Your HDHP User Guide Take Control of Your Coverage With the High Deductible Health Plan (HDHP), you re in control of your health care spending. The plan includes comprehensive coverage that allows you to make choices about health care services and providers, and it includes the Health Savings Account (HSA) a tax-advantaged savings account that allows you to budget for health care expenses and save money. With these combined plans, you have greater control over when and where you spend your health care dollars. This guide is filled with tips to help you take advantage of money-saving opportunities and other resources available through the HDHP. Use it to find out how you can use this plan to meet your health care needs. How the HDHP Works The HDHP combines two important components: Medical coverage and a Health Savings Account (HSA). Here s how they work together: Part 1 Part 2 Medical Plan with a network of quality providers, comprehensive coverage, and an annual deductible + Health Savings Account (HSA) lets you pay for expenses federal tax-free = HDHP Together, these components give you comprehensive medical coverage and complete control over what health services you buy and how you spend your money on health care.
Part 1: Medical Plan The HDHP s medical coverage is made up of four basic components: 1. 2. 3. 4. Free in-network preventive care. Your preventive care is fully covered with no deductible and no coinsurance, as long as you receive this care from in-network providers. This includes annual physicals, well-child checkups, immunizations, flu shots, well-woman exams, mammograms, and other cancer screenings. Deductible. You pay for your initial (non-preventive) medical care and prescription drugs until you meet your annual deductible. To help offset the deductible, you can save federal tax-free money in your Health Savings Account (HSA) to help pay for these out-of-pocket costs. (You can also use any contributions that Avista may put in your HSA.) Coinsurance. Once the deductible is met, you and the HDHP share any further health care costs until you meet the out-of-pocket maximum. This is known as coinsurance. Out-of-pocket maximum. The medical plan limits the total amount you pay each year for medical care. Once you meet the out-of-pocket maximum, the plan pays 100% of the eligible, in-network expenses for the remainder of the calendar year. Why You Should Consider the HDHP 1. Comprehensive coverage. The HDHP has the same comprehensive coverage as the current medical plan. Both plans cover the same doctors, hospitals, and other providers. From office visits and hospital care to prescription drugs and more, you ll have the coverage you need. 2. NO PREMIUMS. You pay NO monthly premiums for medical coverage, even when you enroll eligible dependents. (Here s a tip contribute the amount you would have paid in premiums to your HSA, which will build up your savings more quickly.) 3. Build savings for health care expenses now and in the future. When you enroll in the HDHP, you can establish a tax-advantaged Health Savings Account (HSA) to help you save for health care expenses. Avista will make a contribution to your HSA (if eligible): $700 if you enroll in employee-only coverage or $1,500 if you enroll in employee + 1 coverage. (Avista s contribution will be divided evenly and deposited each pay day.) You can use your contributions and Avista s to help pay for current medical costs. Or you can save your HSA funds to help pay for future medical costs, including retiree medical coverage. Plus, any account balance over $2,000 can be invested in mutual funds offered by Rehn & Associates, the HSA administrator. Interest and other investment earnings are 100% federal tax-free, yours to keep, and add to your account balance! 2
Part 2: The Health Savings Account (HSA) If you enroll in the HDHP, you ll have access to a unique tax-advantaged savings account called a Health Savings Account, or HSA. You can use this account to pay for eligible health care expenses for you and your eligible dependents on a federal tax-free basis. Avista s HSA will be set up and administered by Rehn & Associates, who has partnered with HealthcareBank, a division of Bell State Bank & Trust. The HDHP and the HSA: How They Work Together Your Health Savings Account (HSA) Together, your and Avista s contributions can cover a portion of the deductible and coinsurance. HDHP Plan Free In-Network Preventive Care To emphasize the importance of wellness, preventive care is covered at 100%, as long as you receive this care from in-network providers. Deductible You pay for your initial medical costs until you meet the annual deductible. This deductible is higher compared with the other medical