Health Savings Account reference guide

Transcription

1 Heath Savings Account reference guide

2 Information at your fingertips This ist of chapters and page numbers wi hep you find the information you need quicky. A detaied ist of sections and topics is at the beginning of each chapter. Chapter 1 page 3 Chapter 2 page 17 Chapter 3 page 23 Chapter 4 page 29 Chapter 5 page 35 Chapter 6 page 39 Getting started with your heath savings account (HSA) This chapter introduces you to the many Further HSA features and describes how your heath pan works with your HSA. You earn how to register at heofurther.com and how to set up your HSA with optiona features. You aso be introduced to onine toos and resources at your fingertips. Contributing to your HSA There are many good reasons to contribute to your HSA and severa ways to do it. This chapter examines why it is so beneficia to contribute to your HSA, presents strategies and tips to make contributing simpe and easy, discusses contribution imits, catch-up contributions, roover contributions and more. Being reimbursed from your HSA HSAs give you severa reimbursement options, incuding debit card, crossover, onine and manua reimbursement requests and direct deposit. This chapter examines your HSA reimbursement options, introduces you to the broad range of medica expenses for which you can be reimbursed from your HSA and gives an exampe of how you are reimbursed from your account. Saving for retirement with your HSA Your HSA is a smart way to save for retirement. This chapter presents effective strategies to maximize your HSA. It aso expains how HSAs work for peope enroed in Medicare. Managing your HSA when ife changes What happens to your HSA when you encounter ife changes ike osing your job, divorce and even death? This chapter expores what happens to your HSA when these events occur. HSAs and your taxes This chapter covers such things as reporting HSA income on your tax return, important forms to submit and how individua HSA contributions are treated on your tax return. Chapter 7 Investing your HSA page 43 This chapter introduces you to investment strategies and options that can hep you grow your HSA from minimum baances and basic investment accounts, to sef-directed mutua fund options and asset casses. Chapter 8 page 51 Getting hep with your HSA You have severa options for getting hep if you can t find information and answers in these pages. This chapter ooks at the many resources avaiabe to you as an HSA member and incudes a gossary of terms. 2

3 Chapter 1 Getting started with your heath savings account (HSA) This chapter introduces you to the many Further HSA features and describes how your heath pan works with your HSA. You earn how to register at heofurther.com and how to set up your HSA with optiona features. You aso be introduced to a the onine toos and resources avaiabe to you.

4 Chapter 1 Getting started with your heath savings account (HSA) Section 1 Wecome to Further 6 Section 1.1 Getting to know Further 6 Section 1.2 Quick overview of what you need to do 6 Section 2 Set up your HSA 7 Section 2.1 Compete these steps 7 Section 2.2 Your optiona HSA features 7 Section 2.3 Section 2.4 Debit card or crossover Which HSA reimbursement method is better for you? 8 Submit your onine appication and contribution to Further 8 Section 2.5 Your heath pan Expanation of Heath Care Benefits 9 Section 2.6 Spend or save What s your HSA strategy? 10 Section 2.7 Your heath pan is an HSA-quaified HDHP 10 Section 2.8 HSA member eigibiity 11 Section 3 Manage your HSA onine 11 Section 4 Understanding what and when you pay 12 Section 4.1 Exampes of an HDHP without an HSA and with an HSA 13 4

5 Section 5 Frequenty asked questions 14 What is an HSA? 14 What are the advantages of an HSA? 14 What are my responsibiities as an HSA hoder? 14 What if, in the future, I am not covered by an HDHP or I end coverage through my empoyer? 14 If I (or my empoyer) change heath pans midyear, from a non-hsa pan to an HSA pan, can any amount paid toward my previous pan deductibe be appied to my new HSA pan deductibe? 14 Can business owners not eigibe for a heath reimbursement arrangement (HRA) estabish an HSA? 14 Is someone enroed in Medicare eigibe for an HSA? 14 Is the HDHP portabe? 15 How is interest credited to my HSA? 15 Is there a fee for having an HSA? 15 Why did I get a bi from my provider? 15 Wi I have to pay my provider before I am reimbursed from my HSA? 15 Why didn t I have to pay for my prescription at the pharmacy? 15 Why did I have to pay for my annua checkup? I thought I had 100 percent coverage. 15 Why did I get a check in the mai from Further? Who is Further? 15 What happens to an HSA at the end of the year? 15 5

