Health+Savings FAQs. The following are frequently asked questions and answers regarding the Health+Savings Option in the BP Medical Plan.

Transcription

1 Health+Savings FAQs The following are frequently asked questions and answers regarding the Health+Savings Option in the BP Medical Plan. Note: Health Savings Account (HSA) tax laws vary by state. You might also seek the advice of a tax advisor regarding the features and tax savings provided by Health Savings Accounts. More information is also available on the IRS website. General... 2 HSA eligibility... 3 HSAs and Health Care Flexible Spending Accounts... 5 Contributions to your HSA... 6 Your investment options... 8 Spending your HSA... 9 Maintaining your HSA...12 Health+Savings coverage...13 Page 1

2 General Q. What is the Health+Savings Option? A. The Health+Savings Option is a high deductible health plan (HDHP) that offers comprehensive medical coverage when you need it. Enroll in this option and you ll pay a lot less in monthly premiums than you would in other medical options 60% less in exchange for having a higher deductible amount. Plus, the Health+Savings Option comes with a Health Savings Account (HSA), which is a tax-preferred account that you will own and that will help you save for future health expenses. Q. What is an HSA? A. The Health Savings Account (HSA) is a bank account that works with your health plan. Administered by PayFlex, a subsidiary of Aetna, it works like the Health Care Flexible Spending Account (HCFSA) in that you can contribute and use before-tax dollars to cover the cost of eligible health care expenses. But unlike the HCFSA, you can invest your HSA money in mutual funds to grow your savings. Plus, the earnings you make on your investment are tax-free. That s triple the tax savings! What s more, you never forfeit your contributions to the HSA. Unused money will carry over from one year to the next, enabling you to build a reserve for future expenses. And you get to keep all of the money in your HSA year after year, even after you ve left BP. Q. How do HSAs and medical plans work together? A. HSAs are available to help you pay for health care expenses associated with high deductible health plans (HDHPs) such as the Health+Savings Option. You can use the money in your HSA to pay for eligible health care expenses, or you can choose to save your funds for the future. Once you meet the deductible, your medical coverage will work like a traditional health plan and start covering a portion of the costs. Remember, you can contribute to an HSA only if you participate in an HDHP. Q. I enrolled in the Health+Savings Option. Do I have to open an HSA? A. No. However, please note that while you are not required to open an HSA, for administrative reasons, PayFlex will create an HSA account on your behalf when you enroll in the Health+Savings Option. If you do not wish to maintain the account, simply contact PayFlex to close the account. Q. How do I open an HSA? A. When you enroll in the Health+Savings Option, Aetna (the BP Medical Plan administrator) will send your information to PayFlex (our HSA administrator), and PayFlex will set up your account. You will then receive a welcome letter. After undergoing and passing a customer identification process (CIP) as required by the Patriot Act, you will receive a welcome letter and debit card from PayFlex as confirmation that your Page 2

3 HSA has been established. In some cases, PayFlex may request that you verify personal information (e.g., Social Security number, home address, date of birth) before opening your HSA. Q. How does my HSA grow? A. Your HSA grows from: Any contributions you decide to make (must be claimed on your annual tax return). Tax-free interest earned on your account. Any investment earnings (when your account reaches $1,000, you can open an investment account). HSA eligibility Q. Who s eligible for an HSA? A. You are eligible for an HSA if you are: Covered by a high deductible health plan, such as the Health+Savings Option. Not covered under a non-high deductible health plan (including a plan your spouse/domestic partner may have). Not enrolled in a Health Care Flexible Spending Account (including an account your spouse may have with BP or a separate employer s Health Care Flexible Spending Account. Not enrolled in Medicare. Not eligible to be claimed as a dependent on another person s tax return. Q. My spouse/domestic partner has other medical coverage. Can I cover him or her under the Health+Savings Option? A. Yes. As long as you are not covered under your spouse/domestic partner s plan, and your spouse/domestic does not enroll in a Health Care Flexible Spending Account that is not a Limited-Purpose HCFSA. Federal regulations do not allow you to contribute to an HSA if your spouse has an HCFSA. Q. Can my spouse/domestic partner have his or her own HSA? A. Yes. If both you and your spouse/domestic partner have your own high deductible health plan coverage, you may each contribute to your own HSA, up to IRS limits, which are $3,350 for personal Page 3

