Human Energy. Yours. TM Start a Savings Plan for Your Health Learn about health savings accounts. Your Health. When it comes to your wealth, you have choices to help you protect and preserve it for the future. With Chevron, you have not one, but two ways to save for retirement. There are life, disability, long-term care and property insurance benefits to help you protect your assets. There are even estate and financial planning resources ready to help you put it all together with a plan. But when was the last time you considered your health in your overall financial picture? You can do a lot to improve and maintain good health in an attempt to keep your health expenses low. But let s face it: planning for health expenses can be hard. There are times when you need very little care and other times when you need a lot. And when you need care it can be expensive, especially if you weren t expecting it. What if you could save money today for those health expenses that might come tomorrow? Starting January 1, 2015, Chevron will offer a High Deductible Health Plan (HDHP). One feature that makes the HDHP special is that it s compatible with a health savings account. A health savings account or HSA is like a savings plan for your health care. An HSA is a personal account separate from your Chevron benefits. There a lot of rules about who can open and contribute to an HSA, how it s used, and how taxes work. This communication provides only basic information to help you understand how HSAs work in general. It s your responsibility to understand the complete rules and take action if you decide an HSA is right for you.
What is an HSA? An HSA is like a savings plan for health care. It works like a regular bank account, but you don t currently pay federal income taxes on money you deposit. And when you use your money to pay for qualified medical expenses, under current IRS rules, you won t pay federal income taxes on the money, either. Unlike the Health Care Spending Account (HCSA), Chevron s flexible spending account plan, your savings grow from year to year. There is no use it or lose it rule. And you can take your money with you if you change plans or when you leave Chevron. You can use an HSA to pay for qualified medical expenses this year, three years from now or at any point in the future even in retirement. You own it. You take it with you. An HSA is a personal account separate from your Chevron benefits. You are responsible for making contributions, and likewise the money you contribute belongs to you. Deposits can be made at any time and the money is available upon deposit for you to spend. You keep your money, even if you change jobs or medical plans. You must be enrolled in a qualifying high deductible health plan such as the Chevron HDHP to open and contribute to an HSA. However, you can still use your established HSA to pay for qualified medical expenses regardless of what medical plan you re participating in at the time. It s not just for doctor visits. You can use your HSA to pay for qualified medical expenses, like your HDHP deductible, coinsurance payments, prescription drugs, dental care, vision care and mental health or substance abuse services. You can also use the money to pay for the qualified medical expenses of your tax qualified dependents, whether or not they are enrolled in the HDHP. You can t use your HSA to pay the monthly premiums on your health coverage right now, but later you can use it to pay for your Medicare premiums, out-of-pocket expenses and even eligible long-term care premiums. Spend it now or save it for the future. Save now, and you could possibly have a nest egg for qualified medical expenses when you retire. Because you control your account and the money is yours to keep, you choose when you spend the funds. If you ve got enough in your household budget to cover minor medical expenses today, you don t need to use the funds in your HSA. You can simply let the money grow and save it when for when you need more help due to an illness, accident or when you re on a fixed income in retirement.
There might be tax advantages. Money deposited into an HSA is currently federal income tax free. If you withdraw money to pay for qualified medical expenses, those withdrawals are currently federal income tax free. There are some states, including California, that do not follow the federal tax rules and tax HSA contributions and earnings. You re encouraged to talk to your tax advisor to understand the potential consequences of an HSA before you make final decisions. You should know that you can be subject to interest and penalties if you contribute over the annual limit allowed by the IRS, or if you use the money on an expense that is not a qualified medical expense like a big screen T.V. or a vacation. Contribution limits do apply. Just as the IRS limits how much you can contribute to your retirement savings and a flexible spending account, an HSA has contribution limits, too. Your contribution limits, are determined by the level of coverage you ve selected in the Chevron HDHP or another qualifying, high deductible health plan. For January 1 through December 31, 2015, the maximum annual contribution are: Annual Contribution Limits You Only You + One Adult You + Child(ren) You + Family $3,350 $6,650 $6,650 $6,650 You are allowed to make an extra $1,000 in catch-up contributions starting in the calendar year in which you turn age 55. Monitor your contributions carefully. It is your responsibility to track the total contributions you make during the year. Chevron cannot monitor your total contributions from all sources to an HSA to ensure you don t surpass the annual limit. If you choose payroll deductions, it s your responsibility to choose the monthly contribution that is appropriate. If you contribute over the limit, you may be subject to taxes and penalties. Consult IRS Publication 969 or talk to your tax advisor to understand potential consequences and how the annual limits work when you have more than one HSA account, or you re married. These are just the basics to get you started. IRS Publication 969 has more. IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, is a resource you should review before you open and contribute to an HSA. It s available at www.irs.gov. You should also consult your tax advisor for additional information.