plan, but offset by HSA contributions you and Avista may make. Coinsurance Once the deductible is met, you and the HDHP share any further health care costs until you meet the out-of-pocket maximum. Out-of-Pocket Maximum The plan limits the total amount you ll pay each year. Once you meet the out-of-pocket maximum, the plan pays 100% of your eligible, in-network expenses for the remainder of the year. 1 HDHP Medical Plan 2 The green boxes show the four basic parts of the HDHP. HSA You can contribute to this tax-advantaged account to help pay for eligible medical, dental, vision, and prescription drug expenses, now and in the future. Avista may also put money in your HSA in 2018: Coverage Level 2018 HSA Contribution Limit Avista s Contributions Wellness Program Incentive Your Contribution Limit Employee-only coverage Employee + 1 coverage Employee + 2 or more dependents $3,450 $700 Up to $400 $2,350 $6,900 $1,500 Up to $400 $5,000 $6,900 $0 Up to $400 $6,500 Age 55 or older? You can contribute an additional $1,000 per year. HSA contributions are subject to change each year. 3
Key Features Triple tax advantage: The money you put into your HSA is before federal tax, and your money isn t taxed when you take it out for qualified expenses. Finally, any earnings on your savings aren t subject to federal tax. Avista may help jump start your savings: When you enroll in the HDHP, Avista may put money in your HSA (in 2018, Avista will contribute $700 for those with employee-only coverage and $1,500 for those with employee + 1 coverage). You can use this money to help pay for eligible expenses. You own the account: Your HSA funds including any contributions Avista may make to your HSA belong to you. That means you can take your HSA funds with you, even if you change medical plans, leave Avista, or retire. You control how you use it: You can use your HSA funds to cover qualified expenses or you can pay out of your own pocket and save your HSA funds for a later date. You can invest your savings: You have the option to invest in a variety of mutual funds for any HSA account balance over $2,000. Save for medical expenses in retirement: By building up your HSA account year over year, you ll be able to use the funds to reimburse your medical expenses in retirement. How the HSA Works START IT BUILD IT GROW IT USE IT KEEP IT After you enroll in the HDHP, you ll need to complete the HSA enrollment packet and return it to Human Resources. Once complete, your HSA will be set up through Rehn & Associates. You ll receive a welcome email or letter from Rehn & Associates. Please log in to your account (the same one you previously used for your Flexible Spending Account or Health Reimbursement Arrangement) at www.cdh.rehnonline.com to manage your HSA. Additionally, you ll be able to view your HSA balance, request distributions, and more through our Incent Mobile App. Simply search Rehn in the Apple App Store or through Google Play to download. Your contributions to your HSA are made on a federal pretax basis through payroll deductions, up to the annual limits. You can change the amount you contribute monthly. You can make after-tax contributions directly to your HSA through the Consumer Portal (www.cdh.rehnonline.com), Incent Mobile App, or via personal check. Your family can also contribute after-tax. Jump Start Your Savings! If you enroll in employee-only coverage or employee + 1 coverage, Avista will make a contribution to your HSA: Employee-only coverage = $700 contribution from Avista Employee + 1 coverage = $1,500 contribution from Avista Avista s contribution will be divided evenly and deposited each pay day. Your account has the potential to earn interest. Unused money in your account will roll over to the next year. Any HSA account balance over $2,000 can be invested in a variety of mutual funds. You keep any interest and other investment earnings, which add to your account balance. You can use the money in your HSA to pay for qualified health care expenses when funds are available. See Qualified Expenses on page 5 for details. You can pay for qualified expenses for you and your dependents in a variety of ways: You can use a debit card from Rehn & Associates to pay for qualified expenses when funds are available. You can use this debit card to pay the provider directly, or you can use it as a credit card when you receive an invoice. You can also request a distribution online via the Consumer Portal (www.cdh.rehnonline.com) or the Incent Mobile App offered by Rehn & Associates. Withdrawals from your HSA (for qualified health care expenses) are federal tax-free. You don t need to provide receipts for reimbursement you only need to save them for tax purposes. Note: If you use your funds to pay for non-qualified expenses, you ll have to pay taxes on the amount plus a 20% excise tax. You always own the money in your HSA. You take the account with you if you leave Avista. You can save your HSA funds to use during retirement once you reach age 65, you can use the money in your account to pay your Medicare premiums. After you turn age 65, your HSA account becomes similar to a regular IRA. Withdrawals you use for non-qualified expenses will be taxed at your regular income tax rate, but won t incur the additional 20% excise tax. 4
