MAKING THE MOST OF HEALTH SAVINGS. HEALTH SAVINGS ACCOUNTS ALERUSRB.COM ::

Transcription

1 MAKING THE MOST OF HEALTH SAVINGS. HEALTH SAVINGS ACCOUNTS ALERUSRB.COM ::

2 SAVING FOR NOW HSA & HDHP To open or contribute to a health savings account (HSA), you must be covered by a qualified high-deductible health plan (HDHP). An HSA may be funded by your contributions, your employer s contributions or both. Contributions can easily be made by payroll deduction through your employer. HSA ADVANTAGES HDHPs combined with the tax advantages of HSAs provide employers and employees with alternatives to the rising costs of health care by: WHAT IS AN HSA? A health savings account (HSA) is a tax-exempt savings vehicle used to accumulate money for eligible health care expenses. Your HSA may be used to pay for health care expenses as they occur, or the funds may remain in your account until you need them later in life. Reducing premium cost. Paying out-of-pocket costs with pre-tax dollars. Investing money for future needs. Some of the significant advantages of using an HSA include: Contributions to the HSA and qualified expenses dispersed from the HSA are not subject to tax. Contributions may be invested in a variety of funds, providing excellent long-term growth potential. Interest and investment earnings are tax-free. Funds roll over from year to year so there is no use it or lose it. HSAs are individually owned and portable so they are never forfeited when you change employment, when you are no longer covered by an HDHP or when you retire. Upon death, the HSA becomes the property of a designated beneficiary. A spousal beneficiary receives it as an HSA and any other beneficiary as a taxable event. At age 65, or in the event you become disabled, disbursements for nonqualified health care expenses may be made without penalty but will be subject to income tax. TAX SAVINGS Contributions made via pre-tax payroll deductions are not subject to Federal, State*, Social Security or Medicare tax. Contributions made outside of payroll are exempt from Federal and State* income tax. *State tax applies to HSA contributions and earnings in AL, NJ and CA.

3 INVESTING FOR THE FUTURE. Annual Wages Expenses Paid by HSA Taxable Wages Expenses not paid by HSA Take Home Pay Savings from HSA The saving example above may vary by state and income tax bracket. Additionally, any unused money will stay in the account for future health care expenses. ELIGIBILITY In addition to having an HSA qualified HDHP, to be eligible for an HSA, you cannot receive benefits under Medicare or be claimed as a dependent on any other person s tax return. Additionally, the law prohibits you from opening or contributing to an HSA if you are covered by any other health plan that is not an HDHP. However, this provision excludes specific accident, injury, disability, dental, vision and long- term care insurance as well as limited purpose flexible spending accounts (those which only pay for expenses such as vision, dental, and orthodontia). ENROLLMENT Without HSA With HSA $40,000 $40,000 N/A $3,000 $40,000 $37,000 $3,000 N/A $27,000 $27,750 N/A $750 Once you have determined you are eligible for an HSA, you must take the necessary steps to establish your account and set up your pre-tax payroll deductions (if applicable). Your employer will provide specific directions for this process. When you enroll, an account will be created for you at Alerus Retirement and Benefits (Alerus) and with our Trustee partner, as referenced in the terms and conditions of your HSA agreement. You will also be issued two Benny Prepaid Visa Cards for point-of-sale use to pay for approved health care expenses. CONTRIBUTIONS If you are eligible for an HSA, you may contribute up to the maximum allowed by law for each tax year. These limits are based on your level of HDHP coverage (Single or Family) and are adjusted annually for inflation. HSA owners who are or will attain age 55 during a tax year are also eligible to make a catch-up contribution. The catch-up contribution is only available for the HSA owner, spouses would have to establish their own HSA to take advantage of the catch-up. Refer to the insert for the current contribution amounts. If you are married and each spouse has single HDHP coverage, you can both contribute the single amount into your own HSA. If at least one spouse has family coverage, the family amount can be split any way you choose between both accounts. If you begin HDHP coverage mid-year, you may contribute the entire annual maximum contribution allowed. However, you must remain HSA-eligible through the following calendar year in order for the entire contribution to be excluded from taxation Example: An employee begins coverage in an HDHP in May and puts the entire annual maximum into his/her HSA. In order for the entire amount to be excluded from taxation, the employee must remain on the HDHP through December of the following year. If the employee ceases to be covered by an HDHP, then one-third of the contribution (January through April) is ineligible and would need to be withdrawn and taxed.