4 coverage or $6,750 for personal + dependents coverage. For married couples, the maximum combined before-tax contribution (yours and your spouse s) cannot exceed the annual IRS limit of $6,750. If you re over age 55, you re eligible to make an additional $1,000 catch-up contribution per year to your HSA. If your spouse/domestic partner is over age 55, he or she may make an additional $1,000 contribution to his or her HSA. Spouse/domestic partner catch-up contributions cannot be made to your HSA. Note: The maximums shown above are reduced by any HSA contributions made by BP or your spouse s/domestic partner s employer. Additionally, if you are a domestic partner of a BP employee, you are required by law to open a separate HSA if you want to make HSA contributions. Q. When does the $6,750 family contribution limit apply? A. The ability to contribute up to the family limit depends on whether you have federal tax-qualified dependents, and it s important to note that the IRS defines dependents differently than does our medical plan. In general, tax-qualified dependents include: Your spouse, even if he or she is not covered by a high deductible health plan. Anyone you claim as a dependent on your personal income tax, even if that person is not covered by a high deductible health plan. Contact your tax advisor if you have any questions. Q. I m not enrolled in Medicare, but my spouse is. Can I contribute to a Health Savings Account (HSA)? A. Yes. You can contribute to an HSA and use your HSA contributions to pay for your and your spouse s qualified expenses. Q. Can I have an HSA and an IRA? A. Yes. Q. Can I combine an HSA from a former employer with my PayFlex HSA? A. Yes. There is a Trustee Transfer form on available on the PayFlex site through Aetna Navigator. Page 4

5 HSAs and Health Care Flexible Spending Accounts Q. Can I contribute to an HSA and participate in a Health Care Flexible Spending Account (HCFSA)? A. No. Federal regulations do not allow you to contribute to both an HSA and a Health Care Flexible Spending Account. Q. My spouse has a Health Care Flexible Spending Account. Can I open an HSA? A. No. If your spouse participates in a Health Care Flexible Spending Account that is not a Limited- Purpose HCFSA, you will not be eligible to open an HSA. Federal regulations do not allow you to contribute to an HSA if your spouse has an HCFSA. Q. My spouse has a Limited-Purpose Health Care Flexible Spending Account. Can I open an HSA? A. Yes. If your spouse participates in a Limited-Purpose HCFSA, which is a special type of spending account that covers only dental and vision expenses, you are eligible to open an HSA. Q. If I enroll in Health+Savings and open an HSA this year but change to a different medical option sometime in the future, can I then enroll in a Health Care Flexible Spending Account even though I have an HSA? A. Yes. And you can keep the HSA for as long as you want and spend that money whenever you want. But you can contribute to the HSA only while you re enrolled in a high deductible health plan. Page 5

6 Q. Can I have an HSA and a Dependent Care Spending Account? A. Yes. Dependent Care Spending Accounts are for dependent day care expenses and not for medical care. Please note, as a retiree, you are not eligible for the BP Dependent Care Spending Account. However, if your spouse has a Dependent Care Spending Account, you can also have an HSA. Contributions to your HSA Q. How much will BP contribute to the HSA? A. BP will not make contributions to retiree HSAs. Q. How much money can I put into my HSA? A. For 2016, the IRS allows up to $3,350 to be contributed for Personal coverage and up to $6,750 for Personal + dependents coverage. If you re over age 55, you re also eligible to make an additional $1,000 catch-up contribution each year to your HSA. Because BP s plan year is April 1 through March 31, you can make contributions according to the last-month rule. Q. What is the last-month rule? A. BP s benefits plan year is April 1 through March 31. Even though you weren t eligible to contribute from January through March, the last-month rule states that, as long as you re eligible for an HSA on December 1, you can contribute to your HSA, up to the maximum annual limit for the calendar year. However, the IRS requires that you continue to be eligible through December 31 of the following year. This is called the testing period. If you fail to remain an eligible individual during the 13-month testing period, other than in the event of death or becoming disabled, you will have to include as part of income the total contributions made to your HSA that would not have been made except for the last-month rule. This amount is included in your income in the year in which you fail to be an eligible individual. This amount is also subject to a 10% additional tax. For more information, please consult your tax advisor or see IRS Publication 969. Q. How do I make contributions to my HSA? A. Contributions will be on a post-tax basis and can be set up automatically when you link your personal savings account with your HSA on Aetna Navigator. You can also mail a deposit coupon directly to PayFlex, our HSA administrator. Page 6

