In-Network Benefits. NationalOne 2600/5200 HDHP- HSA. NationalOne Available to: Deductible. Medical Out-of-pocket Maximum

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2 2 In-Network Benefits Available to: Deductible Medical Out-of-pocket Maximum NationalOne ALL Units $200 individual $600 family $500 individual $1,000 family NationalOne 2600/5200 HDHP- HSA Clerical, Education Assistants, Local 70, Non Units, Paraprofessionals, Principals $2,600 individual $5,200 family $2,600 individual $5,200 family Prescription Out-ofpocket Maximum $500 per person $750 per family Combined with Medical Out-of-Pocket Maximum Lifetime maximum Unlimited Unlimited Preventive health care 100% coverage 100% coverage Office Visits Urgent Care Convenience Clinics (Retail Clinics) $25 copay $0 copay 100% coverage after deductible 100% coverage after deductible

3 3 District 622 Health Plan Offerings Inpatient, Outpatient hospital, Ambulance Emergency Room Durable medical equipment Home health care Retail pharmacy: -- Generic preferred -- Brand preferred -- Non-preferred NationalOne % after deductible $75 copay 100% after deductible 80% after deductible 34 day supply/100 units $8 copay $16 copay $32 copay NationalOne 2600/5200 HDHP-HSA 100% after deductible 100% after deductible 100% after deductible 100% after deductible 31 day supply 100% after deductible Mail order pharmacy 2 copays for a 90 day supply 100% after deductible Provider network and drug formulary the same for all plans

4 4 1. You seek medical care, your provider submits the charges to HealthPartners 2. HealthPartners processes the claim, applies their discount and sends Explanation of Benefits to provider and you. 3. Provider sends you bill for amount you owe. 4. You pay the doctor using provided checks or Benny card

5 5 An account that you can use to pay medical expenses Must be in conjunction with a high-deductible health plan (HDHP) Tax-advantages: contribute pre-tax money (HSA only), funds accrue tax-free and withdraw funds tax-free (if they are for eligible medical expenses) You own the account Contributions HSA Both you and your employer can contribute funds

6 6 Tax advantage means you save money on your health care expenses Funds rollover each year, so you can use you re the account to save tax-free money for retirement You own the account, even if you leave the District Lower monthly premiums than a traditional health plan

7 7 The IRS defines expenses that are considered qualified medical expenses for HSA distributions Expenses must be primarily to treat or prevent a physical or mental defect or illness If you use HSA funds for expenses beyond what the IRS defines as qualified, you will be subject to income tax on the distribution and an additional 20 percent penalty

8 8 Examples of qualified medical expenses include: Most medical care that is subject to your deductible (copays, coinsurance, doctor visits, inpatient or outpatient treatment, etc.) Prescription drugs Over-the-counter drugs, only if you obtain a prescription Insulin (with or without a prescription) Dental and vision care Select insurance premiums COBRA, qualified long-term care insurance, health insurance premiums paid while receiving unemployment benefits, health insurance after you turn 65 except for a Medicare supplemental policy Examples of not considered qualified medical expenses include: Insurance premiums (other than the exceptions listed on the previous slide) Over-the-counter drugs (unless a prescription is retained from a physician insulin is an exception) A full list of qualified medical expenses is available at corphealthsys.com or from the Benefits office

9 9 Distributions are tax-free if they are taken for qualified medical expenses Accounts can only be used for expenses that are incurred on or after the date the account was established Funds can be used for expenses from a prior year, as long as the expenses incurred on or after the date the account was established

10 10 Distributions can be taken for qualified medical expenses for the following people: The account holder (employee covered by the HDHP) Spouse of account holder (even if not covered by the HDHP) Dependent Children HSA: Tax Dependents of that individual

11 Corporate Health is the third party administrator for the VEBA and HSA accounts. 11

12 12 First let s make some assumptions about the HDHP for the examples provided: The average office visit costs $110 Remember: Routine Preventative Physicals are covered 100% under all plans Plan has a prescription copay of $8 generic preferred, $16 brand preferred and $32 non preferred; an office visit copay of $25 and a $200 per person deductible (maximum of $400 per family). The HSA plan has a deductible of $2,500 per person and a maximum of $5,000 per family.