4 DISTRIBUTIONS You can take a distribution from your HSA at any time. Distributions for eligible health care expenses are tax-free. If you take a distribution from your HSA for non-health care expenses, the distribution will be subject to income tax and a 20% excise tax until age 65 and then only income tax would apply. If you are disabled or reach age 65, you can receive non-health care distributions without penalty, but such distributions are subject to income tax. ELIGIBLE EXPENSES Your HSA covers a wide variety of health care expenses as defined by Section 213(d) of the Internal Revenue Code. These expenses must be necessary for the treatment or alleviation of a specific injury or illness, including: Hospital or clinic services, prescription medications and many other health-related expenses. Some services are not covered by the HDHP and therefore do not accumulate towards your deductible, such as dental, orthodontia or vision expenses. Eligible expenses incurred by your spouse and qualified tax dependents, even if they are not covered by your HDHP. Premiums for COBRA, long-term-care insurance (federal limits apply) and health coverage you have while receiving unemployment compensation. Additionally, once you reach age 65 your HSA also covers Medicare and other health plan premiums, with the exception of Medicare supplements. EXAMPLES OF ELIGIBLE MEDICAL EXPENSES: Acupuncture Alcoholism Treatment Ambulance Artificial Limbs/Teeth Bandages Birth Control Pills Blood Pressure Monitoring Devices Blood Sugar Test Kit Body Scan Chelation (EDTA) Therapy Chiropractors Circumcision Copays/ Deductibles Contact Lenses/ Related Material Counseling (excludes marriage) Crutches Dental Treatment Dentures Diabetic Supplies Diagnostic Services Drug Treatment Egg Donor Fees Eye Exams/Glasses Fertility Treatment Flu Shots Glucose Monitoring Devices Guide Dog Hearing Aids Home Care Hormone Replacement Therapy Hospital Services Immunizations Inclinator Insulin Laboratory Fees Laser Eye Surgery Learning Disability Medical Records Charge Medical Services Nursing Services Obstetrical Expenses Occlusal Guards Operations Optometrist Organ Donors Orthodontia Osteopath Oxygen Physical Exams Physical Therapy Prescription Drugs Prosthesis Psychiatric Care Psychoanalysis Psychologist Reading Glasses Screening Tests Sleep Deprivation Treatment Smoking Cessation Programs Sterilization Procedures Supplies for Medical Condition Surgery Therapy Transplants Vaccines Vasectomy Vision Correction Procedures Wheelchair X-Ray Fees For more information about eligible HSA expenses, consult IRS Publications 502 and 969 at Eligible HSA expenses do not include services which have been reimbursed by another source or any expense for which you have claimed a tax deduction.

