Health Savings Account - HSA Presentation John Alden Life Insurance Company Welcome to John Alden.
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Transcript of Health Savings Account - HSA Presentation John Alden Life Insurance Company Welcome to John Alden.
Health Savings Account -
HSA PresentationJohn Alden Life Insurance Company
Welcome to John Alden
About John Alden
United States Individual Medical market leader
In business over 110 years
More than 1,000,000 customers
John Alden – an HSA Leader
First to offer MSAs in the individual market
In the forefront of HSA legislation John Alden sold the first HSA in the
country Experts in account administration One of the only custodial accounts in
the country that provides seamless administration with no fees.
What is an HSA? An HSA is a tax-favored savings account
designed to allow for the accumulation of funds to pay for qualified healthcare expenses and to save for the future. It works in combination with a qualified high deductible health insurance plan.
Huge New OpportunityHSAs are:
New Tax-Free Flexible Permanent Portable A significant improvement over
MSAs
We make HSAs simple and easy.
Easy to explain An HSA is a tax-favored savings account
designed to allow for the accumulation of funds to pay for qualified healthcare expenses and to save for the future.
The HSA works with a qualified high deductible health insurance plan. Together they provide:
Premium Savings Tax Advantages Investment Opportunities
Federal Guidelines Annual Contribution limits for 2004 are the
lesser of: 1) 100% of the amount of the deductible or 2) $2,600 – individual or $5,150 – family.
Individuals 55 and over are allowed to contribute an additional $500 for 2004.
Unused funds from an MSA plan may be rolled over into an HSA account with no penalty.
No first dollar benefits except for wellness
HSA Deductibles
Single Family
Qualified high deductible: $1,000 $2,000
Maximum Out-of-Pocket: $5,000 $10,000
John Alden – New Deductibles $1,000 $2,000
$1,500 $3,000
$2,050 $4,100
$2,550 $5,100
$4,950 $9,900
Family Deductibles
What is a common family deductible?
Under John Alden Life Insurance Company plans, a common family deductible refers to the accumulation of all medical expenses for all covered persons to meet a single deductible. In order for a plan to be a qualified high deductible family plan, no one individual can have a deductible of less than $2,000.
HSAs Plus High Deductible Plans Invested funds are tax-free. Funds gain interest that’s tax-free. Withdrawals for qualified expenses are
tax-free. Funds can be withdrawn at age 65 - only
ordinary income tax applies. Funds can be withdrawn, at age 65, tax-free for
non Medicare covered medical expenses and prescriptions.
A 10% penalty plus ordinary income tax applies if funds are withdrawn before 65 for non medical expenses.
Funds can be used to pay Medicare Part A&B premiums (not medical supplement premiums).
Eligible ExpensesQualified Withdrawals: Eligible medical expenses as defined under
Section 213 (d) of the IRS Code.— Medically necessary services— Deductibles and Coinsurance— Glasses— Dental— Non-prescription drugs
Qualified Long-Term Care Premiums COBRA Continuation Premiums Premiums while unemployed Medicare Part A&B Premiums (but not supplemental
premiums)
Withdrawals after age 65Non-qualified Withdrawals: Under age 65
— Ordinary income tax and a 10% penalty on withdrawals for non-qualified expenses
65 or older— No penalty— Subject to income tax but likely at a lower rate – just like a 401k, for non-qualified expenses
Cost Comparison Scenario Family – Coverage (Husband and Wife
are both 37 years old with two children) 28% federal tax bracket Living in Illinois $1,500 in claims
Cost Comparison
Coinsurance:
Premium paid Your share - medical care expenses
($1,500 claim)
Expenses subtotal
Tax Savings on HSA deposits
Net expenses (out-of-pocket minus savings)
Total net savings with HSA Plan
HSA Account Balance $3,050!
Typical Family Plan(three times single deductible)
$1,00080%/20%
$7,115
$1,000 for deductibles, $100 for coinsurance,
$550 for other non-covered medical expenses
+$1,650
= $8,765
$0
$8,765
Fortis Health HSA PlanCommon family deductible:
$5,100 100%
$3,125
$1,500 for medical expenses and $550 for
dental/eyewear expenses
+$2,050
= $5,175
$1,428
$3,747
=$5,018
Tax-Deferred Investment Options
John Alden HSA MSAver HSA Any custodial account the client
chooses
John Alden HSA
Several contribution options Monthly, quarterly, semi-annual, annual
No additional fees No administrative, set-up or user fees
Very competitive interest rates Optional automatic claims payment
MSAver HSA Account options
Checkbook Debit card
Brokerage account provides access to stocks, bonds and
mutual funds
How Can Funds Be Used? Withdraw any time for eligible medical expenses
glasses … dental … deductible … coinsurance … long term care premium … etc.
(See John Alden Medical Expense Sheet, Form # 28557) Non-eligible withdrawals before age 65
Taxed as ordinary income Plus 10% penalty
Age 65 or Medicare eligibility withdrawals Lower tax bracket No penalty Tax-free for non-Medicare covered medical
expenses and prescriptions
Money Withdrawal Methods HSA Check book
HSA Mastercard Debit Card
Clients Save Premium, Reduce Taxes and Build Savings
Unused funds accumulate from year to year.
— Use the money to pay for qualified expenses tax-free as they occur
— Save money tax-free for future medical expenses
— Accrue savings and build a tax-sheltered nest egg for
retirement
Want More Information?
For more information contact:
David Velke 703-330-0971