Health Savings Accounts (HSAs) Paul Leonard

Transcription

1 Health Savings Accounts (HSAs) Paul Leonard

2 Today s Agenda High-Deductible Health Plan (HDHP) option Benefits of a Health Savings Account (HSA) Getting started Additional resources 2

3 Health Care Choices Blue Cross Blue Shield High- Deductible Heath Plan (HDHP) Fidelity HSA 3

4 What is the High Deductible Health Plan (HDHP)? Health plan that meets certain federal requirements for deductibles and out-of-pocket expenses Generally offers a lower premium than other medical plan options One requirement for establishing an HSA 4

5 What is a health savings account (HSA)? Tax-advantaged account that can be used to pay for current and future qualified medical expenses Can be established once enrolled in the Blue Cross Blue Shield High-Deductible Health Plan (HDHP) 5

6 Fidelity HSA Advantages Triple Federal tax advantages: Contributions can be made pre- or post-tax Potential tax-free growth Tax-free withdrawals for qualified medical expenses Flexibility You choose how and when you use your HSA funds Use for current expenses, or invest for the future Carry Over Balances Not subject to the use it or lose it rule Unlimited Time for Reimbursement Withdrawals Portability The account is yours 6

7 Maximum Portability If you retire, leave your employer, or change your medical coverage in the future, you can: Keep your Fidelity HSA Use your Fidelity HSA for future qualified medical expenses for yourself, your spouse, or your dependents 7

8 Rules to Establish and Contribute to an HSA You must be enrolled in an HSA-Eligible Health Plan You are not eligible if covered by any of the following: Spouse s non-hsa-eligible Health Plan Spouse s health care FSA (flexible spending account) TI Health Care Flexible Spending Account (FSA) You may not be enrolled in Medicare You may not be claimed as a dependent on another s federal tax return BUT: you MAY participate in the Texas Instruments Dental and Vision Flexible Spending Account 8

9 How to Contribute Through a few different ways: Personal contributions Payroll deduction Personal check Third-party contributions such as TI s annual contribution 9

10 HSA Contribution Limits 2012 Limits Individual Family Annual HSA Contribution Limits $3,100 $6,250 Catch-up Contribution $1,000 $1,000 10

11 Rules for Taking Money Out of an HSA Qualified Medical Expenses (QMEs) You can use HSA funds to pay for QMEs, which include: Deductible, coinsurance, and preventive care copayments IRS-approved medical expenses not covered by your health plan Medicare premiums, including Part A, Part B, and Part D Long-term care insurance premiums, subject to certain limits Age 65: no more penalties for non- QME withdrawals 11

12 Taking a Distribution From Your HSA There are multiple options available for accessing your HSA funds: HSA debit card Distribution check or electronic funds transfer (EFT) HSA checkbook Fidelity BillPay beginning January 2012 Distributions used to pay for expenses other than qualified medical expenses are considered taxable income and will be subject to an additional 20% penalty. The 20% penalty will not apply to distributions made after your death, you become disabled, or once you reach age

13 New Feature Fidelity HSA BillPay! It s easy and convenient to use! Establish payees Receive invoices electronically Receive notifications of due invoices Schedule payments Use in addition to Debit Card or HSA Checks For Illustrative purposes only 13

14 The Fidelity Health Savings Account Example Year 1 Family Coverage Health Care Services Used Doctor visits, non-preventive $ 200 Prescriptions $ 300 Total Out-of-Pocket $500 Fidelity HSA Activity Employee contributes $2,000 Total in Fidelity HSA = $2,000 Amount withdrawn $500 Carry Over Amount = $1,500 For illustrative purposes only; this example may not be representative of your Blue Cross Blue Shield HDHP 14

15 The Fidelity Health Savings Account Example Year 2 Family Coverage Health Care Services Used Doctor visits, non-preventive $ 500 Emergency room visit $ 700 Lab work $ 350 Prescriptions $ 450 Total Out-of-Pocket $2,000 Fidelity HSA Activity Total in Fidelity HSA $1,500 Employee contributes $3,000 Total in Fidelity HSA = $4,500 Amount withdrawn $1,000 Carry Over Amount = $3,500 For illustrative purposes only; this example may not be representative of your Blue Cross Blue Shield HDHP 15

16 Account Growth A Fidelity HSA offers an opportunity for growth* based on: How much you contribute to your account Your health care expenses and whether you choose to withdraw funds from your Fidelity HSA How you invest your Fidelity HSA funds * Because these accounts may be invested in securities, the funds may be subject to market risk. 16

