Health Savings Account Welcome Guide

Transcription

1 Health Savings Account Welcome Guide

2 Your Health Savings Account Health care made more affordable To help you better manage healthcare costs, a Health Savings Account (HSA) is designed to save you money and make it more convenient to pay medical bills. Your HSA, administered by BB&T, can produce significant cost savings in two ways: First, because an HSA can only be established with a high deductible health plan which can be less expensive than plans with lower deductibles your portion of healthcare plan premiums may be more affordable. Second, the contributions you put into your HSA are tax-deductible. This may save you hundreds of dollars a year, or more, on eligible healthcare costs. Steps to take now 1. To find out if you can enroll in an HSA, answer the questions on the Are You Eligible worksheet on page Fill out the Maximum Annual Contribution Worksheet on page 3 to determine how much you can contribute to your HSA this year. 3. Review the Frequently Asked Questions to learn more about the BB&T HSA on pages 4-8. complete the following forms provided by your BB&T representative n HSA Application n HSA Draft Authorization if you would like to set up automatic monthly contributions from a checking or savings account n HSA Transfer Request if you would like to move your HSA from another financial institution to BB&T n BB&T Online Banking enrollment form n Signature Card As an HSA owner, it s up to you to confirm that you re eligible for an HSA. Also, you and your tax and financial advisors are responsible for all decisions you make with regard to your HSA.

3 What is an HSA? An HSA is a tax-advantaged*** account, owned by an individual who makes account contributions that can be used to pay for current and future medical expenses. Eligible individuals can make tax-deductible contributions to the account, and funds can be withdrawn tax-free when used for qualified medical expenses. An HSA can only be established with a high deductible health plan (HDHP), which is defined as a plan with: n n A deductible of at least $1,200 (single coverage) or $2,400 (family coverage), and Annual out-of-pocket expenses (including deductibles and co-pays) not exceeding $6,050 (single) or $12,100 (family). These figures are for 2012 and are indexed for inflation annually. Designed for Convenience BENEFITS n Funds remain in your HSA account from year to year n Your HSA is portable, it goes where you go n Balances are FDIC insured n Tiered interest rates FEATURES n No minimum balance is required n Unlimited in-branch deposits at any one of our 1,800+ branch locations n No set-up fees or transaction fees n Free BB&T Benefits Access Debit Card* n Free BB&T OnLine Banking with unlimited OnLine Bill Payment n Mutual fund investment sweep sub-account option available for account balances greater than $3,000 with a minimum transfer of $500** n Monthly statements are issued for the HSA deposit account and quarterly for the Mutual Fund Sweep Investment Sub-Account n Monthly maintenance fee of $3.00 TAX ADVANTAGES*** n Earnings are tax free when used to pay for qualified medical expenses n Contributions up to the annual contribution limit are tax deductible n Withdrawals for qualified medical expenses are tax free Member FDIC. Only deposits are FDIC insured. Deposit products are offered through Branch Banking and Trust Company. * Certain restrictions apply. Benefit Access Debit Card can only be used to pay for qualified medical expenses at participating merchant and service providers. ** An investor should consider a fund s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the funds can be found in the fund s prospectus. To obtain a prospectus, please call Read the prospectus carefully before investing. *** Consult your tax advisor about the tax benefits applicable to Health Savings Accounts. BB&T Asset Management, Inc., a wholly owned subsidiary of BB&T Corporation, serves as investment adviser to the BB&T Funds and is paid a fee for its services. The BB&T Funds are distributed by BB&T AM Distributors, Inc., which is not affiliated with Branch Banking and Trust Company or its affiliates. Any mutual funds that you purchase in your HSA Sweep Investment sub-account are not FDIC insured, are not insured by any federal agency or any other agency of the United States Government, are not a deposit or other obligation of the Bank, are not guaranteed by the Bank or any of its affiliates, and are subject to investment risk, including the possible loss of the principal amount invested. 1