7 Q. How often can I contribute to my HSA? A. You can contribute frequently or all at one time, provided your total contribution does not exceed the IRS annual limits. Q. Can I make changes to the amount I contribute to my HSA during the plan year? A. You can start, stop or change your contribution to your HSA account at any time. Q. What if I contribute more to my HSA than the IRS allows? A. You will be required to pay income taxes on the excess and any earnings. If you do not withdraw your excess funds before the tax-filing deadline (usually April 15 of the following year), you will also be subject to an excise tax. Contact PayFlex for guidance on how to withdraw excess funds before the deadline and avoid tax penalties. Q. Are HSA rules similar to the IRA rule that I can make a deposit into my HSA up to April 15 and have it count toward my prior-year tax return? A. Yes, as long as you did not contribute up to the maximum in the prior tax year. Q. Where can I find more information about how contributing to an HSA affects my taxes? A. The PayFlex website has helpful tools and resources. Visit the site at Page 7

8 Your investment options Q. Do I have investment options for my HSA balance? A. Once you have a balance of $1,000 in your HSA, you can open an investment account, and invest any of your HSA funds over this $1,000 in an array of mutual fund options. You must maintain a balance of at least $1,000 in your HSA in order to invest your funds. If funds are needed to pay for an eligible expense, you can always transfer funds from your investment account back to your interest-bearing account. Note: Investments are not FDIC-insured. By transferring funds into an HSA investment account, you can potentially benefit from capital appreciation in the value of mutual fund holdings. However, you will be exposed to a number of risks, including the loss of principal. To familiarize yourself with these risks, you should always read the prospectus for the mutual funds you intend to purchase. Once you have funds in investments, you will pay a monthly account fee of $1.50. This fee will automatically be deducted from your cash account. Q. Once I have $1,000 in my HSA, can I preset future allocations into my investment and/or interest-bearing accounts? A. Yes. You can preset your allocations by logging on to the Aetna Navigator member website via LifeBenefits and following these steps: Select Health Savings Account. Click Investments. Click View Investment Account. Select Manage My Account from the top navigation. Click Invest New Contributions on the left navigation. From here, you can input your preferred percentage values and then click Submit. Q. Can I use funds from my investment account to pay for health care expenses? A. No. Funds in the investment account cannot be used to pay for health care expenses. You must use money in the interest-bearing account only. If you need money from your investment account to pay for an eligible expense, you must first transfer the money from your investment account into your interest-bearing account and then pay the expense. Page 8

9 Spending your HSA Q. How do I spend my HSA? A. PayFlex will send you an HSA debit card that makes it easy to access your HSA money. Simply swipe the card for eligible health care expenses and the funds will be taken directly from your account. Be sure to select credit rather than debit when you use your card, because the card does not have a separate PIN. Note: The merchants and providers must accept MasterCard in order for your card to work. If you aren t required to make a payment at the time you receive the service, you should wait for the claim to be processed through the claim system. The doctor s office will send you a bill requesting payment for the difference between the billed charges and the amount covered by your health plan. You can write your HSA debit card number on the doctor s bill and submit it as payment, or you can pay for the expense out of pocket and reimburse yourself later. To pay for health care expenses directly from your HSA, log on to Aetna Navigator to access your HSA account and sign up for Make a Payment on the HSA website. You can also transfer funds from your HSA to your personal bank account. Make sure to keep your receipts for all expenses, in case you are audited. Q. Can I request additional debit cards one for me and one for my spouse? A. Yes. You can request additional debit cards by logging on to the Aetna Navigator member website via LifeBenefits. Q. What is the earliest I can begin paying claims with my HSA? A. You can use your HSA for eligible expenses that you incur after the date you have established your HSA. This means that the date of service for the expense must be on or after your HSA becomes effective. Expenses that you incur before you open your HSA are not eligible expenses. Q. Does my HSA have to have the money in it before I use it for eligible medical expenses? A. Yes. Your HSA is a personal account in your name and is administered by PayFlex, a subsidiary of Aetna. The funds must be in your account before you can pay for an expense. Page 9

