HEALTH SAVINGS ACCOUNT BASICS

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1 HEALTH SAVINGS ACCOUNT BASICS WHAT IS A HEALTH SAVING ACCOUNT? A Health Savings Account (HSA) is a tax-favored account which you and your employer can make contributions to pay for qualified medical expenses incurred by you, your spouse and any of your dependents. The HSA takes the form of a tax-exempt trust or custodial account. HOW DO I UTILIZE MY HEALTH SAVINGS ACCOUNT? It's easy to use the funds in your HSA. HSA funds may be accessed by using checks drawn on your HSA or the HSA debit card. You may pay for qualified expenses directly by using one of these methods. If you have already paid for expenses out of your own pocket, you may reimburse yourself by writing a check out of your HSA. Make sure and keep your receipts. HOW DO I KNOW WHAT IS INCLUDED AS A "QUALIFIED MEDICAL EXPENSE"? Included in this packet is a partial list of qualified medical expenses. You may access a more comprehensive list on the IRS website, Publication 502. In order to be considered a qualified medical expense, the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness. WHAT HAPPENS IF I ACCIDENTALLY USE MY HSA FUNDS FOR A NON-QUALIFIED EXPENSE? If funds in the account are not used for qualified medical expenses, you will need to claim the amount as income on your tax return. That amount will be subject to a 10% penalty if you are under age 65. However, you can avoid taxes and potential penalties if the funds are repaid by April 15th of the year following the year in which you paid for the non-qualified expense(s). HOW DO I REPAY A DISTRIBUTION FOR A NON-QUALIFIED MEDICAL EXPENSE? When you reimburse a distribution that is made in error, you need to send a letter of explanation stating that the funds are to reimburse the HSA due to an error. These funds will not be treated as a contribution but as a reverse distribution. CAN I USE MY HSA TO PAY FOR MEDICAL EXPENSES INCURRED BEFORE I ESTABLISHED MY HSA? No. You cannot use funds in your HSA to pay for expenses you incurred before your account was established. It is recommended you open your HSA as close as possible to the effective date of your HSA qualified health plan. HOW CAN I REIMBURSE MYSELF FOR EXPENSES I PAID FOR OUTSIDE OF MY HSA? As long as you encountered those expenses after you opened your HSA, you may reimburse yourself by writing a check out of your HSA.

2 IS THERE A DEADLINE FOR REIMBURSING MYSELF FOR MEDICAL EXPENSES I PAID FOR OUTSIDE OF MY HSA? No. HSA funds can be used to reimburse the prior year s expenses as long as they were incurred on or after the date the HSA was established. WHO IS RESPONSIBLE FOR TRACKING EXPENSES PAID FROM MY HSA? First Horizon Msaver tracks the total dollar amount spent from the account and provides that information to both you and to the IRS. The form that you will receive reflecting this amount is called a 1099-SA and is sent prior to January 31st. You should maintain copies of your medical receipts to verify how you utilized those funds. You are responsible to the IRS for all types of withdrawals made from your HSA. Please see the partial list of qualified medical expenses included in this packet. You may access a more comprehensive list on the IRS website, Publication 502. WHAT HAPPENS TO THE FUNDS IN MY HSA AT THE END OF THE YEAR? The funds in your HSA rollover and continue to grow from year to year. Each year, as long as you are eligible, you are able to continue making the full contribution to your account. CAN I HAVE AN HSA AND A FLEXIBLE SPENDING ACCOUNT (FSA)? Yes, if the FSA is set-up as a limited benefit FSA used to reimburse such expenses as dental and vision. Certain limitations apply. HOW DO I TRANSFER MY MEDICAL SAVINGS ACCOUNT (MSA) OR HSA CURRENTLY HELD AT ANOTHER FINANCIAL INSTITUTION TO FIRST HORIZON MSAVER? The account holder should contact First Horizon Msaver to request an MSA or HSA transfer. First Horizon Msaver will provide the account holder a form to authorize the transfer. The request will be handled directly between First Horizon Msaver and the transferring institution. WHAT HAPPENS TO MY HSA WHEN I NO LONGER HAVE THE QUALIFYING INSURANCE IN PLACE? You can continue to use the funds in your HSA for qualified medical expenses. You may not contribute to the account if you no longer have the qualified High-Deductible Health Plan. WHAT TAX FORMS WILL I RECEIVE REGARDING MY HSA? You will receive a 1099-SA statement prior to January 31st. This statement will indicate total distributions from your HSA for the previous calendar year. You will also receive a 5498-SA after April 15th. This form will show the total contributions to your HSA. First Horizon Msaver will also send a copy of these forms to the IRS. The copy you will receive is for your records. Please review these forms for accuracy and notify First Horizon Msaver immediately if there is an error.