5 USE YOUR DEBIT CARD TO GET MORE OUT OF YOUR HSA: HEALTH BENEFITS CARD YOUR RESPONSIBILITIES As the account owner, you are responsible for the following important items pertaining to your HSA: Determining that you are eligible to establish and fund an HSA, and that you remain eligible throughout the year. Ensuring your contributions do not exceed the annual limit, including the prorated limit if you lose HSA eligibility during the year. Maintaining records of all health care documentation. Filing Form 8889 with your income taxes GOOD THRU Swipe your debit card at places where you and your family members have health care services. Request a distribution payment online. Payment can be sent to you or to the service provider for a small fee. Complete and submit a Distribution Request Form and payment is sent to you by check or direct deposit. SUBMIT A CLAIM Go online to alerusrb.com and log into your HSA. Upon signing in, select Make HSA Distribution from the main page, complete the fields and click Submit. Regardless of the method used to request funds, only the amount in your account is available. This amount may fluctuate due to interest earnings, investment returns or appropriate fees. DEBIT SAVING RECEIPTS Since the HSA is in an individually owned Trust, it is the account owner s responsibility to retain records for all health care expenses paid from the account. It is important to retain all receipts and adequate records for expenses paid with HSA funds in the event of an IRS audit, such as: Medical plan Explanation of Benefits (EOB) Prescription Drug Receipts Itemized Provider Statements Our Expense Tracker assists you with this process by allowing you to securely upload and store your itemized health care documentation on our website. This secure storage solution means no shoebox full of receipts sitting on your shelf! Plus, you are able to flag expenses for reimbursement whenever you choose. Documentation can be added to the Expense Tracker online or via our mobile app. Additionally, it may be prudent to keep a copy of your HDHP coverage since such coverage is required to open or contribute to an HSA. If HSA funds are used for non-qualified expenses, income tax and excise tax will apply.

6 LIVING TODAY. THRIVING TOMORROW. INVESTING HSA FUNDS The money contributed to your HSA will be deposited into an interest-bearing, FDIC-insured account. Once your HSA balance exceeds $2,000, you will have the option to invest in a variety of mutual funds. You will be required to maintain a minimum $2,000 threshold or cash balance in order to invest additional money in the mutual fund options. If you elect to invest in the mutual funds, you will be asked to define your investment threshold. This can be the $2,000 minimum or any greater amount. Investment products are not insured by the FDIC; are not deposits or obligations of a bank; and involve investment risk, including possible loss of principle amount invested. Your debit card will always be linked to the balance in your cash account. Keep this in mind when deciding the right threshold amount for your HSA. Remember, you can easily transfer your HSA funds from cash to mutual funds, and vice versa, at any time. Discover more information on managing investments on the alerusrb.com HSA login page under Resources. Auto-Sweep: If you swipe your debit card for $100 or more, it will trigger an auto-sweep, meaning money is transferred from the mutual fund investments back to your cash account to replenish the available cash balance. The sale from the mutual funds will be pro-rata by fund balance. If the swipe is under $100, the auto-sweep will not happen until additional swipes occur, bringing the cumulative total to $100 or more.

7 ACCOUNT ACCESS Once you are enrolled, you may access your account online at alerusrb.com. This one-stop portal provides you with anytime, anywhere access to your HSA, allowing you to: Review your HSA balance, update personal information and request disbursements. Access your HSA investment portal including fund performance and prospectus information for the available mutual funds. Access monthly account summary reports. Upload and store itemized receipts for health care expenses to your Expense Tracker. GO MOBILE You can also manage your HSA on the go! The BeneFIT access mobile app allows you to: View your account balance, activity and transaction details. Submit new items to the Expense Tracker using your device s camera. Easily contact our customer service team. DOWNLOAD THE APP The BeneFIT access mobile application is available for iphone, ipad, itouch and Andriod devices. To access this free mobile application: Search for BeneFIT access at the Apple App Store or Google Play, or; Download the application directly at alerusrb.com. Log into your account and select Download Mobile App from the message center. LOGGING IN Upon successful installation, enter your username and password on our website, alerusrb.com. Create a 4-digit passcode for future access to your account.

8 FUTURE YOU WILL THANK YOU. LEARN MORE AND DISCOVER THE POSSIBILITIES. Visit alerusrb.com for additional HSA information and resources. This material is provided for informational and discussion purposes only. Services are offered through Alerus Financial, NA., which does not provide legal or tax advice. Please consult your tax or financial advisor to determine how this information may apply to your own situation. Statements of fact are from sources considered reliable but no representation or warranty is made as to their completeness or accuracy. The opinions presented in this communication are subject to change without notice. Investment products 1) Not FDIC insured 2) Not guaranteed by bank 3) May lose value. HSA ::