10 Q. What if funds are not available when I have an eligible medical expense? A. If you do not have enough money in your HSA to pay for an eligible medical expense, you ll need to pay for the expense by some other means. Once the money is in your HSA, you can reimburse yourself for the amount you personally paid for the expense. Q. What can I spend my HSA on? A. You can use your HSA for eligible health care expenses for you, your spouse or your dependents (even if they re not covered under the Health+Savings Option), as defined by IRS Code Section 213(d). The law states that the expense must be primarily to alleviate or prevent a physical or mental defect or illness. Examples include prescriptions, doctor office visits, and vision and dental care. You can also spend it on some health care expenses not covered by your health plan, such as glasses and contact lenses, but it will not count toward your deductible. For a complete list of eligible expenses, go to or Examples of expenses that do not qualify include most cosmetic surgery, health club dues, maternity clothing and toiletries. Q. Can I spend my HSA on non-health care expenses? A. No. If you use your HSA for expenses other than eligible health care expenses, you automatically subject yourself to IRS penalties, which have increased to 20% of the total ineligible withdrawal. These expenses are considered taxable income (much like an early withdrawal from a 401(k)). You must report these withdrawals accordingly. Keep in mind that the inappropriate use of your HSA may leave you without available funds for future medical expenses. The 20% penalty does not apply if the withdrawal is made after you: Turn age 65. Become completely and permanently disabled. Die. Q. Can I use my HSA to pay insurance premiums? A. Generally, insurance premiums are not an eligible medical expense for your HSA. However, premiums for the following are eligible expenses: Long-term care coverage. Health care coverage while you receive unemployment benefits. Health care continuation coverage required under any federal law (e.g., COBRA). Retiree insurance premiums (other than premiums for a Medicare supplemental policy, such as Medigap) if you re age 65 or older. Page 10

11 Q. Can I use both my HSA and Retiree Reimbursement Account (RRA) to pay for health care expenses? A. If you are enrolled in one of the Health+Savings Options with the Health Savings Account (HSA) for retiree medical coverage before you become eligible for Medicare, your RRA may be used only for certain types of expenses, as follows: Until you meet your deductible, your RRA can be used only for certain types of expenses, including Medicare premiums and eligible out-of-pocket vision, dental and preventive care expenses. Note: Medicare premiums can only be for your spouse or eligible dependent, as you cannot be covered under Medicare and also contribute to an HSA. Your RRA cannot be used to reimburse you for your deductible. You can use your HSA to pay for all out-of-pocket eligible medical expenses. You cannot be reimbursed from both accounts for the same expense. Once you meet your deductible, the RRA can reimburse you for all eligible medical expenses you and your eligible spouse and dependents incur. Q. Who is responsible for ensuring that I am using my HSA for eligible medical expenses only? A. How you use your HSA is solely between you and the IRS. You should save all receipts, invoices and statements that provide evidence for how you used your HSA, in case you are audited. By law, BP cannot ask you to substantiate your reason for withdrawing money from your account; therefore, you will be responsible for improper withdrawals. And remember, the penalty for improper withdrawals is 20% of the amount withdrawn. Q. Who can I spend my HSA on? A. You can use your HSA to pay for eligible health care expenses (e.g., copays, deductibles and coinsurance that are not covered by another health plan) for: Yourself. Your spouse, even if he or she is not covered by a high deductible health plan (domestic partner expenses are generally not eligible for reimbursement). Anyone you claim as a dependent on your personal income tax, even if that person is not covered by a high deductible health plan. However, you cannot spend your HSA on eligible expenses for dependent children between ages 24 and 26. While health care reform changes mandate that children up to age 26 can be covered by your medical plan, they are not considered dependents for tax purposes. Q. Is there a time limit for reimbursing myself from the HSA? A. No. There is no time limit on HSA reimbursements. Page 11