3 CONTRIBUTING TO YOUR HEALTH SAVINGS ACCOUNT HOW DO I MAKE CONTRIBUTIONS TO MY HSA? Contributions may be made to your HSA in a variety of methods. Mail contributions using deposit slips from your personal check book to: First Horizon Bank P.O. Box 97 Memphis, TN Automatic monthly contributions: Funds are transferred on a specific day each month from your personal checking account. See enclosed ACH form. HOW MUCH CAN I CONTRIBUTE TO MY HSA THIS YEAR? Your maximum contribution is based on the amount of your annual health deductible. You can contribute 100% of your deductible or the maximum indexed amount (see insert for this year s amount) whichever is less. This amount is also dependent on the number of full months you have the HSA qualified insurance plan. The amount must be pro-rated. For instance, if you qualify on February 1, you will only be able to deposit 11/12 of the maximum contribution. In addition, there is a catch-up amount that may be contributed for those age 55 or older who are not enrolled in Medicare by the end of the tax year. Please call if you have further questions about pro-rating contributions. BOTH MY SPOUSE AND I ARE OVER THE AGE OF 55, CAN WE BOTH CONTRIBUTE THE CATCH UP CONTRIBUTION IN MY HSA? As long as you are both only covered by the qualified health plan, you are both able to contribute. However, if your spouse wishes to make a catch up contribution, he/she would need to do so in an account established in his/her own name (i.e., your spouse may not put his/her catch up contribution into your account). HOW OFTEN DO I HAVE TO CONTRIBUTE TO MY HSA? You have the flexibility to choose the frequency of your contributions. You can mail your contribution annually or at a lesser frequency. WHAT IS THE LAST DATE I CAN MAKE A CONTRIBUTION TO MY HSA? All deposits received in the current year will be credited as a current year contribution unless otherwise noted. You have until April 15th of the following year to make contributions for the prior tax year. The contribution must be credited to the account by April 15th. You may indicate the type of contribution, current or prior year, on the deposit slip that accompanies your check. WILL FIRST HORIZON MSAVER NOTIFY ME IF I'VE EXCEEDED MY ALLOWABLE CONTRIBUTION AMOUNT? No. It is solely your responsibility to keep track of the contributions deposited into your account. We will be happy to assist you in calculating your maximum contribution.

4 HOW DO I CORRECT OVER CONTRIBUTING TO MY HSA? You have until the time you file your tax return or April 15, whichever comes first, to remove excess contributions from your account. If the excess contribution is not removed from your account, you will be subject to a 6% penalty and income tax on that amount. You would need to send a letter to First Horizon Msaver indicating that you over contributed to your account. Please include the following information in your letter: Amount over funded Request for a check equal to the over funded amount including interest earned on the contribution Name and signature of the primary account holder, account number, and mailing address. First Horizon and First Horizon Msaver do not offer tax or legal advice. You are advised to consult your personal tax and/or legal advisor regarding your individual situation.

5 MAINTAINING YOUR HEALTH SAVINGS ACCOUNT CAN I ACCESS MY HSA ONLINE? Yes, you can establish online access by visiting the website address listed in the enrollment package letter. WILL I RECEIVE A MONTHLY HSA STATEMENT? Yes. As an account holder you will receive monthly statements on your HSA similar to a regular checking account. These statements will show the average balance, closing balance, and any debits or credits to the account. HOW DO I ORDER ADDITIONAL CHECKS OR DEPOSIT SLIPS? Please call First Horizon Msaver for assistance ordering additional checks and deposit slips. Additional checks and deposit slips are provided to you at no charge. CAN I ADD ANOTHER INDIVIDUAL TO MY HSA? You can designate an authorized signer on your HSA. This authorization provides the authorized signer access to your HSA via checks or HSA VISA debit card. Please contact First Horizon Msaver for details. HOW DO I CHANGE THE ADDRESS ON MY HSA? The account holder should call First Horizon Msaver with the new address and phone number. HOW DO I CHANGE THE NAME ON MY HSA? The account holder should contact First Horizon Msaver to change his/her name. First Horizon Msaver will require a written request along with a copy of the documentation reflecting the change in name (i.e., marriage certificate or divorce decree). HOW DO I ADD OR CHANGE THE BENEFICIARY ON MY HSA? The primary account holder must request a Beneficiary Designation Form from First Horizon Msaver. The completed form should be returned to First Horizon Msaver.