6 Chapter 1 Getting started with your HSA Section 1 Wecome to Further Further is a nationa eader in the administration of persona spending accounts. Our experience and toos make it easy to use your HSA. Section 1.1 Getting to know Further Further ranks among the top administrators nationay in managed HSA assets and accounts. We are an IRSapproved non-bank trustee with more than 25 years experience administering persona spending accounts. Setting up and using a heath savings account (HSA) makes a ot of sense. It s an easy and convenient way to pay for your eigibe medica expenses, enjoy tax savings and earn tax-free interest on your account baance, too. Further is the right choice because: Experience Since 1989 we ve been focused soey on medica account administration, serving cients and individua account hoders in a market segments across the country. Choice Further offers a range of HSA account options with varying administrative fees and market-eading interest rates on account baances. Service Our team of speciay trained HSA experts are here to support you. In a recent survey, 96 percent of Further customers were either satisfied or extremey satisfied with the service they received. Give us a ca at Our ca center is open 7 a.m. to 8 p.m. Centra Time, Monday through Friday. Investments Once you reach a minimum of $1,000 in your account, you can invest the amount over $1,000 into mutua funds seected by Devenir Advisors LLC for Further. Once you have $10,000 in investments an optiona sef-directed HSA brokerage account is aso avaiabe. By enroing in a HSA-quaified heath pan, you ve taken an important first step in managing your heath and your heath care doars. Maximize the vaue by opening a Further tax-advantaged HSA that heps you pay for medica expenses now and in the future. This HSA reference guide tes you everything you need to know about your Further HSA. If you can t find an answer here, visit heofurther.com or ca the Further service team at Section 1.2 Quick overview of what you need to do Here s what you need to do to take fu advantage of your heath pan and your HSA. A these steps are covered in more detai in this reference guide. 1. Enro in an HSA quaified high-deductibe heath pan (HDHP) 2. Ensure you are eigibe to contribute to an HSA 3. Open the HSA (medica expenses incurred before your HSA is set up are not eigibe to be reimbursed) Note: your account is not considered active unti a contribution is made 4. Register onine at heofurther.com to manage your HSA onine Convenience Access your HSA funds quicky and easiy with the Further debit card or choose other convenient reimbursement options ike onine reimbursement with direct deposit or crossover (automatic caim reimbursement). In addition, ogging into your account via the Onine Member Service Center gives you the freedom to manage your account anytime, anywhere. 6

7 Chapter 1 Getting started with your HSA Section 2 Set up your HSA Don t deay setting up your HSA It s in your best interest to set up and begin funding your HSA eary in your pan year even if you don t intend to use it right away. That s because medica expenses incurred before your HSA is set up are not eigibe to be reimbursed. Don t worry, it s a simpe process and we hep you, if needed. You can set up your HSA onine at heofurther.com. Registration is a secure process, so ony you can access your persona information. Be sure to enter your e-mai address. This wi hep us get your information quicky in the future. If you aready registered but don t have your user name or password, you can request that information onine, using the Forgot Username or Password? ink in the sign-in area or by caing Further customer service. Section 2.1 Compete these steps The first thing you need to do is compete the appication and make a contribution: HSA Appication* Go onine and compete the HSA appication. If you ve purchased your pan as an individua (not through your empoyer), you can then seect your HSA pan type. HSA Contribution Form* Go onine and contribute funds to your HSA. Contributions can be made monthy, annuay, or any time frame you prefer. You can choose to fund your account now, or ater in the year. Note: Your account is not considered active unti a contribution is made. *Paper forms are avaiabe Section 2.2 Your HSA features and options Your HSA comes with many features and options that make it easy to use. HSA Debit Card When you open your HSA, you wi automaticay receive a debit card which is incuded at no cost with any Further HSA. Your debit card gives you and your eigibe dependents immediate access to your HSA doars. This is the fastest reimbursement option. Crossover (automatic caims reimbursement) If avaiabe through your heath pan, crossover enabes your heath pan to eectronicay submit caims to Further to reimburse you from your HSA. That means no paperwork for you. (See Chapter 3 on page 23 to earn more.) Note: Do not sign up for crossover if you have other heath coverage. If you sign up for crossover, your HSA debit card wi be removed. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 7

8 Chapter 1 Getting started with your HSA Direct Deposit Further can deposit your reimbursement directy into your checking or savings account. Direct deposit saves time because you don t have to deposit a reimbursement check and, in most cases, you be reimbursed sooner. Direct deposit makes sense whether or not you choose crossover. Section 2.3 Reimbursement Options HSA debit card: Once you ve set up your HSA and made a contribution, you can use the money in your HSA, tax free, to pay for your pan deductibe and other eigibe heath care expenses. If you don t use a the money in your HSA, the baance ros over to the next year. Those doars earn interest at the stated rate and are avaiabe to pay for future medica expenses. As your HSA baance grows, you have the option to invest a portion of the funds. This makes an HSA a great savings too for the future, incuding when you retire. You wi automaticay receive a debit card when you sign up for an HSA. Use your debit card just ike you woud a debit card from your bank. Many account hoders find this to be the simpest, quickest way access their HSA funds. Need hep? Ca Further customer service at a.m. to 8 p.m. Centra Time, Monday through Friday. Onine Withdrawa (aso caed Submit a Caim): Use the Onine Member Service Center to request a reimbursement or to pay heath care providers directy from your HSA. Crossover: (If your heath pan participates in this program). If you or your dependents have other heath coverage, do not sign up for crossover. If you do not want to use your debit card or onine withdrawa options, change to crossover through My Profie at heofurther.com. The debit card option wi be removed. Section 2.4 Submit your appication and contribution onine Appy onine at heofurther.com or return your competed forms to Further at the address noted on the forms. Pease aow five to seven business days for Further to process your information. When your HSA is set up, you receive a wecome packet in the mai that incudes a verification form from Further. Note: You must make a contribution (deposit) to your HSA before it is officiay active. 8

9 Chapter 1 Getting started with your HSA Section 2.5 Your heath pan Expanation of Heath Care Benefits When you use your heath pan, you receive information about your caims. It wi come in the form of an Expanation of Heath Care Benefits (EOB). Your EOB provides detaied caim information incuding the care you received, the doar amount covered by your heath pan and the amount you owe your doctor or provider. The EOB is not a bi. Your doctor wi bi you separatey for the amount you owe. If you eect crossover, (automatic caims reimbursement), your heath pan wi submit the caim to Further and you automaticay be reimbursed from your HSA for the amount you owe, as ong as there is money in your account (Pease note: you can ony eect crossover if your empoyer aows it and you are part of a participating heath pan). You re sti responsibe for paying your doctor. If you did not seect crossover, you need to use your HSA debit card, submit caims onine, or submit caims manuay to Further to be reimbursed from your HSA. HSA caim activity is maintained by Further and can be viewed anytime in the Onine Member Service Center at heofurther.com. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 9

