The Most The Most Trusted Name Trusted Name in HSA in HSA AdministrationAdministration

First HSAFirst HSA

Incorporated as First MSA, Inc. in 1999

Recognized Leader in Industry

Charter Member of MSA/HSA Coalition

Assist Treasury with HSA Rules and Regulations

Changed Name to First HSA July 2005

Health Savings Accounts Health Savings Accounts (HSAs)(HSAs)

Part of the Medicare Reform Bill Part of the Medicare Reform Bill

PermanentPermanent federal law effective January 1, 2004 federal law effective January 1, 2004

Signed into law by President Bush on December Signed into law by President Bush on December 8, 2003 8, 2003

What is a HSA?What is a HSA?

Allows individuals to put away tax-free dollars that are used to pay for qualified medical expenses

Must be combined with a “High Deductible” Health plan (HDHP)

Health Savings Account

Qualified High Deductible Health Plan

Custodial/Trust Savings Account

What is a Health Savings Account?

High Deductible Health High Deductible Health Plan (HDHP)Plan (HDHP)

HSA Deductible/OOP (In Network)Individual- $1,150-$5,800

Family- $2,300-$11,600

HSA Deductible/OOP (Out of Network)Individual- $1,150- Unlimited Family- $2,300- Unlimited

2009: Adjusted by COL

Typical “HDHP’s”Typical “HDHP’s”

No office visit co-pays

100%, 90/10, 80/20 Co-insurance

Some Preventive services covered not subject to deductible

Prescription drugs included in deductible then subject to co-insurance or a co-pay

Who all qualifies for an HSA?Who all qualifies for an HSA?

All Employees, All Employers, Unemployed, Self-Employed, Families, Individuals

Who doesn’t qualify for an HSA?Who doesn’t qualify for an HSA?

Anyone claimed as a dependent on a tax return

Those age 65 and above who are enrolled in Medicare.

Anyone covered under a lower deductible plan.

Who can make contributionsWho can make contributionsto an HSAto an HSA??

Any combination of individuals, family members and employers may make contributions.

Contributions made by an individual and family member are tax-deductible (for the account beneficiary) even if the account beneficiary does not itemize.

Employer contributions are made on a pre-tax basis and are not taxable to the employee.

Employers are allowed to offer HSAs as part of a cafeteria plan.

Employer ContributionsEmployer Contributions

Employers can make contributions to employees’ HSAs, although it is not required.

Current rules require employers to make like dollar amounts or like percentages of the deductible to all eligible enrollees, no matter how much eventually accumulates in employees’ HSA accounts.

01/01/07 – New tier system that includes: Self, Self + 1, Self + 2, Self + 3 or more

What is the maximum What is the maximum contributions for 2009?contributions for 2009? Individuals: $3,000 Regardless of

Deductible

Family: $5,950 Regardless of Deductible

Contributions are NOT pro-rated by the amount of months your HDHP was effective.

No limits on growth of an HSA.

‘Catch up’ contributions

Allowed for individuals age 55 to Medicare age (65)

Additional amount of $900 per individual in 2008. $1000 per individual 2009.

Contribution is pro-rated in the year insurance plan is terminated based on termination date of Insurance plan, not DOB.

Increases $100 per year until it reaches $1,000 in 2009

Catch up Contributions

The Health The Health Savings AccountSavings AccountTax BenefitsTax Benefits

Contributions are tax-deductible going in

Interest income grows tax-free

Qualified withdrawals are tax-free coming out

Qualified Medical ExpensesQualified Medical ExpensesHSA distributions are tax-free if they are used to pay for qualified medical expenses, such as: Amounts paid for the diagnosis, cure, treatment or

prevention of disease

Prescription drugs

Qualified long-term care services and long-term care insurance

Continuation coverage required by Federal Law (i.e., COBRA)

Health insurance for the unemployed

Medicare Expenses (but not Medigap)

Retiree Health expenses for individuals age 65 and older

Can Individuals use the Can Individuals use the accountaccount to pay for anything else? to pay for anything else?