Contributing to Your HSA Contributions to your HSA come from you and, in years where there is a company contribution, Avista. The table below shows the maximum amount that can be contributed to your HSA in 2018, including how much Avista will contribute and the total contribution you can make. Coverage Level 2018 HSA Contribution Limit Avista s Contributions Wellness Program Incentive Employee-only coverage $3,450 $700 Up to $400 $2,350 Employee + 1 coverage $6,900 $1,500 Up to $400 $5,000 Employee + 2 or more dependents $6,900 $0 Up to $400 $6,500 Age 55 or older? You can contribute an additional $1,000 per year. Your Contribution Limit Qualified Expenses You can use your HSA for out-of-pocket expenses that would generally qualify for the medical, dental, vision, and prescription drug expenses income tax deduction, including: Save Your Receipts! Deductibles and coinsurance Office visits Prescription drugs Hospital stays Lab work and exams Hearing aids That s not all! Smoking cessation Speech/occupational/physical therapies Chiropractic care and acupuncture Dental exams, braces, and other care Eye exams, contacts, and glasses Unlike an FSA where you have to demonstrate expenses were eligible prior to being reimbursed, with the HSA, it s your responsibility to track and maintain records of how your HSA funds were used. You ll need these records in the event you re ever audited by the IRS. You can also use your HSA to pay for over-the-counter items, such as medicines or BAND-AIDS. However, you need a prescription for over-the-counter items in order to reimburse the expenses on a tax-free basis. For a complete list of qualified expenses, go to www.cdh.rehnonline.com or review IRS publication 502 at www.irs.gov/publications/p502/index.html. 5
Five Important HSA Rules The HSA has many benefits, but there are some important rules to remember: #1 There are annual contribution limits. The IRS limits the amount you can contribute to an HSA each year. Note: These limits may change each year. It s your responsibility to ensure your contributions don t exceed the annual limit. Tax penalties may apply on excess contributions. You should consult your personal tax advisor for questions regarding your HSA. #2 Not everyone can open an HSA. All Non-Union and Local 659 benefits-eligible employees can enroll in the HDHP. However, you aren t eligible to open an HSA if you re: Enrolled in another medical plan (such as a spouse s/domestic partner s plan), unless it s a qualified high deductible health plan Enrolled in Medicare Eligible to be claimed as a dependent on another individual s tax return Not a U.S. resident An active military member who is enrolled in TRICARE. #3 All dependents expenses may not be eligible. Domestic Partners Tax laws are different than marriage laws. The IRS doesn t consider a domestic partner to be a spouse under federal tax law, regardless of state law exceptions. The only way to use money in your HSA to pay for your domestic partner s qualified expenses is if your domestic partner is considered a qualified tax dependent as defined by the IRS. Dependent Children You may only pay for your dependent children s expenses if they re considered a qualified tax dependent. If they qualify, you can pay for your dependent children s expenses until they turn age 19, or until age 24 if they re full-time students. #4 You can t have an HSA and a Health Care FSA at the same time. If you enroll in the HDHP, you can t enroll in the Health Care Flexible Spending Account (FSA). If you currently have a Health Care FSA, your FSA must have a $0 balance as of December 31, 2017. If you still have an FSA balance by that date, you will have to wait until April 1, 2018, to begin receiving Avista s contribution or begin making your own contributions. Additionally, if you enroll a spouse or dependent in the HDHP, your spouse or dependent cannot enroll in a Health Care FSA through his or her employer. Note: You can continue to enroll in the Dependent Care FSA, which reimburses child and elder care expenses. #5 It s tax-advantaged, not always tax-free. Although your HSA contributions are free from federal income taxes, certain states tax HSA contributions and/or earnings. Check with your tax advisor to see if this applies to you. For more information about the HSA and these rules, consult your tax advisor. 6