10 Chapter 1 Getting started with your HSA Section 2.6 Spend or save What s your HSA strategy? Your HSA aows you to be reimbursed for eigibe heath care expenses now or in the future. There are two key ways to grow your HSA: 1. Pay for your heath care expenses out of your pocket as they incur and et your HSA doars earn interest and grow tax free 2. Activate your HSA Basic Investment Account once your HSA Base Baance exceeds $1,000 and begin investing your HSA doars. (See Chapter 7 on page 46 to earn more about your HSA investment options.) Shoud you spend, save or invest your HSA doars? Ask yoursef these questions: Wi you and your famiy have medica expenses that you can t pay out of your pocket? Wi you be abe to et your HSA doars grow, or wi you need to use the HSA to pay for medica expenses? If this is not your first year with an HSA, what is your average account baance? If you choose to invest your HSA, are you wiing and abe to take on the financia risk? If you can afford to et your HSA baance grow (by paying for medica expenses out of pocket), then saving and investing your HSA coud be a smart move. However, if you have a ot of medica expenses and need to use your HSA to pay for those expenses, then consider eaving the money in your HSA Base Account where it wi earn interest. Section 2.7 Your heath pan is an HSA-quaified HDHP That means it meets the foowing criteria, which aows you to contribute to an HSA to hep pay for eigibe expenses. 10 Minimum pan deductibes for HSA compiant HDHPs in 2018 and 2019: 2017 individua minimum $1, individua minimum $1, famiy minimum $2, famiy minimum $2,700 Maximum Out-of-Pocket eves for HSA Compiant HDHP s in 2017 and individua minimum $6, individua minimum $6, famiy maximum $13, famiy maximum $13,300 Other HDHP criteria A services must appy toward the deductibe (incuding prescription drugs), with the exception of preventive care services. There can be individua (embedded) deductibe(s) on famiy poicies, as ong as the individua deductibe is not ess than the minimum famiy deductibe amount estabished by HSA aw ($2,600 in 2017 $2,700 in 2018). Your heath insurance pan can verify if you are on a quaified HDHP. Famiy HSA deductibe exampes (doar amounts wi vary these are for iustrative purposes ony) Individua deductibe Famiy deductibe Exampe: Husband and wife on heath pan. Husband incurs $2,700 in caims during year; wife incurs $500 in caims during year. HSA-compiant deductibe structure for a famiy heath pan with an embedded individua deductibe HSA-compiant deductibe structure for a famiy heath pan $2,600 None individua accumuations appy toward an aggregate famiy deductibe $5,000 $5,000 Husband meets $2,600 individua deductibe, then the remaining $100 is paid at coinsurance or 100% (depending on pan design). Wife meets $500 toward her individua deductibe. Tota famiy deductibe met is $3,100. Husband meets $2,700 toward the famiy deductibe. Wife meets $500 toward the famiy deductibe. Tota famiy deductibe met is $3,200. The deductibe and out-of-pocket maximums are subject to annua adjustment for a of the high-deductibe heath pans at every eve. These adjustments are effective on the pan s annua renewa date.

11 Chapter 1 Getting started with your HSA Section 2.8 HSA member eigibiity You are eigibe to contribute to an HSA if you meet these criteria: 1. You are covered by an HSA quaified high-deductibe heath pan (HDHP). Aso see preceding section 2.7 on page 10. You re ineigibe for an HSA if you re covered under a heath pan (as an individua, spouse or dependent) that is not an HDHP, incuding Medicare. 2. You are not a dependent. If you are caimed as a dependent on someone ese s tax return, you cannot set up an HSA. 3. You are not covered by Medicare. 4. You are not in a medica fexibe spending account (FSA) uness your FSA imits eigibe expenses to vision, denta and preventive services during the heath pan deductibe period. 5. You have no other coverage. Note: Coverage under a spouse s FSA wi disquaify your HSA, uness your spouse s FSA imits eigibe expenses to vision, denta and preventive services during the heath pan deductibe period. Eigibe individua status is determined monthy as of the first of each month. You can contribute to more than one HSA, but your tota contributions cannot exceed the annua imit (see Chapter 2, Section 1 on page 19 for contribution imits). You may enro in the foowing types of pans whie maintaining your HSA eigibiity: Accident coverage Disabiity coverage Denta and vision care Long-term care insurance Insurance for a specified disease or iness Insurance that pays a fixed amount per day (or other period) of hospitaization Insurance in which the coverage reates to iabiities from workers compensation aws, torts or ownership or use of property (such as automobie insurance) Section 3 Manage your HSA onine Compete HSA transactions fast, easy and paperess on heofurther.com. At the Onine Member Service Center you can: Submit an appication to set up your HSA Get reimbursed for expenses Sign up for features ike direct deposit Request a debit card or order a repacement card View account baances and transaction history Set up one-time or recurring contributions to your HSA Open and manage your HSA investment account Pay heath care providers Designate beneficiaries Give a famiy member or trusted individua authority to contact Further on your behaf Keep track of a your heath care receipts in Further s eectronic document storage system. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 11

12 Chapter 1 Getting started with your HSA Section 4 Understanding what and when you pay Your HSA is a smart way to save money and pay for medica expenses, a at the same time. HSAs are easy to use. But there are a few things you shoud know as you use your new heath pan and HSA. With an HSA-quaified HDHP you pay for eigibe medica expenses unti you reach your deductibe. When your deductibe is met, your heath pan starts to pay (subject to coinsurance amounts) unti the out-of-pocket maximum has been met. When you ve met your outof-pocket maximum, the heath pan pays 100 percent of covered expenses. Preventive care is covered at 100 percent, even during the deductibe phase. When the money in your HSA is spent, you pay for the rest of your deductibe out of your own pocket, incuding prescriptions. How can you avoid HSA surprises? Here are a few tips: Make sure that you and your spouse are aware of your current HSA baance when receiving care or fiing prescriptions Keep track of your HSA activity so you know when you have to begin paying out of pocket. Use the Onine Member Service Center or ca customer service to get baance information Use generic drugs to save money on maintenance drugs. It can aso hep decrease the number of prescriptions you need after you ve used up your HSA baance Whie your HSA can go a ong way toward heping you pay for your heath care expenses, it may not cover a your expenses, at east not in the first few years. Here s an exampe of how your HSA works with your heath pan to cover your expenses, and what your experience woud be if you had a high-deductibe heath pan without an HSA. 12

13 Chapter 1 Getting started with your HSA Section 4.1 Exampe of an HDHP without an HSA $1,450 deductibe $2,900 out-of-pocket maximum 80/20 coverage after deductibe unti the out-of-pocket maximum is met You pay for a expenses out of your own pocket during this time. The heath pan begins to pay. You may pay a share of expenses (coinsurance). Your pan pays the rest. The heath pan pays 100% of eigibe expenses for the rest of the year. Exampe of an HDHP with an HSA $1,450 deductibe $2,900 out-of-pocket maximum Preventive care benefits are usuay covered 100 percent from Day 1. $1,450 deductibe $750 HSA contribution (you, your empoyer or both) $2,900 out-of-pocket maximum 80/20 coverage after deductibe unti OOP is met You can use your HSA to pay for expenses.* $750 account baance You pay for a expenses out of your own pocket once your HSA is spent. $1,450 deductibe When you ve met your deductibe, the heath pan begins to pay. You may pay a share of expenses (coinsurance). Your pan pays the rest. $2,900 out-of-pocket maximum Preventive care benefits are usuay covered 100 percent from Day 1. The heath pan pays 100% of eigibe expenses for the rest of the year. *Additiona features: Your HSA aows you to save any unused doars for future heath care expenses, PLUS you can have tripe tax advantages; money put into the account isn t taxed; unused account doars earn tax-free interest; and withdrawas aren t taxed if used for quaified medica expenses. An additiona difference between a deductibe pan and an HSA pan: with an HSA pan, prescriptions are subject to the deductibe. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 13

14 Chapter 1 Getting started with your HSA Section 5 Frequenty asked questions Q: What is an HSA? A: An HSA or heath savings account is a specia taxpreferred trust or custodia account estabished under Interna Revenue Code Section 223 that is used to pay for medica expenses. A references in this document to Sections refer to the Interna Revenue Code. HSAs works with a quaified high-deductibe heath pan (HDHP). Ensure that contributions do not exceed your appicabe annua IRS maximum Ensure that withdrawas for non-quaified expenses are added back to gross income Keep a records that support withdrawas from your account. Further s eectronic document storage system is a convenient too you can use to keep track of your important heath care receipts and documents Compete the required tax form (Form 8889) and attach it to Form 1040 Depending on your situation, HSA contributions may be made by you, your empoyer or both. Contributions are deductibe or excuded from your gross income. Since your HSA is your own individua account, you aone contro the account. For exampe, you aone are responsibe for ensuring the funds from your HSA are used for eigibe medica expenses ony. Q: What are the advantages of an HSA? A: There are many financia advantages to owning an HSA, incuding: Empoyer contributions and empoyee pretax contributions via a cafeteria pan are not taxabe income Post-tax contributions are tax deductibe even if you do not itemize deductions on Form 1040 You may make tax-free withdrawas from your HSA for eigibe medica expenses not covered by your pan The interest or other earnings on the HSA funds accumuate tax free If, in the future, you are not covered by an HDHP you may sti make tax-free withdrawas from your account for eigibe medica expenses but you can no onger contribute to the HSA If you become disabed or reach age 65, withdrawas can be made for non-medica reasons without penaty, but amounts must be reported as taxabe income Q: What are my responsibiities as an HSA hoder? A: Your HSA beongs to you. You re responsibe for maintaining the account. Here s what is expected of you as an HSA hoder: 14 Ensure that you have an HSA-quaified HDHP Ensure that you do not have any medica coverage that wi disquaify the HSA incuding a genera purpose FSA Ensure that you cannot be caimed as someone ese s tax dependent Q: What if, in the future, I am not covered by an HDHP or I end coverage through my empoyer? A: If you or your empoyer change heath pans and the new pan is not an HDHP, you can continue to use your HSA for eigibe medica expenses, but you can t contribute to your HSA for any month that you were not covered by an HDHP. Q: If I (or my empoyer) change heath pans midyear, from a non-hsa pan to an HSA pan, can any amount paid toward my previous pan deductibe be appied to my new HSA pan deductibe? A: Yes, amounts that were appied to your deductibe in the same caendar year or in the same pan year from a non-hsa pan to an HSA pan wi carry over and be appied to your new heath pan deductibe. Q: Can business owners not eigibe for a heath reimbursement arrangement (HRA) estabish an HSA? A: Yes. This incudes owners of S corps, soe proprietors, LLCs, LLPs and partnerships. However, these individuas cannot use pretax doars via a cafeteria pan to fund their HSA. These individuas are eigibe to make posttax contributions to their HSA and caim a deduction when they fie their taxes. We recommend you consut your tax advisor in this situation, as specia rues appy. Q: Is someone enroed in Medicare eigibe for an HSA? A: If you re enroed in a Medicare program, you cannot estabish a new HSA. Contributions to an existing HSA

15 Chapter 1 Getting started with your HSA must be prorated for the year you enro in Medicare. You can, however, spend down your existing HSA. If you decine Medicare coverage when you turn 65, you can continue to contribute to an HSA. For more information about HSAs and Medicare, see Chapter 4, Section 2 on page 32. Q: Is the HDHP portabe? A: Yes. If you eave your job, your heath pan s medica coverage may be continued through COBRA. This coverage remains an HDHP. Once COBRA coverage ends, you may appy for portabiity coverage. Remember, you own your HSA and the doars are yours to keep. Q: How is interest credited to my HSA? A: Further wi credit interest monthy on the average daiy baance for the month in your HSA. Further reserves the right to decare a different rate of interest at any time. Further does not pay interest on funds that are transferred to optiona investment accounts. Q: Is there a fee for having an HSA? A: Yes (with the exception of the FreeSaver HSA pan option). If you purchased your pan as an individua, you can choose which of the five HSA options is best for you. Each program has a different fee. (You find the fee options on your HSA Appication). If your HSA is through your empoyer, your empoyer wi choose the program option and may pay the fee for that program or pass it on to you. Accounts paid by individua account hoders are bied annuay and payment is automaticay debited directy from the HSA, as soon as funds are avaiabe. Q: Why did I get a bi from my provider? A: You re responsibe for paying your pan deductibe and any out-of-pocket expenses (incuding coinsurance) that you incur at the provider s office or pharmacy. Your provider wi send you a bi for the amount you owe after your heath pan has processed the caim and appied discounts you receive as a heath pan member. You can use your HSA doars to pay these expenses. Q: Wi I have to pay my provider before I am reimbursed from my HSA? A: It s possibe. Some states aw authorizes providers to coect deductibe and coinsurance amounts at the time of service, but providers may not deny you treatment if you are unabe to pay in advance. If you have crossover, you usuay receive your reimbursement before you get a bi from your provider. If you need to make specia payment arrangements with your provider or cinic, ca the cinic s business office. Any ate charges are your responsibiity and whie you may choose to pay these fees from your HSA, they are considered ineigibe expenses and wi be subject to income tax and a 20 percent penaty tax. Q: Why didn t I have to pay for my prescription at the pharmacy? A: If you seected crossover and have money in your HSA, the doars in your account wi be used to cover the cost of the prescription at the pharmacy. That means you woud pay nothing out of pocket when picking up your prescription. Q: Why did I have to pay for my annua checkup? I thought I had 100 percent coverage. A: Many pans pay for preventive care at 100 percent. Check your Summary Pan Description or ca your heath pan customer service to earn more about your preventive benefits. These resources can aso verify which services count as preventive care. Q: Why did I get a check in the mai from Further? Who is Further? A: Further is the administrator of your HSA (and FSA, if you have one), not your heath pan. Further processes your reimbursement caims and then either sends you a check for the amount requested or deposits the money into a checking or savings account. It s your choice. Q: What happens to an HSA at the end of the year? A: The funds in an HSA, regardess of the source of contributions, aways beong to you as the account hoder. Contributions remain in the account from year to year unti used. 15 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8

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17 Chapter 2 Contributing to your HSA There are many good reasons to contribute to your HSA and severa ways to do it. This chapter examines why it is so beneficia to contribute to your HSA, presents strategies and tips to make contributing simpe and easy, and discusses contribution imits, catch-up contributions, roover contributions and more.

18 Chapter 2 Contributing to your HSA Section 1 Who can contribute to an HSA? 19 Section 2 Catch-up contributions 19 Section 3 Strategies to make your money work for you 19 Section 3.1 Contributions through payro deductions 19 Section 3.2 Roover contributions and transfers 20 Section 3.3 Moving money from individua retirement account (IRA) 20 Section 3.4 A smart IRA roover strategy 20 Section 3.5 Top reasons to contribute to your HSA 20 Section 3.6 Excess HSA contributions 21 Section 4 Frequenty asked questions 21 For new HSAs, are maximum contributions prorated on a monthy basis? 21 What if contributions exceed the annua imit? 21 What if contributions and/or withdrawas do not occur according to reguations? 21 Is the maximum contribution eve adjusted if I move from famiy to singe coverage, or vice versa? 21 Can empoyee pretax HSA contributions be changed throughout the year? 22 Can I ro over or transfer funds from an existing HSA or MSA to an account with another custodian? 22 If my HSA is set up midyear (after my FSA), can I change my FSA contributions for the rest of that year? 22 Can I contribute to an HSA at the same time as an FSA and/or HRA? 22 Can an individua and their spouse have famiy HDHPs and HSAs? 22 Is there a deadine for setting up and contributing to an HSA? 22 18

