A Health Savings Account (HSA) is a tax-favored account used in conjunction with an HSA-compatible health plan.

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1 What is an HSA? A Health Savings Account (HSA) is a tax-favored account used in conjunction with an HSA-compatible health plan. Affordable and Comprehensive Coverage How does it work? HSA-compatible health plan: An HSA-compatible health plan provides a balance between comprehensive coverage and more manageable insurance premiums. You are responsible for the deductible and the maximum out-of-pocket. Once those are met, expenses covered by the health plan (including prescription drugs) are paid at 100%. Since an HSA-compatible plan must meet certain deductible and maximum out-of-pocket requirements, your health plan representative can verify if your health plan qualifies. Health Savings Account: The HSA allows you to build savings to pay for eligible expenses that are not covered by the health plan, typically the deductible and other out-of-pocket costs. HSAs provide tax benefits when funds are deposited, as the account grows and when funds are used for eligible medical expenses. Savings opportunities Save on premiums: Premiums are typically less with an HSA-compatible health plan than with lower-deductible plans and generally increase at a slower rate. The money you save on premiums can be used to help fund the HSA. Save as you contribute: Contributions are made on a pre-tax or tax-deductible basis. Grow your balance: Balances roll over each year; helping you save money for future medical expenses. As your balance grows, the interest and investment earnings grow tax-free. Save on medical expenses: HSAs allow you to pay for eligible medical expenses with taxfree dollars. At age 65, you can use HSA funds as another retirement account and pay only income tax.

2 1. Consider Your Financial Impacts An HSA provides a variety of financial incentives including savings on premiums and attractive tax benefits on contributions, account growth and funds withdrawn for eligible medical expenses. Calculate your premium savings with the Is an HSA Right for Me? calculator at: Determine your tax savings and future value at: 2. Consider Your Lifestyle There are many myths that suggest an HSA is only for the young, healthy and wealthy. However, an HSA plan can compliment any stage of life or health condition if you understand how to use it. The Every Day HSA tool allows you to view scenarios of how an HSA can be used and receive a custom recommendation of how you might best maximize the benefits of an HSA. Receive your custom HSA recommendation at: 3. Start Saving Today - 3 Easy Steps Making the decision to enroll in an HSA-compatible health plan with an HSA is the first step to taking control of your healthcare financing. To get started: 1. Verify you are eligible. You must be covered under an HSA-compatible health plan, not be enrolled in Medicare or other non-compatible plans, and not be claimed as a dependent on another person s tax return. 2. Complete the HSA application. If you are enrolling through your employer, your employer will provide you with an enrollment link or application. For individuals, complete our Individual Online Enrollment form at: 3. Your account is opened. Your account is typically opened within 1-2 business days and you can expect your Welcome Kit and debit cards to arrive 7-10 days later. (For Individual Online Enrollments, your Welcome Kit will arrive by .) If you did not enroll in Internet Banking or electronic statements at the time of enrollment, be sure to sign up at:

3 Service & Expertise As a leader in the industry, it is our goal to provide expertise and service that exceeds your expectations. You can receive account information and support in English or Spanish by contacting our knowledgeable and friendly customer service representatives. HSA Bank, a division of Webster Bank, N.A., has been providing FDIC insured health-based savings accounts since We focus on HSAs and provide ongoing training to further enhance our representatives knowledge of current legislation and industry trends. Convenience Account Information To assist in account management, we have designed our Internet Banking system for HSAs. You can receive notifications, view electronic statements, access year-to-date information and tax documents, as well as initiate transfers to/from your HSA. As an alternative, our toll-free automated banking system also provides you with access to your account balance and transaction history 24 hours a day, 7 days a week. Contributions It is easy to put money in your HSA. With Internet Banking, you have the option to schedule one-time or recurring transfers from a personal bank account. You can also send a check with a contribution form or deposit ticket, or make contributions through payroll deductions if your employer offers this option. Withdrawing Funds You can request up to two complimentary Visa debit cards at account opening. The card can be used for point-of-sale purchases where medical products or services are provided, or with a PIN at an ATM. Accountholders may also opt to purchase checks or reimburse themselves through Internet Banking. Investment Opportunities Through our investment partners, you have the opportunity to invest your HSA dollars in stocks, bonds and mutual funds. Plus, earnings grow tax-free. Investment accounts are established separately after enrollment. Investment accounts are not FDIC insured, may lose value and are not a deposit or other obligation of, or guarantee by the bank. Investment losses which are replaced are subject to the annual contribution limits of the HSA.