HSAs can be used to pay for medical expenses not covered by the employee’s health plan. Typical expenses include vision, dental and over-the-counter medications. Employees must keep a copy of all receipts for IRS reporting.

Distributions made for any non-qualified medical expense are subject to income tax and 10% penalty. The 10% penalty is waived in the case of death or disability or once the individual reaches age 65.

Non-Qualified Medical ExpensesNon-Qualified Medical Expenses

How do I pay for a typical Office How do I pay for a typical Office Visit?Visit?

Your plan utilizes a PPO network. Therefore, unless your Provider knows their negotiated fee schedule you shouldn’t pay anything at the time of service. You will be billed by the provider at a later date. Outside of the network you will be asked to pay at the time of service.

How are prescriptions How are prescriptions paid?paid?

Prescriptions are paid at the time of service. Pharmacy discounts are applied at purchase, therefore payment will be required. Pharmacy expenses will be added toward deductible and paid subject to co-pays after deductible has been satisfied.

What happens if I use a What happens if I use a Non-Network Provider?Non-Network Provider?

Expenses incurred using a non-network provider will be paid at the time of service. No discounts are awarded, unless, individually negotiated. Expenses incurred will count toward your non-network deductible.

What happens to money left What happens to money left at the end of the year?at the end of the year?

The money in the HSA belongs to the employee. HSA funds rollover from year to year, earning interest tax-free and continue to accumulate for future years. These funds may be used to pay for future medical expenses tax free or can be used to supplement income at age 65 tax-deferred.

What happens to the money if What happens to the money if the employee changes the employee changes employment?employment?Funds remaining in the account are employee owned. Funds can be used to pay for future medical expenses or used to supplement income at retirement.

Account will remain open until funds are exhausted and account is closed. Additional contributions may be made as long as the accountholder has obtained the necessary HDHP.

HSA Ownership Upon DeathHSA Ownership Upon Death

Upon death, HSA ownership may transfer to a spouse on a tax-free basis. All other transfers result in a taxable event.

Company OverviewCompany Overview First HSA Services

FDIC Insured Unlimited Checkbook

and VISA access Free Internet Access specific to your HSA Periodic Statements

E-Statements or Paper IRS Reporting Interest Rates

Investment Options Rx Pricing Tool Exclusive Medical Procedure Pricing Tool Health Advocate

Interest Rates

$100 - $999.99: 0.25%

$1,000 - $4,999.99: 0.75%

$5,000 - $14,999.99: 1.50%

$15,000 & up: 2.50%

First HSA Materials Employee Educational

Tools Employee Powerpoint

Presentation Tax filing Information

Application Process Paper Application Electronic Application

Post Enrollment Welcome Packet Debit Card 5-7 days 20 Free Checks 7-10

Days Investment Information

What do I need to do at Tax What do I need to do at Tax time?time?

At the end of each year, First HSA will send Forms 1099-SA and 5498-SA. As an HSA accountholder you must file a Form 8889 with your tax accountant that uses the information from the 1099-SA and 5498-SA.

How does my FSA work?How does my FSA work?

Your FSA can still be used for expenses not covered under your HDHP i.e. Dental, Vision and Childcare. It is now a “Limited FSA”. Once your deductible has been satisfied, FSA funds may be used to pay for expenses incurred under the medical plan.

Customer ServiceCustomer Service

Customer Service Representatives Highly qualified, trained individuals Phones answered by live person

Hours of Customer Service 8:30 AM to 6 PM EST Toll-free customer

service numbers 24-hour automated

telephone banking Website: www.1hsa.com

Contact InformationContact Information

Contact First HSA at:

First HSA2561 Bernville Road, Reading, PA 19605

Phone: 610-678-6000 or toll free at 888-769-8696

Fax: (610) 678-6818