19 Chapter 2 Contributing to your HSA Section 1 Who can contribute to an HSA? An individua, an empoyer, or both can make contributions to an HSA. As an empoyee, you won t pay tax on the contributions your empoyer makes to your account. In addition, you won t pay tax on contributions made through a company-sponsored cafeteria pan (if offered by your empoyer). You can aso make post-tax contributions and itemize them as an above-the-ine deduction when you compete your tax return, even if you don t itemize deductions. Note: HSA contributions must be made in cash and are vountary. Current contribution information can be found on the U.S. Department of Treasury website at treas.gov. The maximum annua HSA contribution imits for an eigibe individua without catch-up contributions are: Maximum Contribution Limits 2017 Limits 2018 Limits $3,400 for individua coverage $3,450 for individua coverage $6,750 for famiy coverage $6,850 for famiy coverage $1,000 age 55+ catch-up contribution (in addition to individua or famiy maximum) Section 2 Catch-up contributions If you are age 55 and oder and are eigibe to have an HSA, you can contribute an additiona $1,000 a year to your own account unti you reach age 65 or enro in Medicare. If you had HDHP coverage for the fu year, you can make the fu catch-up contribution regardess of when your 55th birthday fas during the year. If you did not have HDHP coverage for the fu year but meet the 13-month testing period, you can sti contribute the entire catch-up amount. For more about the testing period, see Section 4, page 21. A spouse in the same situation can aso contribute an additiona $1,000 to his or her own HSA. Section 3 $1,000 age 55+ catch-up contribution (in addition to individua or famiy maximum) monthy premium than a traditiona heath pan. Consider contributing the premium savings to your HSA. If done automaticay through your empoyer s pretax payro deduction pan, you save federa and FICA taxes. By caiming the HSA contribution as part of your 1040 tax fiing, you save federa taxes on post-tax contributions. If you can t make reguar HSA contributions, deposit some doars in your HSA to set up your account. Then contribute as you incur medica expenses to take advantage of tax-free withdrawas to reimburse yoursef. Your HSA must be set up before expenses are eigibe to be reimbursed. The HSA is not considered active unti money is deposited into the account. Make the maximum contribution aowed and take out ony what you need for eigibe expenses. This reduces your taxabe income and gives you the benefit of tax-free heath care expenses. An effective strategy for quicky growing your HSA is to pay for your heath care expenses out of pocket whie etting your HSA funds accumuate tax free. Save your medica expense receipts so you can be reimbursed from your HSA ater or even after you retire. See an exampe of this strategy in Chapter 4, Section 1.2 on page 31. Note: Before deciding on your HSA contribution and investment strategy, consut your tax advisor or accountant. Further cannot provide tax advice. Section 3.1 Contributions through payro deductions The easiest way to contribute to your HSA is through your empoyer s pretax payro deduction program. However, you can make post-tax contributions any time. You can make onine contributions by authorizing withdrawas from your bank account or mai your contributions to Further. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Strategies to make your money work for you Because your HSA-quaified heath pan is a highdeductibe heath pan, chances are it has a ower 19

20 Chapter 2 Contributing to your HSA Section 3.2 Roovers contributions and transfers Roover contributions and transfers to an HSA are permitted as ong as the source of the funds is another HSA or medica savings account (MSA). Funds that move directy between the od account trustee and the new account trustee are caed trustee-to-trustee transfers. A other movement of funds from an HSA or MSA account is considered a roover contribution. A roover of HSA funds must be competed within 60 days from the date of receipt to avoid taxation. One roover every 12 months is permitted. If you make a roover contribution, you must certify to the trustee, in writing, that you are making a roover contribution. Once made, the certification is fina. An unimited number of trustee-to-trustee transfers may be arranged by you without the restrictions mentioned for roover contributions. Since your HSA is owned ony by you, you cannot ro over or transfer money to your spouse s HSA account uness you die or a ega proceeding such as a divorce requires it. The roovers and transfers discussed in this section do not count toward your maximum annua HSA contribution. your HSA (up to the contribution maximum amount). This one-time strategy works we for peope age 64 or younger because it must be done prior to enroing in Medicare. In addition, you may have a ower annua income (especiay if you re an eary retiree). Doars withdrawn from traditiona IRAs are taxed. But doars withdrawn from an HSA are not taxed if used for eigibe medica expenses. Section 3.5 Top reasons to contribute to your HSA Contributions can often be made through an empoyer cafeteria pan on a pretax basis Contributions remain in your HSA from year to year unti they are used. Unike an FSA, there is no use-it-orose-it provision. Contributions can be made by an empoyer, an empoyee or both in the same tax year Individua contributions are tax deductibe; empoyer contributions and empoyee contributions through a cafeteria pan are excuded from taxabe income Section 3.3 Moving money from an individua retirement account (IRA) You can make a one-time, tax-free transfer from an existing traditiona IRA to your HSA. This roover must be transferred from trustee to trustee to receive the tax benefit. The amount transferred counts toward and is imited to your maximum annua HSA contribution amount. To compete an HSA transfer, visit heofurther.com and downoad the form caed the HSA One-Time IRA Roover Request Form. Money accumuates tax free with interest paid on funds that have not been invested Funds can be withdrawn tax free to pay for eigibe heath care expenses. You can aso make tax-free HSA withdrawas to pay some insurance premiums. See Chapter 3, Section 3.1 on page 27 for a partia ist of eigibe medica expenses. Funds can be used for non-eigibe expenses but taxes and penaties appy The HSA beongs to you no matter where you work HSA funds are a great way to pay for medica expenses after you retire Section 3.4 A smart IRA roover strategy If you have a traditiona IRA (not a Roth, SEP or SIMPLE IRA) and one year you do not have the means to maximize your HSA contribution, consider roing part of your IRA into Section 3.6 Excess HSA contributions Contributions that exceed your appicabe IRS maximum imit for the year or that are made by an ineigibe individua are considered excess HSA contributions. If you 20