17 Fidelity HSA Hypothetical Growth Example Blue Cross Blue Shield HDHP - Family Coverage HSA Account Balance $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $126,471 $82,696 $39,093 $ Year HSA Annual Contribution $1,000 HSA Annual Contribution $2,000 HSA Annual Contribution $3,000 This hypothetical example is illustrative and doesn't represent the performance of any security in a Fidelity HSA. Assumes the investor receives 2% investment growth on funds in the default investment option and that once the balance in this account reaches $2,500, excess funds will earn 7%. Actual net returns will be based on the investor s investment choices within the Fidelity HSA. This example does not account for the effect of interest, dividends and taxes. Investing in this manner does not ensure a profit or guarantee against loss in declining markets. 17

18 Investment Options for the Fidelity HSA A Fidelity HSA is an individual brokerage account Contributions are automatically invested in a core position Once you reach the minimum balance, you can invest in: The full range of Fidelity mutual funds Over 4,000 additional mutual funds Individual stocks, bonds, treasuries, and CDs Exchange-traded funds (ETFs) A single fund option Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. 18

19 Investment Options Compared to Other Accounts You have expanded options when it comes to the Fidelity HSA. Similar to the BrokerageLink feature within your 401(k). A brokerage account on the Personal Investments side of Fidelity. Use the available tools to research investment options on Fidelity.com Review and manage your account on an ongoing basis. Brokerage Account HSA Brokeragelink in 401(k) Texas Instruments 401(k) 19

20 Research Tab Selecting Your Investment Category For illustrative purposes only The Research Tab provides the drop-down where you can select from the various investment types and additional tools. 20

21 Research Information For illustrative purposes only The Research pages provide various data and information points to help you make decisions. 21

22 Getting Started It s easy to enroll: Choose the Blue Cross Blue Shield High Deductible Health Plan (HDHP) as your medical plan Go to NetBenefits or 401k.com to open your Fidelity HSA For illustrative purposes only 22

23 Online Resources Frequently Asked Questions and Fidelity HSA guide on NetBenefits or IRS Publication 502 (Medical and Dental Expenses): IRS Publication 969 (HSAs and Other Tax-Favored Health Plans): U.S Department of the Treasury, information about Health Savings Accounts 23

24 Important Information Before investing in any fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call or write Fidelity for a free prospectus or, if available, a summary prospectus. Read it carefully before you invest. Information on the tax status of contributions described in this presentation applies to federal taxation, but may or may not apply to state taxation. See your tax advisor for more information on the state tax implications on HSAs. There are many factors that go into the determination of a maximum contribution amount to your HSA each year. One example to consider is if your opposite-sex spouse has family HSA-Eligible Health Plan coverage, you may need to take that deductible into account when determining your maximum annual contribution amount. The materials presented during this Blue Cross Blue Shield High Deductible Health Plan and Health Savings Accounts Workshop contain general information regarding the terms of the Blue Cross Blue Shield High Deductible Health Plan, which are sponsored by your employer and its affiliated Companies (the Company ). The benefits described in this workshop are available only to benefits-eligible employees. The language used in this workshop is not intended to create, nor is it to be construed to create, a contract between your employer and any one of its employees and former employees. In the even the content of this workshop and any oral or written representations made by any person regarding the Blue Cross Blue Shield High Deductible Health Plan, or any other plans sponsored by the Company, conflicts or is inconsistent with the provisions of the applicable plan document(s), the provisions of the applicable plan document(s) are controlling and will govern. Your employer reserves the right to change, suspend, withdraw, amend, modify or terminate the plan(s), in whole or in part, at any time. The information provided in this workshop is general in nature. It is not intended, nor should it be construed as legal or tax advice. In addition, the information is not intended or written to be used, and cannot be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code; or (b) promoting, marketing or recommending to another party any transactions or matter addressed herein. The establishment and ongoing administration of a Fidelity HSA is a taxpayer responsibility. As a result, you are encouraged to consult your tax advisor before establishing a Fidelity HSA. You are encouraged to become familiar with the information available from the U.S. Department of the Treasury, which can be found on the Treasury web site at You also are encouraged to review information available from the IRS web site at You can find IRS Publication 969, Health Savings Accounts and Other Tax- Favored Health Plans, and IRS Publication 502 Medical and Dental Expenses (including the Health Coverage Tax Credit), online, or you can call the IRS to request a copy of each at Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI