Health Savings Accounts Overview. Health Savings Accounts Overview

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1 Health Savings Accounts Overview Health Savings Accounts Overview

2 Health Savings Accounts: What are they? Let s start with the basics. Health Savings Accounts (HSAs) are tax-advantaged savings accounts specifically designed to help pay for qualified medical expenses. These accounts are controlled by you and the funds roll over from year to year so you won t lose them if you don t use them. Because of our relationship with your employer, the KeyBank HSA will provide you with preferred pricing, including no setup fee, no annual fee, and no monthly service charge. Key@Work Health Savings Accounts 2

3 Advantages of an HSA 1. These accounts are: Controllable Deposit up to the IRS limits and manage how you want to invest your funds. Flexible Use your funds as you need them or save them for later medical expenses. These funds roll over from year to year. Portable You own this account, so you can take it anywhere. 2. Earnings You can earn interest on your HSA balance, at a competitive rate. And, since these funds are for medical expenses, you won t be taxed on the interest you earn. Key@Work Health Savings Accounts 3

4 Advantages of an HSA 3. Contributions You can avoid or defer taxes on your deposits, including those made by you or your employer. Tax deductible if you deposit money outside of your payroll deductions. 4. Distributions Qualified If you use the funds for qualified medical expenses, it is tax free! Non-qualified Distrubutions are taxable (and a 20% penalty will apply under the age of 65). Key@Work Health Savings Accounts 4

5 Are you eligible for an HSA? You must be covered by an HSA-qualified High Deductible Health Plan (HDHP). You may not be covered by any other health insurance plan (certain exceptions apply, such as dental and vision). You, as the account owner, may not be covered by Medicare. You cannot be claimed as a dependent on someone else s tax return. Key@Work Health Savings Accounts 5

6 Funding your HSA Regular contributions Since your HSA has tax benefits, there are limits to how much you can deposit. Contributions can be made until the tax filing deadline. Individual and Family contribution limits are based on your High Deductible Health Plan (HDHP). Please reference chart below for 2017/2018 maximum contribution limits: 2017 Contribution Limits 2018 Contribution Limits Individual $3,400 $3,450 Family $6,750 $6,900 Catch-up contribution If you are 55 or older, you can make catch-up contributions of up to an additional $1,000 per year. If your spouse is also 55 or older, he or she may establish a separate HSA and make a catch-up contribution to that account. Monitor your contributions If you exceed the maximum, the IRS will impose a 6% tax penalty on the excess amount. Key@Work Health Savings Accounts 6

7 Using your HSA You can control when you use your HSA funds. These funds can be used in many ways. For example: Doctor visits Dental visits Surgical procedures Hospital services Optical exams, contacts, and surgery Medical equipment Prescriptions A qualified medical expense* for an HSA withdrawal may differ from what is covered under your insurance plan. In other words, you might be able to pay for a medical expense with your HSA that is not covered by your insurance. You may use the funds in your HSA for tax free qualified medical expenses* for yourself, your spouse, and your dependents, even if they are not covered by your health plan. Plus, you can add authorized users to your HSA so they can access the account. * See IRS Publication 502 for a detailed list of qualified medical expenses. You are responsible for determining whether or not an expense is a qualified medical expense. If it is not, the amount withdrawn will be taxed and potentially penalized. Key@Work Health Savings Accounts 7

8 Accessing your funds HSA Checks Eight starter checks provided at no charge HSA Debit Card ATM access Optional Health Care Spending Protection feature limits Online Banking Transfer between accounts Bill pay Methods to access your HSA funds Your KeyBank HSA debit card Using online bill pay to send a payment to your provider Withdrawing cash from your account Reimburse yourself via transfer, if you paid with your checking account or credit card Additional Information You cannot pay for an expense that incurred prior to the time your account was opened or your High Deductible Health Plan goes into effect. You can only spend the current available balance in your account. Overdrafts are not authorized. If one occurs, the bank is required to close the account by IRS regulation. Key@Work Health Savings Accounts 8

9 HSA responsibilities You as the Employee: Determine if you are eligible for an HSA Determine the amount to contribute to your account Monitor contributions so that maximum is not exceeded Manage distributions to determine if they are qualified or not Retain receipts Submit necessary tax reporting KeyBank as the Custodian: Maintains plan documents Reports 1099SA (distributions) properly to the IRS; Bank will mail out by 1/31/2018 Reports 5498SA (contributions) properly to the IRS; Bank will mail out by 5/31/2018 Health Savings Accounts 9

10 Get even more out of your HSA When you bank with KeyBank, you ll find that many of our products and services will help you get the most out of your HSA: Checking accounts Easily move money to your HSA at any time. Credit cards In an emergency, you can use your KeyBank credit card to pay for the expense and transfer funds from your HSA. Financial Wellness Score Investment Option: Key Investment Services (KIS) HSA Investment Account* Account opened only upon request Wide variety of asset allocation mutual funds Eligibility and suitability requirements apply This online tool can help you determine if you re saving enough to cover potential health care expenses. * A $3,500 total minimum balance is needed in your KeyBank HSA checking account to open a KIS HSA investment account. A $1,000 minimum initial investment is needed to open a KIS HSA investment account. A $2,500 minimum balance is required to be maintained in your KeyBank HSA checking account to make investment purchases. Investment products are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA). KIS and KIA are affiliated with KeyBank National Association (KeyBank). Investment and insurance products made available through KIS and KIA are: NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY KIS, KIA and KeyBank are separate entities, and when you buy or sell securities and insurance products you are doing business with KIS and/or KIA, and not KeyBank KeyCorp. KeyBank is Member FDIC Key@Work Health Savings Accounts 10