City and County of Denver Employees. Overview of Your Health Savings Account (HSA)

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Esmond Griffin
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1 City and County of Denver Employees Overview of Your Health Savings Account (HSA) January 1, 2016

Optum Bank, member FDIC Wholly-owned by Optum Financial Services Established in 2003 Focuses solely on health care banking We administer over 1.

2 Optum Bank, member FDIC Wholly-owned by Optum Financial Services Established in 2003 Focuses solely on health care banking We administer over 1.6 million individual Health Savings Accounts One of the nation s leading providers of Health Savings Accounts We offer three HSA options to meet individual goals Serves thousands of employers, families and individuals We have more than $3.2 billion in assets Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 2

resources Easy-to-use online account management Confidential

3 You can expect Access to highly trained HSA specialists Responsiveness Online account enrollment Online education resources Easy-to-use online account management Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 3

help you save and pay for your health care

investment that helps you Deposit your health

Pay for health care now or later Confidential

4 What is an HSA? Health Savings Accounts (HSAs) are designed to help you save and pay for your health care Health Savings Accounts a health-wise investment that helps you Deposit your health care dollars Grow your savings Save on taxes Pay for health care now or later Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 4

HSA overview Requires a high-deductible health plan Used to pay for

employer or others Account funds belong to you Grows over time and

guaranteed by Optum Bank, and may lose value.

5 HSA overview Requires a high-deductible health plan Used to pay for qualified health care expenses immediately Funded by you, your employer or others Account funds belong to you Grows over time and can be invested Investments are not FDIC insured, are not guaranteed by Optum Bank, and may lose value. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 5

What you need to know about an HSA You re in charge of managing your HSA Annual contribution limits are set by the IRS Deposits can be made at any time and are available

6 What you need to know about an HSA You re in charge of managing your HSA Annual contribution limits are set by the IRS Deposits can be made at any time and are available immediately All deposits are income tax-free and withdrawals are not taxed Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 6

HSA eligibility You are eligible to open and contribute to an HSA if: You are covered by an eligible high deductible health plan (HDHP) You are not covered by any other health plan that is not a high

7 HSA eligibility You are eligible to open and contribute to an HSA if: You are covered by an eligible high deductible health plan (HDHP) You are not covered by any other health plan that is not a high deductible plan You are not entitled to Medicare, TRICARE or TRICARE for Life You have not received VA benefits within the past three months You are not claimed as a dependent on someone else s tax return You are not covered by a health care Flexible Savings Account (FSA) Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 7

8 Contribution limits Amount of funding The IRS determines how much you can fund each year. Contribution rules In 2016, individuals can contribute up to $3,350 per year and families can contribute up to $6,750 per year. Additional funding Those 55 years of age or higher, but not yet entitled to Medicare benefits, can fund an additional $1,000/year catch-up contribution Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 8

How an HSA helps you save The money Steve puts into his HSA is income tax-deductible Any money Steve withdraws from his HSA to pay for eligible medical expenses is withdrawn income tax-free Steve may

9 How an HSA helps you save The money Steve puts into his HSA is income tax-deductible Any money Steve withdraws from his HSA to pay for eligible medical expenses is withdrawn income tax-free Steve may earn interest on his account, and it is not taxable The amount not spent during this year carries over for use in future years Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 9

10 How much did Steve save? 1 In 2016, Steve will deposit $6,750 into his HSA, the maximum contribution for family coverage Steve s federal and state income tax and FICA savings for the year are $2,466 2 Steve will withdraw $3,000 to pay for qualified health care expenses for him and his family Steve will not have to pay income taxes on the $3,000 as long as he uses it to pay for qualified expenses 3 Steve earns interest on his account Steve does not have to pay income taxes on his interest 4 Steve will carry over $3,750 HSA dollars (contributions expenses + account earnings) into the next year With a traditional plan, Steve wouldn t have this carryover option, which helps him save for the future Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 10

11 Using your HSA funds Use your HSA funds now to save for the future Use the funds in your HSA Build balances to cover your HDHP deductible Save for the future and grow funds tax-free Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 11

Understanding HSA investments Requirements $2,100

for paying bills until the investment is sold Investment

Might lose value Confidential property of Optum.

