Understanding a Health Savings Account

Transcription

1 , ( Understanding a Health Savings Account What is a health savings account? Otherwise known as an HSA, a health savings account can be funded with your taxexempt dollars, by your employer, by a family member or by anyone else on your behalf. Dollars from the account can help pay for eligible medical expenses not covered by an insurance plan, including the deductible, coinsurance, and even health insurance premiums, in some cases. annually by the Internal Revenue Service (IRS) and are subject to change. Type of Coverage Minimum Annual Maximum Annual Out-of- Deductible pocket Individual $1,300 ($1,300 for 2016) $6,450 ($6,550 for 2016) Family $2,600 ($2,600 for 2016) $12,900 ($13,100 for 2016) How does an HSA work? Part 1: Qualifying High Deductible Health Insurance Plan D Provides health care benefits after the deductible has been met. Who is eligible for an HSA? Anyone who is: Covered by a high-deductible health plan (HDHP) ; Not covered under another medical plan that is not an HDHP; Not entitled to (eligible for AND enrolled in) Medicare benefits; or Not eligible to be claimed on another person's tax return. What is a high deductible health plan (HDHP)? A high-deductible health plan is a plan with a minimum annual deductible and a maximum out-of-pocket limit as listed below. These minimums and maximums are determined Part 2: Health Savings Account D Pays for out-of-pocket expenses incurred before the deductible is met. - ' What are the steps in an HSA? I '..,--:;...:... l -. _1.. "". 1. Employee, employer, family member and/or someone else funds the employee's HSA account. 2. Employee seeks medical services.,_ ~.. Ansay & Assoc 1,\T r.s /rhurj/jcl',\ lfcnelir Jolur101H P11 s Kricw v;jur Benefits aruc e s :Jrov1ded oy Ansay & Associates LLC arid is to be i...sed :or 1nfornia1ona1 o:...rooses or y 3ra s '10t rterided m reolace tre advice of af"i J"!Surance 'Jrofess cr.a1 V s1:..is at '.V\vw arsay com a Zywave tric Alf ngrts reser'lea

2 Understanding a Health Savings Account 3. Medical services are paid by HDHP, subject to deductible and coinsurance. 4. Employee may seek reimbursement from HSA account for amounts paid toward deductible and coinsurance. 5. Deductible and out-of-pocket maximum fulfilled. 6. Employee may be covered for all remaining eligible expenses.* The HDHP can provide preventive care benefits without the required minimum deductible. *Subject to plan design; check your HDHP Summary Plan Description. When do I use my HSA? After visiting a physician, facility or pharmacy, your medical claim will be submitted to your HDHP for payment. Your HSA dollars can be used to pay your out-of-pocket expenses (deductibles and coinsurance) billed by the physician, facility or pharmacy, or you can choose to save your HSA dollars for a future medical expense. You may also be able to use an HSA debit card to access your HSA funds, if your HSA custodian or trustee allows it. You may use your HSA for non-medical expenses. However, HSA amounts that are used for non-medical expenses are taxable as income to you and are generally subject to an additional 20% penalty. What is a deductible? It is a set dollar amount determined by your plan that you must pay out-of-pocket or from your HSA account before insurance coverage for medical expenses can begin. How much can I contribute to an HSA? The annual HSA contribution limits for 2015 are: $3,350 for individual coverage and $6,650 for family coverage The annual HSA contribution limits for 2016 are: $3,350 for individual coverage and $6,750 for family coverage Individuals age 55 or older may be eligible to make a catch-up contribution of $1,000. What is the difference between an HSA and Flexible Spending Account (FSA)? An HSA can roll over unused funds from year to year and is portable if the employee leaves the company. An FSA cannot roll over unused funds from year to year and is not portable. Can I contribute to both an HSA and an FSA in the same year? General purpose FSA coverage will make you ineligible for HSA contributions. However, certain types of FSA designs will not prevent your HSA eligibility. For example, if you are covered under a "limited FSA" (for example, an FSA that covers vision, dental and/or preventive care expenses on a first-dollar basis), you can be eligible for an HSA. Also, you can be eligible for an HSA if you are covered under a "post-deductible FSA" (that is, an FSA that only pays or reimburses for preventive care or for medical expenses that are incurred after the minimum annual HDHP deductible has been met). Please ask if a limited or post-deductible FSA is available to you. What if I enroll in an HSA in the middle of the year? Your HSA contributions are generally determined on a monthly basis. However, if you enroll in an HSA mid-year, you are allowed to make a full year's contribution, provided you are eligible on Dec. 1 of that year and you remain eligible for HSA contributions for at least the 12-month period following that year. Why should I elect an HSA? 1. Cost Savings Triple tax benefits o HSA contributions are excluded from federal income tax o Interest earnings are tax-deferred o Withdrawals for eligible expenses are exempt from federal income tax Reduction in medical plan contribution

