ICCCFO. Health Savings Accounts Presentation For The Illinois Community College Chief Financial Officers April 14, 2011

Transcription

1 ICCCFO Health Savings Accounts Presentation For The Illinois Community College Chief Financial Officers April 14, 2011

2 Health Savings Account Legislative Background Health Savings Accounts (HSAs) were created by the Medicare bill signed by President Bush on December 8, 2003 by the Medicare Prescription Drug, Improvement, and Modernization Act The Bush administration created the product to give individuals a financial incentive (tax-exempt status) to take better control of their health care expenditures. Health Savings Account (HSA) updated under 2006 legislation to include employer contribution regulations. HSA is a bank account created to save for and pay for medical expenses under a high-deductible health plan. What is an HSA? A tax-advantaged personal savings account that works with an HSA-compatible health plan* Pay for qualified medical expenses with tax-free dollars You own it no use-it-or-lose-it requirement on the balances Your balance plus earnings carries over year to year tax free n *Tax references are at the federal level. State taxes vary. Please consult a tax advisor.

3 HSA Benefits The Health Savings Account is essentially a checking account. Account needs include: Easy Enrollment Debit Card Access On-line Banking with e-statements and Bill Payment Checks Tax Reporting 1099SA and 5498SA Long-term Investment Vehicle for savers Individually owned custodian accounts Pre-tax or post tax funding available FDIC insured Demand Deposit Account Save for future medical expenses Be in control of your medical benefits Your money rolls over year after year Portable your money can move with you 100% immediately invested in HSA account Tiered interest rate paid on balances Triple Tax Advantage 1 Tax free accumulation interest we pay on account Tax free withdrawals for qualified medical expenses Pre-tax contributions through payroll deduction 1 State tax laws may vary consult your tax preparer about your situation

4 Who can t have an HSA People who are: Employees enrolled in health insurance under spouse s plan unless HSA compatible Employees enrolled in Medicare Employees enrolled in Tricare Eligible to be claimed as a dependent on someone else s tax return Employee or spouse participates in a Health Care FSA (Please note that this does not apply to Dependent Care FSA)

5 How much can I contribute? 2011 Maximums* HSA Annual Contribution Limits HSA Catch-Up Contributions (over age 55) Single - $3,050 Family - $6,150 $1,000 *Including Employer Funds HSA contributions Pre-tax payroll deductions Employer contributions Individual contributions Contribute up until 4/15 IRA transfer Transfer/rollover from another HSA** Optional transfer from Full Health Care FSA** Can not make deposits at local branches **One time event that does not count toward annual contribution maximum

6 Who is Covered? Qualified medical expenses are those incurred by the following persons. You and your spouse. All dependents you claim on your tax return. Any person you could have claimed as a dependent on your return except that: The person filed a joint return, The person had gross income of $3,500 or more, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2010 return. Please consult your tax accountant

7 Using HSA Funds Eligible Medical Expenses: Deductible and coinsurance amounts Visits to your doctor Medical procedures Prescription drugs Dental Eyeglasses, contact lenses Laser eye surgery Hearing aids For guidance, visit publication 502. Onlinehttp:// earn and click on Tools and Quick Expense Qualifier

8 Qualified Medical Expenses: Qualified Medical Expenses Ambulance Bandages Chiropractor Crutches Eyeglasses Hearing Aids Surgery Medicines Wigs Xrays Non - Qualified Medical Expenses Babysitting/Child Care Cosmetic surgery Diaper service Dance lessons Funeral expenses Hair transplant Maternity clothes Teeth whitening Veterinary fee Weight loss programs

9 It s all yours No matter what stage of life you are in Your HSA stays with you Your balance carries over You spend and save at your own pace Changes in IRS Guidelines Over-the-counter medications are no longer reimbursable from your HSA without a prescription from your physician. Exceptions: Insulin, medical devices and supplies or if your doctor provides a prescription Over-the-counter drugs include Tylenol, Claritin, Prilosec & their generic equivalents. You must have a prescription for them from your doctor, and you are responsible to keep a copy of your prescription Medical devices include crutches, bandages, blood sugar test kits Funds taken out for non-qualified medical expenses will now see a penalty of 20%. For guidance, visit publication 502.

10 Triple tax savings* Increase your spending and savings power Pay for qualified medical expenses tax free Interest and investment earnings are tax free Contributions are pre-tax or tax deductible * All taxes are at the federal level. State taxes vary. Please consult a tax advisor. Other Important things to know about an HSA If you withdraw money from your HSA for non qualified expenses, you pay a 20% penalty and is taxed as ordinary income At age 65, you can withdraw money for non-qualified expenses free from penalty, but you will pay tax on the amount withdrawn

11 Making Contributions Contributions can be made via: Direct Deposit through payroll deductions pretax Check along with deposit coupon post tax contribution - additional deposit coupons can be obtained Online banking customers may be able to use On-Line bill pay Anyone can make contributions to your account Usually can not make deposits at Bank branches

12 Using your HSA Account Pay with your HSA Debit MasterCard - No ATM or Cash Access No ATM or Cash Back access Online Bill Pay: Pay yourself back or pay your medical providers via online bill pay Pay with personal HSA checks Submit signature card and you will receive 4 complimentary checks, triggers plus service, reorder checks for an additional 25 checks (fee associated)

13 Questions?