21 Chapter 2 Contributing to your HSA make an excess contribution, it shoud not be deducted from your income on the tax return. Contributions made by empoyers (or pretax contributions through a cafeteria pan) that exceed the aowabe imit must be added back to gross income by the empoyee on the individua s tax return. It is not the empoyer s responsibiity to add such amounts retrospectivey as income to the empoyee s W-2. However, an empoyee must make every reasonabe effort to notify his or her empoyer prospectivey that empoyer contributions wi exceed the aowabe imit so the empoyer can make the necessary changes to the contribution. An excise tax of six percent for each tax year is imposed on the account hoder for these excess individua or empoyer contributions. If, however, the excess contributions for a tax year and the net income attributabe to these excess contributions are taken out of the account before the tax return deadine, the excise tax does not appy. However, the net income attributabe to the excess contribution is incuded in the account hoder s income for the tax year the withdrawa is made. Section 4 Frequenty asked questions Q: For new HSAs, are maximum contributions prorated on a monthy basis? A: Annua HSA contributions for new HSAs are not prorated on a monthy basis as ong as you are HSAeigibe on December 1 and maintain HDHP coverage throughout the subsequent 13-month testing period. The testing period begins on December 1 in the year the quaified HDHP coverage is obtained and runs through December 31 of the foowing year. The testing period is aso caed the 13-month rue. Enroing in an HDHP and estabishing an HSA any time after January 1 triggers the testing period if you contribute the maximum amount to your HSA. If you do not satisfy the 13-month rue, contribution imits are prorated and tax consequences appy. See Chapter 5, Section 1.2 on page 37 for exampes of pro-rated maximum contribution amounts. Q: What if contributions exceed the annua imit? A: Generay, you must pay a six percent excise tax on contributions made to an HSA that are greater than the annua imit. (See IRS Form 5329 to determine this tax.) If excess contributions are made, you won t pay the excise tax on that excess amount if you: Withdraw the excess contributions by the due date of your tax return, and Withdraw any income earned on the withdrawn contributions and incude the earnings in other income on your tax return for the year. Q: What if contributions and/or withdrawas do not occur according to reguations? A: As the account hoder, you must report contributions and withdrawas to the IRS. You re responsibe for ensuring that HSA transactions are within the aowed reguations. Excess HSA contributions may be corrected by withdrawing the excess amount pus any attributabe net income before the due date of your tax return thus avoiding a six percent excise tax. You re aowed to correct mistaken HSA withdrawas when there is cear and convincing evidence that amounts were distributed from an HSA because of a mistake of fact due to reasonabe cause. You can correct the mistake by repaying the withdrawa no ater than Apri 15 foowing the first year that you knew or shoud have known that the withdrawa was a mistake. When a correction is made, the mistaken withdrawa does not have to be incuded in gross income or be subject to the additiona excise tax. The repayment does not count as an excess contribution. If an error is made by Further in its roe as the administrator, Further is responsibe for taking corrective action. Q: Is the maximum contribution eve adjusted if I move from famiy to singe coverage, or vice versa? A: Yes. You may contribute more if you move from singe to famiy coverage. You can make a prorated contribution based on when coverage was in force or you can make the entire annua maximum contribution as ong as the coverage is maintained through December of the foowing year. You may have to decrease contributions if you move from famiy to singe coverage (the decrease wi appy to any month in which singe coverage was in force for a portion of the month). You can change your contribution eection at any point, however you must ensure contributions do not exceed aowabe amounts. See Chapter 5, Section 1.2 on page 37 for exampes of prorated maximum contribution amounts. 21 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8