Who is Eligible to Save in an HSA? With those federal tax advantages come some pretty strict rules from the IRS about who can open and contribute to an HSA. You must be enrolled in an HSA-compatible plan. Good news, Chevron s new High Deductible Health Plan (HDHP) is an HSA-compatible plan. If you re eligible for and enroll in the HDHP, you may be eligible to open and contribute to an HSA for as long as you remain eligible under the IRS rules. You are covered by no other health coverage, unless it s an allowed plan, such as another high deductible plan, a dental plan, or a vision plan. You are not enrolled in or covered by a health flexible spending account or an HRA. This means you can t be enrolled in Chevron s Health Care Spending Account (HCSA). Participation in Chevron s Dependent Day Care Spending Account (DCSA), another kind of flexible spending account, is still okay. It also means your spouse, if applicable, cannot be enrolled in a flexible spending account or HRA that could reimburse your expenses. You are not enrolled in Medicare. You cannot be claimed as a dependent on someone else s tax return. There are other rules and restrictions, and it s up to you to understand them to ensure you re eligible to open and contribute to an account. You should consult your tax advisor and read the full requirements in IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans available at www.irs.gov. Remember, if at any time you stop meeting the HSA eligibility requirements for example you change to an HMO plan or enroll in Medicare you are no longer eligible to contribute to an HSA. You can, however, still continue to use the money in your account for qualified medical expenses, no matter what type of health coverage you carry.
How to Use an HSA It works like a bank account. It s important to remember your HSA works like a bank account with some extra rules tacked onto it. You can pay for qualified medical expenses only if you have enough money in your HSA to cover the cost. Like a bank account, only the money you ve actually contributed is available to you. And your HSA is not prefunded by Chevron. So even if you plan to contribute $1,000 for the year, if you only have $100 in your HSA at the time, that s all you can spend until the balance grows larger. The balance to pay for those expenses will need to come from your own pocket. But you can pay yourself back later, when you have more money in your HSA. And there s no time limit for reimbursement if it s for a qualified medical expense. Unlike a flexible spending account, there is no use it or lose it rule, and you don t have to send in receipts or a claim form that has to be approved before you can be reimbursed. For this reason you can reimburse yourself two weeks later or two years later. But don t forget to hold onto the receipt and other documentation to prove to the IRS the withdrawal was permissible under their rules. What matters is that the expense occurred on or after the date the HSA was established and the expense was a qualified medical expense. Several ways to pay for expenses. Since your HSA is a bank account, the methods of payment available to you are similar. Keep in mind this list will vary depending on the HSA financial institution you choose, but they generally include the following options: A debit card. You can typically use the debit card at a pharmacy, doctor s office or other locations that meet the government s IIAS requirements. That s many places. You are usually able to order extra cards for your dependents, too. Write a check. If you can t use your debit card, many HSAs will allow you to order checks for an additional fee, and you can simply write a check to the provider, or even to yourself. Use online bill pay. Some, but not all, financial institutions will allow you to pay (online on their website) to your provider (and sometimes to yourself). Pay out of your own pocket. You can pay for the expense yourself and later pay yourself back using a check, cash or online payment, depending on your financial institution. Keep all your receipts. Save all your receipts for a qualified medical expense. If the IRS asks, you must be able to prove you used your HSA money only to pay or reimburse yourself for a qualified medical expense (and not for example, that big screen T.V. or a vacation). Learn more online. Go to hr2.chevron.com for links to resources and additional information about health savings accounts and the BenefitWallet HSA.
Choose Your Own HSA Participating in an HSA is voluntary. If you meet the IRS eligibility requirements to open and contribute to an HSA, you can choose an HSA with any financial institution that offers them. The Chevron Federal Credit Union and many other financial institutions offer HSA products. Eligible employees enrolled in Chevron s HDHP may be able to make contributions to the BenefitWallet Health Savings Account (HSA) though payroll deductions. If you open an HSA with another financial institution, you ll be responsible for making contributions on your own because payroll deduction won t be available. Links to more information about the BenefitWallet HSA are is available on hr2.chevron.com. Recycled/Recyclable This newsletter applies to U.S.-payroll employees who are eligible for Chevron health benefits. This communication provides only certain highlights of benefits provisions. It is not intended to be a complete explanation. If there are any discrepancies between this communication and legal plan documents, the legal documents will prevail to the extent permitted by law. This is not a plan text or a summary plan description. There are no vested rights with respect to Chevron health care plans or any company contributions towards the cost of such health care plans. Rather, Chevron Corporation reserves all rights, for any reason and at any time, to amend, change or terminate these plans or to change or eliminate the company contribution toward the cost of such plans. Such amendments, changes, terminations or eliminations may be applicable without regard to whether someone previously terminated employment with Chevron or previously was subject to a grandfathering provision. Some benefit plans and policies described in this document may be subject to collective bargaining and, therefore, may not apply to union-represented employees. Chevron Human Resources Service Center P.O. Box 199708 Dallas, TX 75219-9708 10/2014 HSA Recycled/Recyclable 2014 Chevron Corporation. All rights reserved. U.S. Pay and Benefits News is published by Human Resources Communications, P.O. Box 6041, San Ramon, CA 94583-0741 Save this newsletter for future reference.