Know Your Resources Our vendors and partners provide many resources to help you make the most of your medical coverage and HSA. Remember! With the HDHP, you re in control of how you spend your money on health care services. Using the tools below can help you save your out-of-pocket dollars and stretch your HSA savings. www.avistabenefits.com Medical plan cost estimator. Use this online tool to estimate which medical plan will be most cost-effective for you, based on your personal situation. Consumer Coach. View hypothetical scenarios to help choose between the HDHP and PPO plan. Premera www.premera.com Find in-network providers. In-network doctors, pharmacies, and facilities cost less than out-of-network providers, so you ll pay a lower deductible and coinsurance. Estimate your costs. Compare the cost of procedures at different providers and facilities. Health Advocate www.members.healthadvocate.com Health Advocate offers a variety of services to help you make the most of your health care dollars, including assistance with: Finding the right doctors Scheduling appointments Resolving insurance claim issues Obtaining cost estimates using the cost transparency tool Rehn & Associates www.cdh.rehnonline.com Access your account. Manage your transactions, investments, and claims. View your history, request distributions, and view HSA tax documents. Manage your investments. Use the HSA Goal Calculator, view account projections, and more! 7
Fact or Fiction? The HDHP s high deductible means I can t afford this plan. FICTION! While the HDHP s deductible is higher, this plan can actually be more affordable than Avista s other plan. Here s how: Avista may contribute money to your HSA to help pay for this higher deductible amount ($700 for those with employee-only coverage and $1,500 for those with employee + 1 coverage). The plan has NO monthly premium for medical coverage so you pay less per month. The plan allows you to use the HSA to pay for your medical care. If you contribute to your HSA, your contributions are federal pretax, which means you re paying for services at a discount (through tax savings). The HSA works just like a personal bank account. FACT! The account is in your name, and you own it. It s your responsibility to manage the account. It s easy to pay medical bills with your HSA. Just swipe your debit card at the doctor s office or pharmacy, use your card like a credit card when paying bills, or use the HSA online payment options. Keep in mind that you don t have to pay for expenses with your HSA. It s always your choice. Some people like to pay for smaller expenses out of their pocket, so their account builds up over time. Enrolling in the HDHP can help me save for retirement. FACT! Your HSA can serve as a great retirement savings tool. You can save money in your HSA now your contributions and Avista s contributions (if you choose employee-only or employee + 1 coverage) and use it when you retire. Any HSA account balance over $2,000 can be invested in a variety of mutual funds to help your savings grow. Any interest and other investment earnings are federal tax-free. And since you own the account, it s yours to keep even if you leave Avista or retire. If I have a catastrophic health event or chronic condition, I m going to have to pay most of my medical costs myself. FICTION! The HDHP has a financial safety net to limit your costs. This is called the out-of-pocket maximum, which is $3,000 for individual coverage and $6,000 for family coverage when you use in-network providers. This means, if you have employee-only coverage, the most you have to pay out of your pocket during a plan year is $3,000 for in-network services. Once you reach that amount, the plan pays 100% for the rest of the year for all covered services and supplies. Note: There is no out-of-pocket maximum for out-of-network providers and the HDHP doesn t cover any expenses that aren t considered reasonable and customary by the plan. With an HSA, it s use it or lose it. FICTION! With an HSA, there s no limit to the funds you can roll over year to year and save for retirement. Also, if you leave the company, you take the dollars with you. So, no more December rush to buy eyeglasses or squeeze in an extra teeth cleaning. I can have a Health Care Flexible Spending Account (FSA) with my HSA. FICTION! If you have an HSA, you may not contribute to a Health Care FSA. Instead, you can contribute federal tax-free to your HSA. You may still contribute to a Dependent Care FSA when you have an HSA. 8