4 Become a Healthcare Consumer Understand what expenses are eligible An expense that is eligible for an HSA distribution is defined as an expense for certain healthcare services, equipment and medications to maintain your health or the health of your family. In addition to medical services, an HSA may be used for dental, vision, prescription, chiropractic and some over-the-counter medications. For more information, please visit for a sample list of eligible medical expenses. Understand how payment works If you are accustomed to health plans with low deductibles and co-payments, the payment experience under an HSA may be a little different. Things to consider: Be sure all network discounts are applied before making a payment. Typically, this will mean you need to wait for an Explanation of Benefits (EOB) from your health plan. However, you may be requested to make a partial payment at the time of service. If you do not have enough funds in your HSA for an expense: A. Make a partial payment from your HSA and use an alternative source for the remaining portion. B. Pay your bill with an alternative payment method, such as another bank account. C. Contact your healthcare provider and request a payment plan. For large expenses, healthcare providers will generally provide low interest payment plans. As your balance increases, you may reimburse yourself for expenses already incurred. Payments made for prescriptions count towards your maximum out-of-pocket expenses. Once you reach your maximum, prescriptions will also be covered 100%. For out-of-network or large expenses, consider using a claims negotiation service to assist in reducing your bill. Visit for more information. Understand the role you play When it comes to healthcare, we often forget that we are consumers who have the right to know how much things cost and understand what we are paying for. With an HSA, you gain control over your healthcare decisions. As you are making your healthcare decisions: Discuss alternatives with your physician Ask about price Utilize resources available online and through your health plan Participate in wellness programs and activities Ask about savings options for prescription drugs For assistance, please contact Customer Service (800) Monday - Friday, 7 a.m. - 9 p.m., Central Time 605 N. 8th Street, Ste. 320, Sheboygan, WI

5 2010 IRS Guidelines for HSA-Compatible Health Plans and HSA Contribution Limits Please contact your health plan representative to determine if your plan qualifies. Single Family Minimum Deductible $1,200 $2,400 Maximum Out-of-Pocket $5,950 $11,900 Contribution Limit $3,050 $6,150 What is your Savings Potential? HSA Bank s account statistics indicate that approximately 97% of accountholders roll balances over from one year to the next. Whether you are saving the maximum or only a portion each year, you have an opportunity for account growth. When you contribute to a Health Savings Account, you experience tax savings on the contributions and tax-deferred growth on the earnings. What could your balance be if you contribute $100 or $200 a month and allow your account to grow over the years? Savings Examples $400, $350, $300, $250, $200, $150, $100, Account Growth Potential These examples demonstrate the potential for savings and account growth. To calculate approximate savings based on your specific circumstances, use our Future Value calculator at: $50, $ Year s (Family Max. 2010) $512.50/month $400/month $300/month $254.16/month $200/month $150/month $100/month $50/month $ $3,050 $100 $1,200 $ $6,150 $200 $2,400 $30,500 $9,150 $ $33,396 $12,000 $3,600 $ $13,139 $61,500 $18,450 $1,752 $67,340 $24,000 $7,200 $ $26,279 $122,000 $36,600 $18, $184,226 $48,000 $14,400 $7, $72,482 All figures are provided for illustration purposes. Actual savings, tax rates and earnings may vary. For illustration purposes, the following assumptions were used: federal tax rate, 25%; state tax rate, 5%; average annual percent yield over the life of the HSA, 2%; net contributions is the amount remaining in the HSA at the end of the year and maximum contribution limits remained constant. # $246,000 $73,800 $37,641 $371,472 $96,000 $28,800 $14,689 $144,