6 INFORMATION QUALIFIED MEDICAL EXPENSES & OTC DRUGS HEALTH SAVINGS ACCOUNT QUALIFIED MEDICAL EXPENSES The following is a partial list of items that are considered qualified medical expenses for Health Savings Account reimbursement. This list is not complete and should serve only as a reference. For complete information, please refer to Internal Revenue Service Publication 502 Medical and Dental Expenses, or visit Acupuncture Alcoholism treatment Ambulance Artificial limb Artificial teeth Birth control pills (by prescription) Chiropractors Christian Science practitioners Contact lenses Crutches Dental treatment Dermatologist Drug addiction treatment (inpatient) Drugs (prescription) Eyeglasses Guide dog Gynecologist Hearing aids Hospital services Laboratory fees Lead-base paint removal Life-care fees Lodging (for outpatient treatment) Mentally retarded (specialized homes) Nursing care Obstetrician Operating room costs Ophthalmologist Optician Organ transplant (including donor's expenses) Orthopedic shoes Orthopedist Osteopath Oxygen and equipment Pediatrician Physician Podiatrist Post-natal treatments Prenatal care Prescription medicines Psychiatrist Psychologist Radium treatment Specialists Spinal tests Splints Sterilization Surgeon Phone/TV (hearing impaired) Therapy Vaccines Vasectomy Vision Vitamins (prescribed) Wheelchair X-rays First Horizon and First Horizon Msaver do not offer tax or legal advice. You are advised to consult your personal tax and/or legal advisor regarding your individual situation.

7 DETERMINING ELIGIBILITY FOR OTC DRUGS This is a partial list and is intended to serve as a quick reference guide for Over The Counter (OTC) drugs. ALLOWED EXPENSES Medical care includes those services or items that prevent or alleviate a physical or mental defect or illness. Services or items are also considered to be for medical care if they are primarily medical in nature and affect a structure or function of the body or are diagnostic in nature. DISALLOWED EXPENSES Items that are toiletries or cosmetics or that are likely to be primarily for general health and well being. DUAL-PURPOSE EXPENSES Items that have both a medical purpose and a personal/cosmetic or general health purpose. These items need to be accompanied by a medical practitioner's note stating that the person has a specific medical condition and that the OTC drug is recommended to treat it and that the treatment is not a cosmetic procedure. (see back of this page) First Horizon and First Horizon Msaver do not offer tax or legal advice. You are advised to consult your personal tax and/or legal advisor regarding your individual situation.

8 ALLOWED EXPENSES DISALLOWED EXPENSES DUAL-PURPOSE EXPENSES Allergy Medicine First Aid Kits Acne Treatment Acne Treatment (rare occasions) Analgesics Hemorrhoid Treatments Antiperspirant Chondroitin (arthritis) Antacids Incontinence Supplies Blemish Concealer Exercise Equipment (not for general health) Antibiotics, First Aid Insect Bite/Sting Medicine Breast Pumps Feminine Hygiene (rare occasions) Anti-Diarrhea Medicine Laxatives Chapstick Fiber Supplements (rare occasions) Antihistamines Menstrual Pain Relievers Cosmetics Glucosamine (arthritis) Anti-Inflammatory Motion Sickness Medicine Cotton Balls Hormone Therapy Aspirin Muscle/Joint Pain Relievers Dental Floss Lactose Intolerant Pills Bandaids/Bandages Nasal Sinus Sprays Denture Care Products Nasal Sprays/Strips for snoring Burn Treatments Nicotine Patches, Gum Deodorant Orthopedic Inserts Cold and Flu Medicine Lozenges Dietary Supplements Orthopedic Shoes (excess cost only) Cold/Hot Packs Oral Wounds (cold sores) Face Creams Shampoo, Medicated Contact Lens Solutions Oxygen Equipment Feminine Hygiene Products Sunscreen Contact Lens Cleaners Pain Relievers Hair Growth/Removal Products St. Johns Wort (depression) Contraceptives Pedialyte (dehydration) Holistic Remedies/Medicines Weight Loss (excess cost only) Corn and Callus Removers Pregnancy Test Kits Mouth Wash Cough Drops Prenatal Vitamins Powder Crutches Psoriasis Treatment Skin Lotion Decongestants Reading Glasses Suntan Lotion Diabetic Supplies Sinus Medication Swabs Diaper Rash Treatment Skin Irritation Treatment Teeth Whitening Products Digestive Aids Sunburn Treatments Toothpaste/Toothbrushes Elastic Wraps Thermometers Vitamins and Minerals Expectorants Throat Lozenges Eye Drops Wart Remover Products

