Considering a Health Savings Account?

Basic HSA Plan ConceptBasic HSA Plan Concept

HSA Eligibility

» Individuals who are covered by an HSA-compatible health plan are eligible if they are:

» Not covered by any other non-HDHP

» Not claimed as a dependent on another person’s tax return.

» Not enrolled in Medicare part A or B

*Section 152 of the Internal Revenue Code excludes spouses from the definition of dependent.

Catch-up Contributions

» Individuals and/or their spouses, over the age of 55 and not enrolled in Medicare can make an additional $1,000 catch-up contribution annually.

Note: If a husband and wife are covered by a HDHP and both are over the ages of 55 and not enrolled in Medicare, they can both contribute the additional catch-up contribution if they each open an HSA.

Eligible Medical Expenses

» An eligible medical expense is generally any expense incurred to maintain the health of you or your family» Doctor and hospital visits» Medical equipment» Dental care, braces, dentures» Vision care, glasses, contacts» Medications, including many over-the-

counter versions» Medical related transportation

*A list of Qualified Medical Expenses can be found in IRS Publication 502, http://www.irs.gov/pub/irs-pdf/p502.pdf. As described in IRS publication 969,

http://www.irs.gov/pub/irs-pdf/p969.pdf, over-the- counter medications are considered Qualified Medical Expenses for HSA purposes.

Other Eligible Medical Expenses

» Premiums for long-term care insurance» Limited to amount listed in 213(d)(10)

» Premiums for "COBRA”» Premiums for coverage while receiving

unemployment compensation» Premiums for individuals over age 65

» Retirement Health Benefits» Medicare Premiums

For Employees/Accountholders» Contributions

» Contributions deducted from accountholder’s federal taxable income

» Earnings» HSAs grow in the same tax-deferred manner as IRAs

» Distributions» HSA funds used for eligible medical expenses are

not included in the accountholder’s federal taxable income

Tax Treatment of HSAs

Tax Treatment of HSAs

For Employees/Accountholders» Distributions

» Withdrawals for qualified medical expenses are tax-free. After age 65, funds may be withdrawn for any reason without penalty, subject to regular income tax.

» Upon death of accountholder» If the spouse is the beneficiary, the HSA may transfer

to the spouses name and remain a tax-favored account

» If the beneficiary is not the spouse, the funds are paid to the beneficiary as a taxable transaction

» If the HSA does not have a beneficiary, the funds are paid to the estate of the accountholder

Tax Savings Example

Contribution $3,000/year for 25 years

Medical Expenses $500/year

Tax Bracket 28% (Federal)

Average Interest Rate 2.00%

For illustrative purposes only. Actual savings may vary. Visit www.hsabank.com and click on Calculate Savings for a personalized estimate.

Tax Savings on Contributions: $17,500.00

Tax Savings on Earnings: $4,921.21

HSA Balance After 25 Years: $80,075.75

HSAs, HRAs, FSAs

HSA HRA FSA

Account Owner Employee Employer Employee

FundingEmployee, Employer,

OtherEmployer

Employee,Possible

Employer

Rollover Year-to-Year

Yes Generally No No

Portable Yes Generally No No

Advantages of an HSA

» Funds roll over from year to year» No “use it or lose it” philosophy

» Tax benefits on contributions, earnings and distributions» Contributions are either pre-tax

(via paycheck) or tax-deductible

» Portability» Funds follow you » Tax-free withdrawals for Qualified Medical Expenses

even if qualifying coverage ends

Self-Directed Investment Option

» TD Ameritrade Corporate Services» Access to stocks, bonds and over 11,000

mutual funds» Trades are made online or over the phone» Transfer funds from your HSA to your

investment account:» Online through Internet Banking» By calling the Client Assistance Center

Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the

principal amount invested.

Mutual Fund Selection

» Devenir Investment Advisors» Selection Options

» Employer can choose to offer our standard selection of historically top-performing mutual funds

» For an additional fee, employers can choose to select mutual funds similar to their 401(k) offering

» Trades are completed online through HSA Bank’s Internet Banking system

Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the

principal amount invested.

» Account statements» Periodic account inserts with valuable legislative

information, account features, and more

» IRS reporting» Year-end status report» 1099-SA (distributions)» 5498-SA (contributions)

» Online Account Access through Internet Banking» Account balance and transaction history

(Up to 18 mo. for convenient tax reporting)

» View cancelled checks » Year-to-date information (Including a breakdown of contributions by source.)

» Ability to download transaction history to Quicken or Money» Email confirmation of account opening and ongoing activity» Online address changes» Access to Online Contributions

Accountholder Reporting

Calculation Tools

» Is an HSA Right for Me» Allows you to compare a traditional health

plan and an HSA qualified plan to determine potential savings http://www.hsabank.com/calculators/decision_tool.aspx

» Future Value Calculator» Calculates tax savings on contributions and

tax-deferred growth as well as the future value of your Health Savings Account http://www.hsabank.com/calculators/future_value.aspx

Account Support

» Toll-free Bankline» 24-hour account access via

touch tone phone

(800)-565-3512

» Toll-free Client Assistance Center (800) 357-6246

7 a.m. – 9 p.m., CT, Monday – Friday

» Toll-free Spanish Language Assistance Line

(866) 357-6232 7 a.m. – 9 p.m., CT, Monday – Friday

For more information, please visit

www.hsabank.com