12 Q. What happens to my HSA when I reach age 65? A. You can no longer contribute to your HSA if you enroll in Medicare. However, you can continue to use your HSA for eligible health care expenses, including retiree Medicare premiums, deductibles, copays, coinsurance and any other retiree insurance premiums (other than premiums for a Medicare supplemental policy, such as Medigap). Once you turn age 65, you can also use your HSA to pay for things other than eligible health care expenses. The money used will be taxable as income, but it will not be subject to the 20% penalty. Maintaining your HSA Q. How can I track my HSA balance? A. You will have access to your account online via the Aetna Navigator member website (accessible via LifeBenefits). When you log on, you can track your expenses, claims and account balance. Q. What happens if I have money left in my HSA at year-end? A. Just like a bank account, any money left over at the end of the year will be yours to keep, no matter what. Whatever funds you don t spend in one year remain in your HSA, earn interest and are available for withdrawal in a future year. Q. What happens to my HSA if I don t enroll in a high deductible health plan next year? A. If you are no longer covered by a high deductible health plan, such as the Health+Savings Option, you cannot continue to contribute to your HSA. However, the account is still yours and you can use the money to pay for eligible health care expenses or save it for future medical expenses. Q. Can my HSA money be rolled into an IRA? A. Not without incurring tax consequences. The only way to avoid those would be to roll it into another qualified HSA. Page 12

13 Q. What happens to my HSA if I die? A. Like your other assets, your HSA will go to your legal beneficiaries. You need to complete a beneficiary designation form that states to whom your account should be transferred in the event of your death. If your beneficiary is your spouse, the HSA will not be taxable to your beneficiary if the funds are used for qualified medical expenses. However, if your beneficiary is not your spouse, the HSA distribution will be taxable. You can select a beneficiary online or request a form when you log on to the Aetna Navigator member website via LifeBenefits. Q. What would cause my HSA to terminate? A. PayFlex will close your HSA only at your request. Q. Is my HSA protected from fraud? A. Yes. Subject to the terms and conditions of the cardholder agreement, if your HSA debit card is stolen or you suspect fraudulent activity, PayFlex will immediately replace your funds and work to resolve the issue. In the event of fraud, your account will be treated just like your checking account. Q. Do I have to pay maintenance fees on the HSA? A. Yes. Retirees and domestic partners will pay all fees associated with their HSAs. These include the monthly maintenance fee, any investment fees, and fees for optional services such as monthly paper statements for your account. Some fees may apply based on how you use your account. For more information, go to Aetna Navigator. Select the link to access your HSA, and click the fee schedule link on the left hand side of the HSA page. Health+Savings coverage Q. Are preventive services covered? A. Yes. Routine preventive care services performed by network providers and certain generic preventive prescription medications are covered at 100% without your needing to meet the deductible first. For information about covered preventive services, go to bp.com/lifebenefits and access the BP Medical Program section in the Benefits Handbook. Page 13

14 Q. What makes a drug a preventive drug, and what are some examples of the generic preventive drugs covered at 100% under the Health+Savings Option? A. Prescription drugs that can help you avoid developing a health condition are considered preventive prescription drugs. They can help you maintain your quality of life and avoid expensive treatments, helping to reduce your overall health care costs. A list of generic preventive drugs is available on the Express Scripts website. Go to LifeBenefits and click Express Scripts under the Contacts tab. Q. What else is covered? A. After you meet your deductible, the plan will pay benefits for covered services. You ll receive higher benefits when you seek services from network providers. You are required to pay the remaining amount up to your coinsurance maximum. For information about covered services, go to bp.com/lifebenefits and access the BP Medical Program section in the Benefits Handbook. Q. How do I find a network provider? A. To see if your doctor or hospital participates, or to find a network provider, visit Q. Does the deductible apply toward my out-ofpocket maximum? A. Yes. This document is presented as a matter of information, and is not intended to constitute a promise or contractual commitment by the company. The company reserves the right to unilaterally change or terminate any or all of the programs discussed herein, as well as all of its benefit plans and programs, at any time and without prior notice. Also, modifications may be necessary to comply with applicable legal requirements. In the event of any inconsistency between a statement contained in this document and the relevant plan document or summary plan description, the plan document or summary plan description will control over this document. Employees covered by collective bargaining agreements will be subject to these benefit plan provisions to the extent consistent with the terms of BP s policy and benefit programs, the applicable collective bargaining agreement and any applicable legal guidelines. Page 14