4 Are you eligible? It is your responsibility to ensure you are eligible for an HSA and you should seek advice, based on your circumstances, from an independent tax advisor. To be eligible to make HSA contributions, you must satisfy the following conditions established by law. 1. Can you be claimed as a dependent on another person s tax return? Yes. Stop. You are not eligible for an HSA. 2. Are you enrolled in Medicare? Yes. Stop. You are not eligible for an HSA. 3. Are you enrolled in a qualified high deductible health plan (HDHP) with a minimum annual deductible of at least $1,200 for single coverage and $2,400 for family coverage? 4. Do you or family members covered under the HDHP have additional health coverage under another plan? 5. If you answered Yes to question #4, is this other health coverage an HDHP? 6. Do you or family members covered under the HDHP currently participate in a tax-deferred health care Flexible Spending Account? Yes. Proceed to question #4. Yes. Proceed to question #5. Yes. Proceed to question #6. Yes. Stop. You are not eligible for an HSA. No. Proceed to question #2. No. Proceed to question #3. No. Stop. You are not eligible for an HSA. No. Proceed to Question #6. No. Stop. You are not eligible for an HSA. No. Proceed to Maximum Annual Contribution Worksheet. If you are not currently eligible for a Health Savings Account, consult your insurance administrator to learn how you may become eligible for a HSA. How much money can you save? Because HSA after-tax contributions can be deducted from your federal income tax return, you can realize tax savings each year you contribute. Here s an example of how your HSA can save you a significant amount of money each year. Potential tax savings With HSA Without HSA Annual income $50,000 $50,000 HSA annual individual contribution $3,100 $0 Taxable income $46,900 $50,000 Estimated taxes (28%) $13,132 $14,000 Tax savings $866 $0 This hypothetical example is for illustrative purposes only and is not intended to represent any specific benefits plan or potential plan savings. Hypothetical plan savings are based on 28% tax bracket for annual income. A plan participant s tax rates and actual savings are likely to be different. 2

5 Maximum annual contribution Your maximum annual contribution to a Health Savings Account in a calendar year is determined by several factors, including: n Single versus family coverage n Your age (Participants age 55 and older may make a catch-up contribution of $1,000 per year or as established by law.) n The maximum annual contribution allowed by law (subject to cost of living adjustments) Full year statutory contribution limits are permissible, $3,100 for single coverage and $6,250 for family coverage in 2012, but the HSA owner must maintain a high deductible plan for a full year beginning in the month the HSA begins or pay tax on the contribution and a 6 percent penalty. The tax and penalty do not apply if the HSA owner is no longer HSA-eligible because he dies or becomes disabled. The following worksheet is designed to help you calculate your maximum annual contribution. If you need assistance, please contact your tax advisor or plan administrator. Maximum annual contribution worksheet Enter the maximum annual amount allowed for Single Coverage Enter $3,100 for Single Coverage on Line 1. Family Coverage Enter $6,250 for Family Coverage on Line 1. 1 Regulations allow individuals over age 55 to make additional annual contributions. (You can apply this rule only one time in a calendar year.) If you will reach age 55 before the end of 2012, enter $1,000 on Line 2. Add Line 1 and Line 2. Enter this total on Line 3. Add $1,000 for yourself and/or your spouse who will be 55 years of age or more before the end of Enter this amount on Line 2. 2 Add Line 1 and Line 2. Enter this total on Line 3. 3 You must deduct any payments you make to other HSAs or MSAs* from your maximum allowable contribution for this plan year. This is your maximum contribution limit for On Line 4, enter the total amount of payments to other HSAs or MSAs in your name that applies to the remainder of this plan. Subtract Line 4 from Line 3 and enter the result on Line 5. This is your maximum contribution limit. On Line 4, enter the total amount of payments to other HSAs or MSAs in your name or your spouse s name that applies to the remainder of this plan. 4 Subtract Line 4 from Line 3 and enter the result on Line 5. This is your maximum contribution limit. 5 It is the responsibility of the individual participant to ensure he or she is eligible for an HSA and to calculate the correct maximum contribution for a given calendar year. Each tax payer should seek advice based on individual circumstance from an independent tax advisor. * Archer Medical Savings Accounts (MSAs). 3

6 Frequently Asked Questions What is a high deductible health plan (HDHP)? For 2012, a high deductible health plan (HDHP) is a health plan with the following:* n A minimum deductible of at least $1,200 for self-only coverage and at least $2,400 for family coverage, and n A maximum out-of-pocket expense limit for allowed costs of not more than $6,050 for self-only coverage and not more than $12,100 for family coverage. Other rules and restrictions apply. Your insurance company or plan administrator should be able to tell you if your plan is an HDHP. *Indexed annually for inflation What is a Benefit Access Card? Since you will not have checks for your HSA, you will be issued a Benefit Access Card. Your Benefit Access Card will allow you to access the funds in your HSA to conveniently pay for qualified medical expenses. You should receive your Benefit Access Card within 10 business days of opening your HSA. If you have not received your Benefit Access Card within 10 business days, you may call BB&T at Bank BBT ( ) to check on the status of your Benefit Access Card. How do I get money from my HSA? You may use your Benefits Access Card for qualified medical expenses, BB&T Online Banking with Bill Payment to initiate payment to a medical provider or transfers funds to another BB&T account, as well as visit a local BB&T branch to make a cash withdrawal or receive an official check (no charge) at the teller line. Can I have contributions made to my HSA on a pre-tax basis? You will need to contact your employers Payroll or Human Resources department to see if that option is available. You will need to provide your HSA account and routing number. What if my employer wants to contribute funds to my HSA? Your employer can work with the company s payroll provider to establish contributions into your HSA. You will need to provide your HSA account and routing number. When paying qualified medical expenses from my HSA, how does the insurance company or plan administrator know when I have paid up to my deductible? If you use an in-network provider, the in-network provider can file your claim for you. This will ensure that you receive the HDHP s discounted price, instead of having to pay full price. Or, you could simply save your medical bills and submit them to the insurance company or plan administrator yourself. How do I check my balance? You can check your balance using BB&T Online banking, BB&T Phone24, or visiting your local financial center. If you have elected to enroll in the HSA Mutual Fund Sweep Investment Sub-Account your available balance is the amount of funds held in cash in your HSA, plus 70% of the net asset value of mutual funds held in your HSA Investment Sweep sub-account, adjusted for pending transactions. 4

7 What happens to my HSA if I cancel my HDHP coverage? Funds deposited into your HSA remain in your account and automatically roll over from one year to the next. You may continue to use the HSA funds for qualified medical expenses. You are no longer eligible to contribute to an HSA for months that you are not an eligible individual because you are not covered by an HDHP. If you have coverage by an HDHP for less than a year, the annual maximum contribution is reduced; if you made a contribution to your HSA for the year based on a full year s coverage by the HDHP, you will need to withdraw some of the contribution to avoid the tax on excess HSA contributions. If you regain HDHP coverage at a later date, you can begin making contributions to your HSA again. Can I make catch-up contributions? If you are at least age 55 at any time during the tax year, the annual HSA contribution limit is increased by $1,000 for 2012 and all years going forward. If you and your spouse are both eligible individuals and you each have an HSA and turn 55, then you each can make catch-up contributions. If only one spouse has an HSA, only that spouse can make a catch-up contribution. Can I make my entire annual contribution to my HSA at the beginning of the year? Yes, you can contribute your entire annual contribution at the beginning of the year, up to the applicable contribution limit. Who can contribute to my HSA? Contributions to your HSA can be made by anyone, including you, your employer, family members or from a combination of sources. All contributions are aggregated to determine whether you ve contributed the maximum allowed. How do I transfer funds into my HSA? You may deposit funds into your HSA by visiting any BB&T branch to make a deposit at the teller line or by setting up a re-occurring funds transfer from a checking or savings account at BB&T or another financial institution. You may also use BB&T Phone24 or BB&T Online banking to transfer funds from another BB&T checking or savings account into your HSA. What investment options do I have for my HSA? Initially, your HSA will be a bank deposit account that will earn tiered interest rates for balances in the cash portion of the HSA. These funds are insured by the FDIC to the maximum extent provided by law. After your account reaches a cash balance of $500 in excess of $3,000 (the HSA Investment Threshold amount), you will have the opportunity to invest in a set menu of mutual funds by setting up an Investment Sweep sub-account to your HSA. Mutual fund investments require a minimum investment of $500. Any mutual funds that you purchase in your HSA Sweep Investment sub-account are not FDICinsured, are not a deposit or other obligation of the Bank, are not guaranteed by the Bank or any of its affiliates, and are subject to investment risk, including the possible loss of the principal amount invested. Obtain information on mutual fund investment options available, including prospectuses on BB&T s web site. How do I enroll in the HSA Mutual Fund Sweep Sub-Account? Each time your balance reaches $3,500 you will see an icon appear next to your HSA Deposit Account on the Summary Screen. To enroll, click on the icon and follow the on-screen instructions to establish your Mutual Fund Sweep Sub-Account. 5

8 How do I check my HSA Mutual Fund Sweep Investment account balance? You will be able to check your account information by logging on to BB&T OnLine and clicking on the icon next to your HSA Deposit Account on the Summary Screen. BB&T OnLine will show your cash balance in your deposit sub-account, the net asset value of your mutual fund investments in your Investment Sweep sub-account, and your available balance. Your available balance is the amount of funds held in cash in your HSA, plus 70% of the net asset value of mutual funds held in your HSA Investment Sweep sub-account, adjusted for pending transactions. When will funds be swept into the Investment Sweep Sub-Account? The automatic sweep requires a minimum investment of $500. Thus, it will occur whenever your cash balance exceeds the HSA Investment Threshold amount by $500 or more. How can I change my mutual fund investment options? Your BB&T OnLine HSA Account Summary screen will feature a link to your HSA Investment Sweep sub-account, where you may make changes to your investment options. From this page, you may redeem shares in mutual funds and re-invest the proceeds in other mutual funds from the menu of funds available, or change the percentages of swept funds that are allocated to your mutual fund investments. You also may direct the Bank to liquidate your entire investments in the HSA Investment Sweep sub-account, de-activate that Investment Sweep sub-account and transfer the funds automatically to your HSA bank deposit. You can later re-establish the HSA Investment Sweep sub-account at no additional charge. You cannot, however, direct the Bank to liquidate one mutual fund selection and not others. Changes in the allocation of your mutual fund investments, or any liquidation of the entire investment in your HSA Investment Sweep sub-account can be directed without the imposition of any charges or fees. What else should I know about my Investment Sweep sub-account? Under certain conditions, the Bank may automatically liquidate mutual fund shares in your HSA Sweep Investment sub-account. If the available balance in your HSA drops below $1,000, the Bank will automatically liquidate mutual fund shares in the HSA Sweep Investment Sub-Account and transfer the proceeds in order to restore the HSA deposit to at least $1,000. Also, if you incur an expense using your Benefit Access Card that, at the time the transaction is processed, is in excess of the cash balance in your HSA, but not in excess of your available balance, we will liquidate mutual fund shares in the HSA Sweep Investment sub-account to cover the shortfall. A $500 minimum transfer amount is required. If your Investment sub-account holds shares in more than one mutual fund, we will liquidate shares from each such mutual fund on a pro rata basis according to its relative value in your Investment Sub-Account portfolio. Your available balance is the amount of funds held in cash in your HSA, plus 70% of the net asset value of mutual funds held in your HSA Investment Sweep Sub-Account, adjusted for pending transactions. How can I maximize my tax-free savings and investment return? Paying for your qualified medical expenses as they occur and reimbursing yourself in later years allows the HSA to grow tax-deferred. You must retain records of qualified medical expenses not reimbursed so they can be reimbursed in subsequent years. It is important to set up your HSA as soon as you have applied for a High Deductible Health Plan in order to maximize your first year contributions. For what purpose can HSA funds be used? The funds belong to you. Funds can be withdrawn for any purpose, at any time. However, if funds are withdrawn for reasons other than to pay for qualified medical expenses, the amount withdrawn is included in your gross income for federal income tax purposes and is subject to a 20% excise tax. If the amount is withdrawn after you reach the age at which you are eligible to enroll in Medicare (generally, age 65), die or become disabled, there is no 20% excise tax (but the amount is still included in your gross income). 6

9 What are Qualified Medical Expenses? Funds used to pay for the following qualified medical expenses are tax-free and penalty-free if they are not reimbursed by insurance or otherwise: n Ambulance services n Dental treatment (including braces, fillings, extractions, dentures, x-rays, etc.) n Eye examinations, glasses, contact lenses, surgery n Hospital services n Medical services (fees and expenses charged by physicians, surgeons, specialists, and other health care providers.) n Nursing home and other nursing services n Prescription medicines n Psychiatric care n Other services defined in Section 213(d) of the Internal Revenue Code (the Code) n Premiums for COBRA continuation coverage n Premiums and expenses for qualified long-term care insurance n Health insurance premiums for individuals receiving federal or state unemployment compensation n Medicare and retiree health insurance premiums, (excluding Medicare Supplement premiums) once you have reached the age at which you are eligible to enroll in Medicare (generally, age 65) n Funds may be used for qualified medical expenses for your spouse or dependents, even if they are not covered by the HDHP. n See Section 213(d) of the Internal Revenue Code or IRS Publication 502 for more qualified medical services This list is only an example of some expenses that would qualify for the medical and dental expenses deduction under Code Section 213(d). You should visit or consult your tax advisor for more complete information. What are Nonqualified Medical Expenses? Expenses for health insurance premiums, other than those specifically listed above, are not qualified medical expenses. Examples of other expenses that are not qualified medical expenses are listed in IRS Publication 502. You should consult your tax advisor for more complete information. Can Long-term care premiums be paid using funds from your HSA account? Yes. The actual cost of your long-term care insurance can be much lower when paying for it with pre-tax dollars. Especially if those pre-tax dollars have had time to grow tax-free also. Can I receive favorable tax treatment if I use my HSA to pay for qualified medical expenses incurred before I set up my HSA? No. If you use your HSA to reimburse your qualified medical expenses incurred before your HSA is established, the reimbursements will be included in your gross income for federal income tax purposes and may be subject to the 20% excise tax. We recommend you establish your HSA as soon as possible once you obtain HDHP coverage and meet the other HSA eligibility requirements. Can I pay my health insurance premiums with an HSA? 7