13 13 Maggie is a single, healthy female who takes advantage of preventive care visits. In a typical year, she usually sees the doctor twice. She has a preferred brand prescription for Singulair that costs $120 (retail) and is filled twice per year. *Annual premiums based on groups with highest District contribution. ^The HSA premiums will vary based on individual contribution to the HSA account (the higher contribution the higher health premium) Plan 2500/5000 HSA Plan ($1,121 District Contribution to HSA) *Annual premiums $698 $0^ Office visits $50 $220 Rx drugs $32 $240 Total estimated maximum costs $780 $460 Reimbursable expenses in HSA n/a $460 Cost after HSA reimbursement $780 $0 HSA Balance n/a $661

14 14 Carol s family includes two children under the age of 6 and her husband. During the year there are a total of 15 visits to the doctor and 2 prescriptions per month between all the family members. The prescriptions filled included 12 preferred generic and 12 preferred brand ($1,500 total retail cost). *Annual premiums based on groups with highest District contribution. ^The HSA premiums will vary based on individual contribution to the HSA account (the higher contribution the higher health premium) Plan 2500/5000 HSA Plan ($1586 District Contribution to HSA, assumes $0 by employee) *Annual premiums $3,531 $0^ Office visits $375 $1,650 Rx drugs $288 $1,500 Total estimated maximum costs $4,188 $3,150 Reimbursable expenses in HSA n/a $1586 Cost after HSA reimbursement $4,194 $1,564 HSA Balance n/a $0

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16 16 Anyone who is: Covered by the High Deductible Health Plan, NationalONE $ % Not enrolled in Medicare Not covered under other health insurance* Cannot be covered by any other health insurance that reimburses you for health expenses you incur, unless it is another HSAqualified HDHP. Not another person s tax dependent *Other health insurance does not include: specific disease or illness insurance, accident, disability, dental care, vision care and long-term care insurance

17 17 Flexible Spending Accounts (FSAs) and VEBA accounts may make you ineligible for an HSA unless they are designated as Limited purpose, meaning they are limited to dental, vision, and child care. Acceptable VEBA accounts set aside money only for retiree health expenses are suspended To preserve the eligibility for the HSA plan, the District FSA Medical plan will be a Limited plan for employees participating on the HDHP HSA. Limited purpose medical FSA is limited to only allow for dental and vision expenses to be reimbursed.

18 18 To preserve the eligibility for the HSA plan contributions, your VEBA account will need to be changed: VEBA plan participant can implement a Suspension that will limit eligible expenses to dental and vision only each plan year Election must be made each plan year

19 19 Eligibility Scenarios -- Acceptable Situations: Single employee enrolled in HDHP no medical flex no HRA/VEBA limited medical flex limited HRA/VEBA suspended HRA/VEBA not on Medicare Married employee enrolled in HDHP not enrolled in spouse s medical plan spouse doesn t have a traditional medical flex spouse doesn t have an HRA/VEBA spouse has an HRA/VEBA that is limited to spouse s expenses limited HRA/VEBA suspended HRA/VEBA not enrolled in Medicare Spend Down Approach: Employee elects HDHP and wishes to spend down their HRA/VEBA balance. The first of the month following when the VEBA balance is $0, the participant could establish an HSA account, assuming they are not enrolled in the traditional flex plan or have any other coverage that would make them ineligible for an HSA account.

20 20 Eligibility Scenarios -- Problem Situations: Some scenarios Single employee enrolled in non HDHP, doesn t suspend or limit existing VEBA Gets married, want to enroll in HDHP and HSA. Can t start HSA as long as HRA/VEBA has funds remaining or until next plan year when the HRA/VEBA can be limited or suspended Single employee enrolled in non HDHP, doesn t have HRA/VEBA, but elects traditional medical flex Gets married, want to enroll in HDHP and HSA. Can t start HSA until next flex plan as flex creates HSA ineligibility Married employee enrolled in non HDHP, doesn t suspend or limit existing HRA/VEBA Wishes to enroll in HDHP and HSA due to spouse plan change/cost. Can t start HSA as long as HRA/VEBA has funds remaining or until next plan year when the HRA/VEBA can be limited or suspended Married employee enrolled in non HDHP, doesn t have VEBA, but elects traditional medical flex Wishes to enroll in HDHP and HSA due to spouse plan change/cost. Can t start HSA until next flex plan as flex creates HSA ineligibility