6 Eligible Medical Expenses An eligible expense is defined as an expense which pays for care as described in Section 213 (d) of the Internal Revenue Code. Below are two lists which may help determine whether an expense is eligible. These lists are not comprehensive, are meant to serve as a quick reference, and are provided to you with the understanding that HSA Bank is not engaged in rendering tax advice. The information provided is not intended to be used to avoid federal tax penalties. For more detailed information, please refer to IRS Publication 502 titled, Medical and Dental Expenses, Catalog Number 15002Q. Publications can be ordered directly from the IRS by calling TAXFORM. If tax advice is required, you should seek the services of a professional. Eligible Medical Expenses (for HSA Distributions) Abdominal supports Abortion Acupuncture Air conditioner (when necessary for relief from difficulty in breathing) Alcoholism treatment Ambulance Anesthetist Arch supports Artificial limbs Autoette (when used for relief of sickness/disability) Birth Control Pills (by prescription) Blood tests Blood transfusions Braces Cardiographs Chiropractor Childbirth/Delivery Christian Science Practitioner Contact Lenses Contraceptive devices (by prescription) Convalescent home (for medical treatment only) Crutches Dental Treatment Dental X-rays Dentures Advancement payment for services to be rendered next year Athletic Club membership Automobile insurance premium allocable to medical coverage Boarding school fees Bottled Water Commuting expenses of a disabled person Cosmetic surgery and procedures Cosmetics, hygiene products and similar items Dermatologist Diagnostic fees Drug addiction therapy Drugs (prescription) Elastic hosiery (prescription) Eyeglasses Fees paid to health institute prescribed by a doctor FICA and FUTA tax paid for medical care service Fluoridation unit Guide dog Gum treatment Gynecologist Hearing aids and batteries Hospital bills Hydrotherapy Insulin treatment Lab tests Lead paint removal Legal fees Lodging (away from home for outpatient care) Metabolism tests Neurologist Nursing (including board and meals) Obstetrician Operating room costs Ophthalmologist Optician Optometrist Funeral, cremation, or burial expenses Health programs offered by resort hotels, health clubs, and gyms Illegal operations and treatments Illegally procured drugs Maternity clothes Non-prescription medication Premiums for life insurance, income protection, disability, loss of limbs, sight or similar benefits Scientology counseling Social activities Oral surgery Organ transplant (including donor s expenses) Orthopedic shoes Orthopedist Osteopath Oxygen and oxygen equipment Pediatrician Physician Physiotherapist Podiatrist Postnatal treatments Practical nurse for medical services Prenatal care Prescription medicines Psychiatrist Psychoanalyst Psychologist Psychotherapy Radium Therapy Registered nurse Special school costs for the handicapped Spinal fluid test Splints Sterilization Surgeon Telephone or TV equipment to assist the hard-of-hearing Therapy equipment Ineligible Medical Expenses Special foods and beverages Specially designed car for the handicapped other than an autoette or special equipment Swimming pool Travel for general health improvement Tuition and travel expenses a problem child to a particular school Weight loss programs Transportation expenses (relative to health care) Ultra-violet ray treatment Vaccines Vasectomy Vitamins (if prescribed) Wheelchair X-rays Over-the-Counter Drugs Antacids Allergy medications Pain relievers Cold medicine Anti-diarrhea medicine Cough drops and throat lozenges Sinus medications and nasal sprays Nicotine medications and nasal sprays Pedialyte First aid creams Calamine lotion Stop-smoking programs Wart removal medication Antibiotic ointments Suppositories and creams for hemorrhoids Sleep Aids Motion sickness pills Over-the-Counter Drugs Toiletries (including toothpaste) Acne treatments Lip balm (including chapstick or carmex) Suntan lotion Medicated shampoos and soaps Vitamins (daily) Fiber supplements Dietary supplements Weight loss drugs for general well being Herbs Health insurance may not be purchased with HSA Funds. However, HSA funds can be used to pay for: 1) Health plan premiums during any period of continuation coverage required under any Federal Law (COBRA) 2) A qualified long-term care insurance contract 3) A health plan during a period in which the individual is receiving unemployment compensation under any Federal or S tate Law 4) For individuals over age 65, premiums for Medicare Part A or B, a Medicare HMO and/or the employee share of premiums for employer-sponsored health insurance, including premiums for employer-sponsored retiree health insurance HSAFORM