YOUR CIGNA CHOICE FUND HEALTH SAVINGS ACCOUNT. A health plan plus a health savings account.

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1 YOUR CIGNA CHOICE FUND HEALTH SAVINGS ACCOUNT A health plan plus a health savings account.

2 Basic Principles What if we bought groceries the way we buy health care? Pay $10 at the door No price tags on shelves How does our behavior change? How does the store s behavior change? Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 2

3 What is Consumer-Driven Health Care? Healthcare Consumerism is about transforming a health benefit plan into one that puts economic purchasing power and decision-making in the hands of participants. It s about providing the information and decision support tools they need, along with financial incentives, rewards and other benefits and tools which encourage personal involvement in altering health and health care purchasing behaviors. Must work for the sick as well as for the healthy and for those who are technically savvy and those who are not. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 3

4 WHAT IS A HEALTH SAVINGS ACCOUNT (HSA) PLAN? Qualified Medical Plan Health Savings Account + = Tax-advantaged HSA Plan A health plan that provides coverage for qualified medical/pharmacy expenses and allows you the option to save HSA dollars on a tax advantaged basis. Your employer contributes and you can too through payroll deduction! The total 2016 annual contribution limit for employee + employer is: - $3,350 Single Coverage - $6,750 Family Coverage Employee and employer money deposited into the HSA is generally not taxable Age 55 or older - Maximum contribution increases by $1,000 (considered a catch-up contribution) Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 4

5 Plan Design Samples Deductible Averages HSA Most Common Deductible Most Common OOP Max Individual $1,500 $6,550 Family $3,000 $13,110 Coinsurance Average In-Network Coinsurance Average Out-of- Network Coinsurance HSA 70% 50% Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 5

6 AM I ELIGIBLE TO PARTICIPATE IN AN HSA PLAN? Because HSA plans have special tax advantages, the IRS defines specific rules for participation. To be eligible, you: Must be enrolled in an IRS-qualified high-deductible medical plan (high-deductible medical plans sold with Cigna s Choice Fund HSA meet IRS requirements) Cannot have any other health coverage Not covered by spouse s medical or pharmacy plan Not covered through Medicare Part A or Part B, Part D, or through TRICARE Not covered through a general-purpose Flexible Spending Account (FSA) plan (either employer s or spouse s) Cannot be claimed as a dependent on another person s tax return Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 6

7 BENEFITS OF AN HSA 7

8 TRIPLE TAX ADVANTAGES OF AN HSA Contributions Payroll deduction contributions are pre-tax* After-tax contributions can be deducted when you file your tax return HSA Account Growth Interest earned on your cash account is generally not taxable* Investment earnings on mutual funds are generally not taxable* Withdrawals to pay qualified health care expenses are tax-free Withdrawals Withdrawals for ineligible expenses are taxed and you pay a 20% penalty At age 65, withdraw funds for any reason with no penalty (taxes do apply) * HSA contributions and earnings are not subject to federal taxes and not subject to state taxes in most states. A few stats do not allow pretax treatment of contributions or earnings: Alabama, California, New Hampshire and New Jersey. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 8

9 SAVING FOR THE FUTURE 100% Rollover of HSA dollars year over year Portable take it with you Use HSA dollars to pay premiums for: COBRA Long-Term Care Medicare Use as Income During Retirement You choose how and when to use your HSA Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 9

10 Investment options $2,000 minimum in HSA to invest. Once the investment account is open, no minimum balance applies No minimum deposit for any fund Tax-free growth of interest or investment earnings No monthly fees apply Track your balance online or with convenient monthly statements Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 10

11 HOW ARE MEDICAL CLAIMS PAID? Sick visit to an in-network doctor/hospital. Show your Cigna Choice Fund ID card. ID Card Health Care Professional files claim with Cigna directly. Cigna receives the claim and processes it based on the plan deductible, covered expenses and Cignanegotiated discounts. EOB Cigna provides an Explanation of Benefits or EOB ( receipt ) showing: Doctor s charge, Cigna discount, amount billed, (amount deducted from the HSA if elected), amount paid to doctor/facility and remaining HSA balance (if medical automatically claim forwarding elected). Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 11

12 meet Karen Single, in her 50s Diabetes; controlling health through medication Looking to save money for future health expenses TOTAL EXPENSES IN-NETWORK PREVENTIVE CARE IS COVERED BY THE PLAN AT 100% Preventive care $ ER visits PCP visits Generic Rx Brand Rx TOTAL 3, % covered Karen s Deductible HSA EMPLOYER $500 + KAREN $0.00 PLAN 70% + KAREN 30% PLAN 100% 70% plan % Karen BALANCE DUE Deductible: % Karen: , % plan: % Karen: , HSA BALANCE This is an example used for illustrative purposes only. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 12

13 meet Mary Married in her 30s Pregnant; having a baby Looking to save money for future health expenses TOTAL EXPENSES IN-NETWORK PREVENTIVE CARE IS COVERED BY THE PLAN AT 100% Check ups Global Delivery Physician bill for delivery Anesthesiologist TOTAL 7, Mary Deductible HSA EMPLOYER $ MARY $4,000 PLAN 70% + KAREN 30% PLAN 100% 70% plan % Mary BALANCE DUE 0.00 $5, Deductible: % Mary: % plan: % Mary: , HSA BALANCE This is an example used for illustrative purposes only. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 13

