impact on HSA plans is limited to (1) an increased penalty on HSA distributions that are not used for qualified medical expenses for those under the age of 65 from 10 to 20 percent and (2) the exclusion of most over-the-counter medications as a qualified medical expense unless they are prescribed by a physician. Q37: What type of records do I need to keep? You are responsible for keeping records of eligible expenses. Use Form 8889 to report all contributions to your HSA. If your tax return should get audited, you might be asked to provide receipts for the expenses that were reimbursed. You can use your Explanation of Benefits (EOBs) and other receipts to validate qualified medical expenses. Your HSA is regulated by the IRS, not FCA. Investment Options Q32: What investment options will I have for the money in my HSA? To open an investment account, you must have a balance in your Health Savings Account greater than $1,000. Once an investment account is opened, be sure to maintain enough funds in your Cash Account to cover fees and eligible healthcare expenditures. Cash Account funds are the ONLY funds that are accessible through your HSA debit card. If you do not have enough funds in your Cash Account to cover a debit card transaction, the transaction will be rejected at the point of sale. Once you elect to invest, you will receive an HSA Investment Guide that will provide more information. You can view the investment guide online by clicking on View Forms under I Want To on the Bank of America Home page. For additional questions not addressed here, please visit the Bank of America website at or call the HSA Service Center at