12 Understanding HSA investments Requirements $2,100 required in HSA balance Invested funds are not available for paying bills until the investment is sold Investment notice Not FDIC-insured Not guaranteed by Optum Bank SM Might lose value Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 12

How you can make the most of your coverage Health care consumerism Make informed choices Look for ways to lower health care costs Own your health care decisions Understand your medical coverage

13 How you can make the most of your coverage Health care consumerism Make informed choices Look for ways to lower health care costs Own your health care decisions Understand your medical coverage Maintain a healthy lifestyle Use your preventative care coverage to catch health issues early Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 13

14 HSA qualified medical expenses Medical plan deductibles and coinsurance Medical, dental and vision care services & products Use HSA dollars to pay for qualified medical expenses for your legal spouse or tax dependents Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 14

Other HSA-qualified medical expenses Health coverage while receiving unemployment benefits COBRA continuation coverage Qualified long-term care

15 Other HSA-qualified medical expenses Health coverage while receiving unemployment benefits COBRA continuation coverage Qualified long-term care Medicare premiums and out-of-pocket expenses Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 15

Negotiate a payment schedule with your provider 2.

16 Paying for major medical expenses If you encounter a major medical expense that is not covered by your current HSA balance, you can: 1. Negotiate a payment schedule with your provider 2. Pay with a credit card or other form of payment Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 16

Paying for non-qualified expenses Any HSA funds used for purposes other than to pay for qualified medical expenses are: Taxable as income Subject to a 20% tax penalty* * The 20% tax penalty does

17 Paying for non-qualified expenses Any HSA funds used for purposes other than to pay for qualified medical expenses are: Taxable as income Subject to a 20% tax penalty* * The 20% tax penalty does not apply to account holders age 65 and older, those who become disabled or enroll in Medicare Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 17

18 How to make deposits into your HSA Payroll deduction Contribute enough through payroll deduction to cover your deductible Mail a Check Deposit additional dollars into your account by April 15 of the current year in order to realize tax savings for the prior year e-contribute Arrange a regular electronic transfer from an account at another financial institution Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 18

19 Payroll deduction Benefits Ease of use FICA tax benefits: save an additional 7.65% in taxes Consistent building of funds Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 19

Receiving your employer s HSA contributions To use your

Bank SM City and County of Denver will make $600 (employee

take advantage of automatic payroll deductions: You must

20 Receiving your employer s HSA contributions To use your employer s contributions: You must open an HSA at Optum Bank SM City and County of Denver will make $600 (employee only) or $1,200 (employee + one or more) to this account To take advantage of automatic payroll deductions: You must open an HSA at Optum Bank SM You can change your payroll deduction one time per month. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 20

deposits Confidential property of Optum.

21 Making manual deposits There are two primary methods for making additional deposits Mailing checks Online deposits Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 21

Rollovers from an IRA, MSA or HSA One-time distribution from your traditional or Roth IRA Roll over amount from Archer Medical Savings Accounts (MSAs) and other HSAs Transfer

deductible Must roll over the amount within 60 days after the date of receipt Can make only one rollover contribution in a one-year period Direct an HSA administrator to transfer

22 Rollovers from an IRA, MSA or HSA One-time distribution from your traditional or Roth IRA Roll over amount from Archer Medical Savings Accounts (MSAs) and other HSAs Transfer funds directly into another HSA Direct your IRA trustee to make the distribution into your HSA Cannot exceed your contribution eligibility Cannot include as income and is not deductible Must roll over the amount within 60 days after the date of receipt Can make only one rollover contribution in a one-year period Direct an HSA administrator to transfer funds into another HSA Cannot include the amount as a deduction or distribution Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 22

checks) Pay for an expense with personal funds and reimburse yourself from your HSA

23 Access your HSA funds Use your Optum Bank SM Health Savings Account Debit MasterCard Sign up for automatic bill pay and online banking Use HSA checks for this account ($10 for 25 checks) Pay for an expense with personal funds and reimburse yourself from your HSA Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 23

24 Save your receipts! Save your receipts for all qualified medical expenses Optum Bank SM does not track your expenses or verify eligibility Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 24

How Molly uses her HSA Molly goes to the doctor with her HSA Molly presents her health

Her doctor submits claim to health care plan a claim to her health care plan Molly fills

pays her doctor s bill with her HSA Debit MasterCard card Molly retains her receipts