10 You can only use your HSA to pay health insurance premiums if: n You are collecting federal or state unemployment benefits n You have COBRA continuation coverage through your employer or former employer n You are paying certain long-term care insurance premiums; or n You have reached the age at which you are eligible to enroll in Medicare (generally, age 65) and the premiums are for health coverage other than a Medicare supplemental policy What tax return information will I get from my HSA custodian? In January of each year, you should receive Form 1099-SA, which will indicate the total distributions you took from your HSA during the previous year. Distributions are not taxed if you spent the money on qualified medical expenses. In January of each year, you will receive an HSA Statement of Account, which serves as a substitute 5498-SA form. This statement will include your Fair Market Value. The Fair Market Value will include the balance in your HSA tiered rate account and your mutual fund investment balance as of year end. If you make additional contributions prior to April 15, we will send you an additional statement showing your HSA contributions. Does the HSA custodian approve medical expenses, or keep track of them? No. It is your responsibility to keep track of your own qualified medical expenses. Do I have to reimburse myself from my HSA within a certain time period of incurring the medical expense? No. There is no time limit for when you can reimburse yourself for your qualified medical expenses. You should keep legible receipts of your qualified medical expenses, and records of when you do reimburse yourself. Can I use the money in my HSA to pay for qualified medical expenses for a family member? Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent without tax penalty. What happens when HSA contributions exceed the maximum amount? An excise tax of 6 percent for each taxable year is imposed on the account beneficiary for excess individual contributions. However, the account beneficiary can avoid the excise tax on excess contributions, by withdrawing such excess contributions before the last day prescribed by law (including extensions) for filing the account beneficiary s federal income tax return for the taxable year. The net income attributable to the excess contributions is included in the account beneficiary s gross income. What happens to my HSA when I die? If your surviving spouse is your named beneficiary, your HSA will be treated as your surviving spouse s HSA. If you have no surviving spouse or your spouse is not the beneficiary, then the account will cease to be an HSA and will be included in the federal gross income of your estate or the income of your non-spouse beneficiary in the year in which you die. What happens if I become disabled? If you become permanently disabled, you may withdraw your funds at any time, without the 20% excise tax. Withdrawals will be subject to federal income tax at that time if they are not used to pay qualified medical expenses. 8

11 Who to call for help! HSA Deposit Account Questions BANK BBT ( ) or visit BBT.com/HSA n Lost/stolen/never received Benefits Access Card n Problems getting card accepted by a vendor n Account balance-transaction history/pending transactions n Need help navigating BB&T Online Banking HSA website Activating HSA Mutual Fund Sweep Investment Sub-Account n Select option 1, then option 2 HSA Mutual Fund Sweep Investment Sub-Account n Information on funds available and/or help moving funds. n Deactivate Sweep (move money in mutual funds back into HSA) Additional Information: The rules governing federal income tax consequences of HSAs are very technical, so that the above description of tax consequences is general in nature and does not purport to be complete. Moreover, the law is subject to change, as are its interpretation, and application of the law may vary in individual circumstances. The consequences under applicable state or local tax law also may not be the same as under the federal income tax law. Thus, you are urged to consult with your personal tax advisor for information about the tax consequences of an HSA that would relate to your particular circumstances. U.S. Treasury Circular 230 Notice: This information (and any and all other information provided by the Custodian relating to your HSA Account) is not intended to be used, and cannot be used, for the purpose of avoiding U.S. federal tax-related penalties. This information (and any and all other information provided by the Custodian relating to your HSA Account) is written to support the promotion or marketing by another person of the transaction(s) and matter(s) addressed herein. Each taxpayer involved in the transactions or matters addressed in this information should seek advice, based on the taxpayer s particular circumstances, from an independent tax advisor. BB&T Asset Management Inc., a wholly owned subsidiary of BB&T Corporation, serves as investment advisor to the BB&T Funds and is paid a fee for its services. The BB&T Funds are distributed by BB&T AM Distributors, Inc., which is not affiliated with Branch Banking and Trust Company or its affiliates. 9

12 BB&T, Member FDIC Branch Banking and Trust Company. BBT.com C Rev. 1/1/12