HEALTH SAVINGS ACCOUNTS FOR BEGINNERS

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1 HEALTH SAVINGS ACCOUNTS FOR BEGINNERS HEATHER MENZIES Employee Benefits Account Executive SET SEG DISCLAIMER The content in this presentation is informational. Each employee should review the benefit summary and network information specific to their plan and discuss specific circumstances and questions with their carrier. Health Savings Accounts (HSAs) are IRS regulated accounts. Nothing in this presentation represents tax advice. Discuss HSA questions with a tax advisor. 1

2 OVERVIEW HSA Basics IRS Guidelines Using Your HSA Traditional vs. High Deductible Plans Contributions and Guidelines HIGH DEDUCTIBLE HEALTH PLANS Have a deductible of at least $1,300 for a single person and $2,600 for a couple or family Employee pays 100% (except preventive care) of medical and prescription drug costs (less any carrier discounts) until deductible is met Copays do not apply until deductible is met 2

3 HIGH DEDUCTIBLE HEALTH PLANS One person can be responsible for entire deductible Compatible with Health Savings Account (HSA) o More engagement and cost awareness HSA BASICS Fund to pay High Deductible Health Plan (HDHP) deductible and health related costs Designed to help employees save and pay for healthcare 3

4 HSA BASICS Each covered individual can open an HSA No use it or lose it Pay for qualified expenses Triple tax savings Portable Reimburse yourself from your HSA if you pay approved medical expenses with something other than HSA funds ELIGIBILITY REQUIREMENTS Eligible to open an HSA if you are not: Covered by non high deductible health plan Enrolled in Medicare Covered by a health care FSA or HRA (or a beneficiary of another FSA) Claimed as a dependent on a tax return 4

5 QUALIFIED MEDICAL EXPENSES Include: Dental check ups, orthodontia, etc. Contact lenses, glasses, etc. Laser eye surgery Out of network benefits Acupuncture May not apply toward deductible Contribute in excess of deductible if using HSA for these costs IRS GUIDELINES HSAs and FSAs regulated by IRS Tax advisor can answer questions IRS publication 502 approved medical expenses IRS publication 969 information on HSAs and FSAs 5

6 USING YOUR HSA PHYSICIAN S OFFICE Questions to Ask: Are the services you are recommending covered by my insurance and do they apply toward my deductible? Are there alternative treatment methods, prescription drugs, etc. that are equally effective but less costly? 6

7 PHYSICIAN S OFFICE Inform office to bill insurance before paying copay Pay nothing at time services are rendered Insurance plan will apply network discounts Provider will send bill for remaining charges if deductible/coinsurance not met Compare bill to Explanation of Benefits statement Pay with HSA debit card PHARMACY Questions to Ask: Do you have my current insurance information on file? Did you run the prescription through my insurance? Is the prescription approved by my insurance? Is the cost of the prescription being applied toward my deductible? 7

8 PHARMACY Present insurance card Until deductible/coinsurance is met, copay will be 100% of discounted cost of drug Once deductible/coinsurance is met, pay copay defined under the plan TRADITIONAL VS. HIGH DEDUCTIBLE PLAN 8

9 TRADITIONAL PLAN May have deductibles Copays generally apply on day one of plan Deductibles generally apply to certain services (in patient hospital stays, outpatient surgical procedures, diagnostic testing, etc. see benefit summary for details) Copays generally cover standard services (e.g. office visits, urgent care visits, emergency room visits, prescription drugs, etc.) and don t apply to deductible TRADITIONAL PLAN EXAMPLE Husband, wife, kids covered by traditional plan with $500 individual/$1,000 family deductible. Husband admitted to hospital and incurs $100,000 in approved hospital charges, family pays $500 (his deductible). Wife admitted to hospital and incurs $50,000 in approved hospital charges, family pays $500 (her deductible). Child admitted to hospital and incurs $80,000 in approved hospital charges, family pays nothing. o Husband and wife met family s $1,000 deductible. Each family member has $500 individual deductible, but family will never spend more than $1,000 in deductible expenses. 9

10 HIGH DEDUCTIBLE PLAN EXAMPLE Husband, wife and kids covered by high deductible health insurance plan with $1,300 single person/$2,600 family deductible. Husband admitted to hospital and incurs $100,000 in approved hospital charges, the family pays $2,600 (the family deductible). Wife admitted to the hospital and incurs $50,000 in approved hospital charges, the family pays nothing (family deductible has been met). Child admitted to hospital and incurs $80,000 in approved hospital charges, the family still pays nothing. In high deductible plans, any family member could meet the $2,600 family deductible, but the family as a whole will never spend more than $2,600 in deductible expenses. CONTRIBUTIONS & GUIDELINES 10

11 CONTRIBUTION LIMITS 2015: $3,350 for single person coverage $6,650 for two person or family coverage $1,000 catch up allowed annually for account holders 55 years or older (not enrolled in Medicare) HSA dollars may not be used to pay medical expenses incurred prior to enrolling in HDHP or establishing HSA PENALTIES Improper use of funds before retirement (Medicareeligible age) o pay income tax on amount used plus a 20% penalty Contribution beyond IRS maximum o pay taxes on excess contributions plus a penalty Use funds for non qualified expenses after reaching Medicare eligible age o pay taxes on funds used without additional penalty 11

12 CONSIDERATIONS Think of annual contribution limits on a monthly basis: Single person coverage o $3,350/12 months = $279 per month Two person/family coverage o $6,650/12 months = $554 per month Plan for large expenses early in the year. CONSIDERATIONS Compare provider bills against the Explanation of Benefits (EOB) sent by insurance plan Keep receipts, provider bills and HSA statements Manage HSA as if it was a checking account 12

13 CONTACT HEATHER MENZIES Employee Benefits Account Executive (800) Ext