25 How Molly uses her HSA Molly goes to the doctor with her HSA Molly presents her health plan member ID card at the doctor s office After her visit to the doctor, Molly submits Her doctor submits claim to health care plan a claim to her health care plan Molly fills her prescription and pays for it with her HSA Debit MasterCard card Molly receives and pays her doctor s bill with her HSA Debit MasterCard card Molly retains her receipts Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 25

26 Managing your HSA online Check monthly statements and interest rates Pay bills to health care providers Download forms needed to manage your account Update personal information Arrange deposits from another banking account Manage investment activities for your HSA Learn about HDHPs and HSAs Use HSA calculators optumbank.com Investments are not FDIC-insured, are not guaranteed by Optum Bank SM, and may lose value. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 26

27 Accessing statements Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 27

28 Account summary Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 28

29 Paying a bill online Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 29

30 How do I reimburse myself? Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 30

31 How do I sign up? Enroll in an HSA-eligible HDHP 1 Following Open Enrollment, you will receive a URL from your HR team 2 Click on HSA Enrollment 3 Follow screen prompts to complete an online application Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 31

32 What to expect as a new account holder Optum Bank SM Welcome Kit will be mailed 7 to 10 business days from the date enrollment materials are received Debit card will arrive in a separate mailing HSA materials are mailed separately from health plan materials After logging on to your account for the first time, you will be prompted to provide your address. You ll receive an Optum Bank bi-monthly newsletter with tips for helping you to make the most of your health care dollars Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 32

Common questions How soon can I open my Health Savings Account with OptumBank? More information will be provided from your benefits team when it is time to open your HSA.

What tax forms will I receive at the end of the year? For tax purposes, there are three important forms.

33 Common questions How soon can I open my Health Savings Account with OptumBank? More information will be provided from your benefits team when it is time to open your HSA. How soon is the money available in my H.S.A. after payroll deduction? Once the money is sent to Optum Bank you will see the funds in your HSA within 2 business days. What tax forms will I receive at the end of the year? For tax purposes, there are three important forms.: IRS Form 1099-SA - This form provides you with the total distributions that were made from your HSA. IRS Form 5498-SA - This form provides you with the contributions that you made to your HSA in a tax year. IRS Form This is the HSA form for you to complete and attach to your IRS 1040 Form. What will my H.S.A Mastercard look like? UHC Enrolled Employees Non-UHC Enrolled Employees Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 33

Common questions Can I open a Health Savings Account at any time during the year? Yes. You can open an HSA at any time, as long as you are covered by an HSA-eligible health care plan.

34 Common questions Can I open a Health Savings Account at any time during the year? Yes. You can open an HSA at any time, as long as you are covered by an HSA-eligible health care plan. You must open the H.S.A by March 1, 2016 to receive CCD contribution. Can I take the funds in my HSA with me if I leave the company? Yes. Funds in your HSA belong to you, including any contributions that your employer or anyone else has made Am I required to contribute a specific amount each year? No. You can contribute as much as you d like up to the IRS maximums. Most people base their contributions on the annual deductible required by their HDHP Do I need to use all of the funds in my HSA during the year? No. HSA plans are not subject to IRS Use It or Lose It regulations. This means that funds in the account continue to accumulate over time Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 34

medical expenses set forth in section 213(d) of the Internal Revenue Code. State taxes may apply. This communication is not intended as legal or tax advice.

35 What if you have more questions? Visit OptumBank.com Talk to your employer Health Savings Accounts (HSAs) are individual accounts offered by Optum Bank, Member FDIC, and are subject to eligibility and restrictions on distributions for qualified medical expenses set forth in section 213(d) of the Internal Revenue Code. State taxes may apply. This communication is not intended as legal or tax advice. Please contact a competent legal or tax professional for personal advice on eligibility, tax treatment, and restrictions. Federal and state laws and regulations are subject to change. Hypothetical example is for illustrative purposes only. All events, persons and results described herein are entirely fictitious and amounts will vary depending on your unique circumstances. Any resemblance to real events or persons, living or dead, is purely coincidental. Current rates are variable and may change at any time. Optum Optimizing Health and Well-Being Optum, Inc. All Rights Reserved. FSEDU0744Sv01NV Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 35

A smart investment toward future health care expenses

Consumer accounts 1 A smart investment toward future health care expenses A health savings account (HSA) is a bank account owned by you. Use it to save money tax-free to pay for qualified expenses. Never