9 2005 TAX INDEXES GUIDELINES FOR MAXIMUM DEPOSITS IN TAX YEAR 2005: According to the IRS guidelines, HSA holders may make contributions as follows: INDIVIDUAL: The maximum contribution is $2,650 or 100% of the deductible on your Qualified High-Deductible Health Plan, whichever is less. FAMILY: The maximum contribution is $5,250 or 100% of the deductible on your Qualified High Deductible Health Plan, whichever is less. NOTE: Amounts allowable to contribute to the HSA must be pro-rated if the account holder does not qualify for the account for the entire tax year. For example, if a person qualifies on February 1, he or she will only be able to contribute 11/12 of the maximum contribution. Please call First Horizon Msaver if you have further questions about pro-rating contributions. CATCH UP CONTRIBUTIONS Individuals age 55 or older and not enrolled in Medicare are eligible to contribute an additional catch-up contribution. The amount that may be contributed for the 2005 tax year is $600. Please note this amount must also be prorated as described above. First Horizon and First Horizon Msaver do not offer tax or legal advice. You are advised to consult your personal tax and/or legal advisor regarding your individual situation.

10 WELCOME TO FIRST HORIZON WHO IS FIRST HORIZON MSAVER? First Horizon Msaver, Inc. is a subsidiary of First Tennessee Bank National Association. The corporation initially established its presence in 1997 as the premier administrator of Medical Savings Accounts (MSAs) now Health Savings Accounts (HSAs). Today, the company opens and services Health Savings Accounts for consumers nationwide. Our continued commitment to customer service and leading edge products has allowed First Horizon Msaver to become one of the nation's premier Health Savings Account experts. First Horizon Msaver is recognized by thousands of insurance carriers and employers nationwide. Most notable, First Horizon Msaver is recognized by: American Medical Association Insurance Agency Inc. as the exclusive provider of Health Savings Accounts to member physicians ADA Member Advantage endorses First Horizon Msaver as the exclusive provider of Health Savings Accounts to ADA members. Securing Your Healthcare Future with First Horizon SM is our nationwide trademark that represents our commitment to provide our customers with the best possible Health Savings Account financial product and services. Our pioneering spirit and dedicated customer support has allowed our company to experience record growth. Rest assured that not all Health Savings Account administrators are the same. ADA Member Advantage SM is a service mark of the American Dental Association. ADA Member Advantage is a program brought to you by ADA Business Enterprises, Inc., a for-profit subsidiary of the American Dental Association.

11 WHO WE ARE First Horizon National Corporation is a national financial services company with a long history of success and tradition dating back to Today, the company, one of the top 30 bank holding companies in the U.S., is known for exceptional customer service and a deep commitment to our people. We are nationally recognized for strong corporate ethics and as one of the best places to work. We continue to earn national recognition Named one of the 100 Best Corporate Citizens by Business Ethics magazine Named to the AARP Best Employers for Workers Over 50 list Earned 10th straight spot on Working Mother magazine s annual list of the 100 Best Companies for Working Mothers Ranked as the number one online banking Web site by Speer & Associates Made Fortune magazine s Hall of Fame for earning a spot on its list of the 100 Best Companies to Work For since the list s inception in 1998 Named to the Information Week 500 for our excellent use of technology in support of corporate strategies WHAT WE DO First Horizon National Corporation has become one of the nation s top 30 bank holding companies in asset size and market capitalization. Today, we have a team of more than 13,000 employees working in more than 1,000 locations in 47 states. All Things Financial is our nationwide financial services trademark and sums up our strategy of offering a broad selection of products and services through our three major businesses retail/commercial banking, mortgage banking, and capital markets. We re stronger together than we would be as separate companies, and we work hard every day to improve our products and services for more than one million individual and business customers. Our knowledgeable, trusted financial professionals are uniquely committed to providing you the advice and guidance you need to build a secure, rewarding financial future one you ll value for years to come.

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