3 Understanding a Health Savings Account Unused money is held in an interestbearing savings or investment account Note: Many states have not passed legislation to provide favorable state tax treatment for HSAs. Therefore, amounts contributed to HSAs and interest earned on HSA accounts may be included on the employee's W-2 for state income tax purposes. 2. Long-term Financial Benefits 3. Choice Save for future medical expenses. Funds roll over from year to year. Account is portable-you take it with you even if you leave the company. You control and manage your health care expenses. You choose when to use your HSA dollars to pay your health care expenses. You choose when to save your HSA dollars and pay health care expenses out-of-pocket. You decide whether to use your HSA dollars to pay for non-medical expenses and incur the additional taxes.

4 ( HSA Examples of Eligible Expenses Your health savings account (HSA) may reimburse: Qualified medical expenses incurred by the account beneficiary and his or her spouse and dependents; COBRA premiums; Health insurance premiums while receiving unemployment benefits; Qualified long-term care premiums*; and Any health insurance premiums paid, other than for a Medicare supplemental policy, by individuals age 65 or older. Distributions made from an HSA to reimburse the account beneficiary for eligible expenses are excluded from gross income. Qualified Medical Expenses The Internal Revenue Service (IRS) defines qualified medical care expenses as amounts paid for the diagnosis, cure or treatment of a disease, and for treatments affecting any part or function of the body. The expenses must be primarily to alleviate a physical or mental defect or illness. The products and services listed below are examples of medical expenses eligible for payment under your HSA, when such services are not covered by your highdeductible health plan. To be an expense for medical care, the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness. This list is not all-inclusive; additional expenses may qualify, and the items listed below are subject to change in accordance with IRS regulations.... '_..., '::> c = Under a rule that went into effect Jan. 1, 2011, claims for over-the-counter medicine or drug expenses (other than insulin) cannot be reimbursed without a prescription. This rule does not apply to items for medical care that are not medicines or drugs. Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan ~6... Ansay & ASSOCfATES Tn1s Know Your 3eriet1ts ar.1c1e s orov1ded oy Ar say & Asscc ates c ard s re ce... sed :or nfcr-r::1 r1ora ::Lrooses ~r y ;ire s -01 ntendf!d a ~ec! ace :re ad'l Ce of ar ""'SL.ra,...ce cr'jfess1cra V s t ~sat.'v'vw a..,say ::o~ Jes gf"i ~ 2CC9-?C13 Ztwave re A g~1s,.eservec

5 Examples of Eligible HSA Expenses Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care-Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations

6 Examples of Eligible HSA Expenses Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray Rev. 4/10, 11/10, 1/11, 4/11, 1/12, 4/14 Source: Plans that do not allow reimbursement of all eligible medical expenses as defined by the IRS and Department of Treasury must customize this brochure prior to use. * For purposes of reimbursement of qualified long-term care premiums from an HSA, reimbursement in excess of the amount which may be deducted on an individual's personal tax return is not an eligible expense. IRS 213(d)(10) establishes the tax deduction allowed for qualified long-term care premiums on individual tax returns. If the HSA reimburses long-terms care premiums for an amount greater than set forth in /RC 213(d)(10), the amount greater than allowed is included in the account holders taxable income and is subject to a 20 percent penalty. Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy

7 I' ( Examples of Ineligible HSA Expenses Your Health Savings Account lets you pay for medical care expenses not covered by your insurance plan with pre-tax dollars. The Internal Revenue Service (IRS) defines medical care expenses as amounts paid for the diagnosis, cure or treatment of a disease, and for treatments affecting any part or function of the body. The items listed below are examples of products and services that are NOT eligible for reimbursement under your HSA, according to the IRS. Typically, expenses for items that promote general health are not eligible expenses. Please note that this list is not all-i nclusive, and is subject to change. Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons ~.. Ansay & ASSOCIATES Tl'i1s Know vai..r 8erefits arucle s orovrded oy Ansay & As socrates L_C ard s to oe used for nforrrational ourocses ~n1y and s not mtendeo :o replace the aov1ce of an 1nsurarce profess1cra1 V1 s1t..i s at Nww ansay com Desrgn l'f\'jave inc All ngrits reserved

8 Examples of Ineligible HSA Expenses Teeth Whitening Veterinary Fees Weight-Loss Program Source: Rev. 8/10, 1/11, 1/12, 4/14