22 Chapter 2 Contributing to your HSA Q: Can empoyee pretax HSA contributions be changed throughout the year? A: Yes. Eigibiity requirements and contribution imits for HSAs are determined on a month-by-month basis, rather than an annua basis. If you make HSA contributions under a cafeteria pan, you can start or stop contributing or increase or decrease the amount at any time, as ong as the change occurs after the change request is received. Q: Can I ro over or transfer funds from an existing HSA or MSA to an account with another custodian? A: Yes. If you want to transfer an existing HSA or Medica Savings Account (MSA) baance to Further, Further wi move the funds. If you want to ro over an existing HSA or MSA with Further, the assets in that account wi be distributed to you. Under a roover, you must deposit the amount into the new account with Further no ater than the 60th day after the withdrawa was received from the previous custodian to avoid tax penaties. Q: If my HSA is set up midyear (after my FSA), can I change my FSA contributions for the rest of that year? A: Perhaps. You can ony change your FSA eection for specific quaifying events, such as marriage, divorce, birth of a chid or adoption. Coverage under a spouse s FSA wi disquaify your HSA, uness your spouse s FSA imits covered expenses to vision, denta and preventive services during the heath pan deductibe period. Q: Can I contribute to an HSA at the same time as an FSA and/or HRA? A: You can contribute to an HSA whie covered by the foowing types of medica FSAs and/or HRAs: imited purpose FSA and/or HRA; suspended HRA; post-deductibe FSA and/or HRA; retirement HRA (See Chapter 8, Section 3 on pages for term definitions). If the account hoder can be reimbursed, a medica FSA that pays for a eigibe expenses (a genera purpose FSA) disquaifies you from contributing to an HSA. If the genera purpose medica FSA has a grace period, you cannot contribute to an HSA during this time, uness the FSA has a $0 baance at the end of the pan year. Q: Can an individua and their spouse have famiy HDHPs and HSAs? A: Yes. If both an individua and spouse have famiy HDHPs, the maximum annua HSA contribution for the famiy is $6,850 in This is true if there is just one HSA or if each spouse has their own HSA. A famiy cannot increase its annua contribution just because there are two HDHPs and/or two HSAs. This imit is spit equay uness the individua and spouse agree on a different division. An account hoder, age 55 or oder, can contribute an additiona $1,000 catch-up contribution to their own HSA account. For other tax situations, consut your tax advisor. A husband and wife cannot have a joint HSA. Each spouse who wants to contribute to an HSA must open a separate HSA. Doars cannot be transferred between the HSAs. However, one spouse may use withdrawas from his or her HSA to pay or reimburse the eigibe medica expenses of the other spouse, without penaty. However, both HSAs may not reimburse the same expenses. Note: If a husband and wife each has an individua HDHP, each can contribute up to $3,450 in 2018, pus a $1,000 catch-up contribution to their own HSA if they are age 55 or oder. Q: Is there a deadine for setting up and contributing to an HSA? A: Your HSA must be set up and contributions made by your tax return due date for the year. For caendar year taxpayers, the deadine for HSA contributions is Apri 15 (uness that day is a Saturday, Sunday, or ega hoiday, then the next business day). This deadine appies regardess of whether contributions are made by you (individua/empoyee), your empoyer or both. This deadine aso appies regardess of whether you have an extension with the IRS. If a contribution is made after Apri 15, it appies to the foowing (current) tax year. 22

23 Chapter 3 Being reimbursed from your HSA HSAs give you severa reimbursement options, incuding debit card, onine reimbursement requests, crossover (automatic caim reimbursement) and direct deposit. This chapter examines your HSA reimbursement options, introduces you to the broad range of medica expenses for which you can be reimbursed from your HSA and gives an exampe of how you are reimbursed from your account.

24 Chapter 3 Being reimbursed from your HSA Section 1 Your HSA reimbursement options 25 Section 1.1 Debit cards 25 Section 1.2 Crossover 25 Section 1.3 Onine and manua caims 25 Section 1.4 Direct deposit 26 Section 2 How you are reimbursed from your HSA 26 Section 2.1 How you are reimbursed with a debit card 26 Section 2.2 How you are reimbursed when you have crossover 26 Section 3 Medica expenses that can be reimbursed by your HSA 27 Section 3.1 Partia ist of eigibe medica expenses 27 Section 3.2 Capita expenses 27 Section 4 Frequenty asked questions 28 What expenses can be paid from an HSA? 28 What premiums can be paid from an HSA? 28 Are caims incurred prior to setting up my HSA eigibe to be reimbursed? 28 If I have both an HSA and an FSA, which account pays first? 28 Regarding the new federa aw that changes the rues for over-the-counter drugs: What over-the-counter drugs are HSA eigibe as of January 1, 2011? 28 24

25 Chapter 3 Being reimbursed from your HSA Section 1 Your HSA reimbursement options Getting reimbursed for eigibe heath care expenses from your HSA is easy. You can get your money faster by enroing in specia features ike the HSA debit card, crossover (automatic caims reimbursement), onine withdrawa or direct deposit. Why send in paper caims to get reimbursed when you can do it more quicky onine? A of these options are avaiabe onine at heofurther.com. Section 1.1 Debit cards You can use your debit card to pay your portion of eigibe medica, denta and vision expenses. Debit cards are an attractive option with severa advantages. They are easy to use and there is no waiting to be reimbursed from your HSA. The debit card automaticay transfers funds from your HSA to your heath care provider. You avoid paying cash up front and don t have to submit a caim reimbursement form and wait to be reimbursed. There s no paperwork. Debit cards are incuded at no extra cost. When to use a debit card A debit card ets you contro where and when to use your HSA doars. For medica caims usuay processed by your heath pan, simpy write your debit card number on your doctor s bi and return it to the provider. You can aso ca your heath care provider with your debit card number. Section 1.2 Crossover Another automatic HSA reimbursement option is crossover (ony avaiabe with certain heath pans). It aows your heath pan to send your medica caims from the provider to Further for reimbursement. When to use crossover Peope who use their HSA to pay for current medica expenses find crossover convenient. It works for a wide range of eigibe heath and medica expenses. If you incur vision or other caims that are not eigibe for crossover, you can simpy submit a withdrawa request onine at heofurther.com. Remember, you cannot seect both crossover and the HSA debit card you can choose ony one of these options. Note: If your dependents have other heath coverage, you shoud not sign up for crossover. Section 1.3 Onine and manua caims If you do not seect crossover or if crossover is not avaiabe to you (or if you have an HSA debit card and choose not to use it), the fastest and easiest withdrawa method is requested onine by signing into the Onine Member Service Center at heofurther.com. The paper withdrawa request form can be requested by caing Further wi process the request and reimburse you as ong as there are sufficient funds in your HSA. Reimbursements can be deposited into your checking or savings account, or sent to you as a check. Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 25