14 meet Joe Married in his 40s with a family Has the flu; needs to have a visit to the PCP TOTAL EXPENSES IN-NETWORK PREVENTIVE CARE IS COVERED BY THE PLAN AT 100% Preventive care PCP visit TOTAL Preventive 100% Joe s Deductible % taken from Joe s ded BALANCE DUE 0.00 HSA EMPLOYER $ JOE $1,000 2, Deductible: Joe owe : PLAN 70% + JOE 30% % plan: % Joe: 0.00 PLAN 100% HSA BALANCE This is an example used for illustrative purposes only. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 14

15 meet Justin A dependent child, age 13 Football injury; that turns in to a broken arm that needs PT therapy TOTAL EXPENSES IN-NETWORK PREVENTIVE CARE IS COVERED BY THE PLAN AT 100% Preventive care $ ER visit PCP visits Specialist visits Brand Rx TOTAL 5, % covered Justin s Deductible % plan % Justin BALANCE DUE 2, HSA EMPLOYER $ JUSTIN $0.00 1, Deductible: % Justin: PLAN 70% + JUSTIN 30% 70% plan: % Justin: PLAN 100% HSA BALANCE This is an example used for illustrative purposes only. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 15

16 MANAGING AN HSA 16

17 What are qualified health care expenses? Qualified health care expenses are determined by the IRS Examples of qualified health care expenses* Deductibles and out-of-pocket costs for medical and dental care Prescriptions Vision care, including glasses and LASIK eye surgery Smoking cessation treatment and prescriptions Family planning procedures Chiropractic services Some insurance premiums, such as long-term care, COBRA and health care coverage premiums while receiving unemployment compensation Air purifiers Examples of nonqualified health care expenses Cosmetic surgery and related expenses Health club dues (unless prescribed by physician to treat illness) Illegal operations and treatments Massages for general well-being Premiums for health care coverage Transportation (unless specifically for and essential to medical care) Toothpaste, cosmetics and toiletries Vitamins and nutritional supplements Weight loss programs (unless for a specific illness) * This is not a complete list. For a detailed list, visit Cigna.com/expenses or the IRS website at and see Publications 502 and 969 for additional information. Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 17

18 Customer Experience Simple and Easy One service center Integrated pre- and post-enrollment communications 24/7/365 live service 150 languages Social Media One-of-a-kind Personal Cost & Quality Estimator Q1 Q2 Q3 Q4 One website mycigna.com Combined financial statements Personal Health Advocate for decision support New! mycigna app & mobile access Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 18

19 Managing your HSA on the go 24 txt Manage your account anytime, anywhere Get mobile or alerts from HSA Bank Sign up for alerts on the HSA Bank online banking portal you access through mycigna.com Choose s or text messages it s your choice Contribution alerts Contribution posted to your account Text Message HSA available cash balance is below $ Text Message HSA contributions year-to-date are within $ of the IRS maximum Text Message Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 19

20 HSA ACCESS TO FUNDS Customers choose when and how they access their money Debit Card Online Bill Pay & Electronic Fund Transfer Use the MasterCard-branded debit card to pay for out-of-pocket expenses The card can also be used to get cash at ATMs to reimburse yourself for qualified expenses paid with personal funds Pay expenses directly from the HSA Monitor, manage and schedule payments online, anytime Payments can be scheduled on a one-time or recurring basis Checkbook Purchase and write checks to pay for out-of-pocket expenses Automatic Claim Forwarding (ACF) Cigna will automatically pay eligible medical expenses from your HSA This option can be selected at enrollment or any time during the year Regardless of how the HSA is accessed, all balance and transaction activity is available online at mycigna.com Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 20

21 TAX RESPONSIBILITIES AND REPORTING Bank Bank reporting for year-end taxes will be sent to the employee (accountholder) Form 1099-SA Reporting all distributions from the HSA Form 5498-SA Reporting of contributions and transfers into the HSA Client Client reporting for year-end taxes will be sent to the employee (accountholder) Form W-2: Reporting all employer contributions, including pretax payroll deductions. Employer contributions are not considered part of your income Employee Employee (accountholder) responsibility Ensure total contributions do not exceed allowable maximums Keep accurate records of contributions and withdrawals Maintain receipts for all use of HSA dollars: purchases and bill payments File form 8889 as part of income tax submission to the IRS Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 21

22 If you need more information mycigna.com Available 24/7/365 Single sign on to your HSA information Personalized site to learn about your benefits, track claims and much more Customer Service 24/7/365 Medical and Drug Cost Comparison Tool!!!!!!! Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 22

23 Educational tools and resources HSA BASICS HSA Savings Calculator Tax Savings Future Growth Choice Fund HSA Video How to use your HSA Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 23

24 WHAT HAPPENS WHEN AN EMPLOYEE LEAVES THE PLAN? Change in employee status or plan change Employer Send updated eligibility information to Cigna. Termination is received by the HSA system via the eligibility file. After 15 days, the termination is released to the bank and they begin process to convert HSA to an individual account. Employee HSA dollars are portable and theirs to keep. No longer able to contribute to the HSA (unless covered through an HSA-qualified plan and remain eligible). Can continue using the HSA funds for qualified health care expenses for their qualified dependents. Bank begins 30-day process to transition account to a freeagent account. Employee may have different/additional account fees. Receives letter from bank outlining changes to the account and the options available: Transfer the account to a free-agent account with HSA Bank Transfer the funds to an HSA at another institution Close the account If free-agent account is opened, employee will have a direct relationship with the bank. (The bank cannot provide Cigna will any information about the account.) Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 24

25 QUESTIONS? Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel Cigna 25