21 21 Each year, the IRS sets contribution limits These limits are for the total funds contributed, including company contributions, your contributions and any other contributions You are allowed to contribute the entire year s limit whenever you first become eligible for the HSA (even if that is in December) However, you must remain eligible for at least 12 months after that date, or you will be subject to taxes and penalties on the amount you contributed Individual $3,350 $3,350 Family $6,650 $6,750

22 22 For individuals ages 55 and older, the IRS allows additional catch-up contributions Eligible individuals may contribute an extra $1,000 for the year (for 2015 and for 2016) This is to help save additional money for retirement

23 23 For individuals age 65 and older, HSA distributions can be used for non-qualified medical expenses without facing the 20 percent penalty However, income taxes will apply for non-medical distributions This rule is regardless of whether the individual is enrolled in Medicare

24 24 Whenever you use HSA funds to pay for a medical expense, you should keep your receipt Different from the VEBA, you are responsible for demonstrating to the IRS that HSA distributions were for qualified medical expenses If the IRS requests receipts for verification purposes, failure to provide those receipts could result in having to pay a penalty

25 25 Corporate Health is the third party administrator collecting the contributions. Corporate Health uses Bancorp. HSA is Interest Bearing Account Investments Available when Balance is $2,500 Investment Transactions Costs Apply Monthly Administration Fee: $3.50 Deducted from your account monthly Online Access: at

26 26 You will receive checks and a Benny Card so that you can easily access the funds in your account. Corporate Health is the administrator collecting the contributions. Corporate Health uses Bancorp.

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28 Make sure you have no other coverage that will make you ineligible for HSA contributions If you have an existing VEBA with the District you will need to change to Limited plan by completing the HRA/VEBA Election Form in order to contribute to your HSA Provide HSA contribution election amount you want deducted from your payroll through SmartBen, the District s benefits enrollment system Make sure to fill in all personal data with your legal name, etc. Any inconsistencies can cause delays in setting up your account due to the patriot act.

29 29 29 You will receive an from Bancorp inviting you to establish your online access to your HSA account Doing this will allow you to see your account details Set up your delivery of statements to be electronic so you avoid any fees for paper statement delivery Order checks if you wish You can set up online bill payments if necessary

30 30 30 You will receive in the mail: BennyCard if you currently do not have one. If you already have a card, DO NOT THROW IT AWAY as your new year accounts will be added including your HSA A welcome kit from Bancorp which includes a signature card and beneficiary declaration, please complete and return as soon as possible in the enclosed envelope

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34 34 34 HSA participants perform customer service activities such as change password, change statement delivery method, order checks, etc

35 35 35 How do you access your HSA account: You can present your BennyCard in the same manner that you would use a credit card. You can order checks from Bancorp if you prefer to access your HSA account Your HSA account balance needs to be large enough to cover the transaction you wish to make. Keep your receipts as you are responsible to present them to the IRS in the event of an inquiry

36 36 36 Annually Bancorp will send the following IRS forms IRS Form 1099-SA provides the total amount distributed from your HSA in prior year. This form will be mailed to you by January 31, and reported to the IRS by February 28. Do not attach Form 1099-SA to your income tax return. Instead, keep it for your records. IRS Form 5498-SA provides the total amount of contributions credited to your HSA for prior year. Rollover amounts and yearend fair market values also are reported on this form. This form will be mailed to you after April 15, to allow you time to apply additional contributions to your HSA for prior year. It will be mailed by May 31, and a copy will be sent to the IRS on your behalf. Do not attach Form 5498-SA to your income tax return. Instead, keep it for your records.

37 37 37 Annually you will file the following IRS form with your tax return IRS Form 8889 is available for download at You must file this form along with your Form 1040 or 1040NR. Use this form to (1) report HSA contributions, including those made on your behalf through employer contributions; (2) figure your HSA deduction; (3) report HSA distributions; and (4) if you fail to be an eligible individual, figure amounts you must include as income and additional tax you may owe. You must file Form 8889 if (1) you or someone on your behalf, including your employer, made contributions to your HSA for 2012; (2) you made or received HSA distributions in 2012; (3) you are required to report amounts as income because you failed to be an eligible individual during the HSA testing period; and/or (4) you acquired an interest in an HSA because of the death of the account beneficiary.