Benefits News Issue 2 Human Resources Your Resource for Information on your Dow Benefit Solutions Get to Know MAP Plus Option 2 In this issue of Benefits News, you will get a closer look at the MAP Plus Option 2 Plan that allows you to be eligible for a Health Savings Account (HSA) administered by Fidelity Investments. With the Dow HSA, you can set aside funds on a pre-tax basis for qualified health expenses. By choosing Option 2 and taking advantage of the HSA now, you can accumulate more funds to help with future medical expenses. To help you compare the Option 1 Low Deductible and Option 2 High Deductible plans, we ve included charts in this issue that compare plan features and out-of-pocket costs. There are also detailed descriptions of how Option 2 and the new HSA work. Because choice is an important part of your Dow benefits, in addition to Option 2, we are continuing to offer Option 1 Low Deductible (formerly MAP Plus) and HMO plans, where available. As 2013 Annual Enrollment approaches, we hope you will consider all options and make the choice that best matches your needs, family situation and budget. Inside: Comparing MAP Plus Option 1 Low Deductible and Option 2 High Deductible How Option 2 High Deductible Works Health Savings Account HSAs and FSAs Watch for future issues of Benefits News for more information about the benefits, resources and tools available to you. *Due to state law, Dow employees and retirees residing in Hawaii are not eligible for Option 1 Low Deductible or Option 2. Save the date! Annual Enrollment is November 6 20, 2012
Comparing the MAP Plus Options Option 2 offers all of the same attractive features as Option 1 Low Deductible, plus a tax-favored Health Savings Account (HSA) administered by Fidelity Investments. You use the same network of providers and have the same services covered. The difference is that Option 1 Low Deductible has higher monthly premiums and generally lower cost at the point of service. Option 2 has lower monthly premiums, and higher cost at the point of service. Both plans have excellent protection of high cost care. Plan Feature Health Savings Account Set aside pre-tax dollars to pay qualified medical expenses through an HSA. Preventive care 100% coverage for services such as routine physical exams, mammograms, Pap tests, PSA tests and annual eye exams. MAP Plus Option 1 Low Deductible No MAP Plus Option 2 Provider choice Use any licensed provider and still receive benefits from the plan. Savings with in-network provider Pay less of your own money when you use health care providers in Aetna s network. Aetna programs and services Online, telephone and one-on-one resources. 2 Save the date! Annual Enrollment is November 6 20, 2012
Cost Sharing Among the points to consider as you choose your 2013 medical plan, are how you and the plan share the cost of care, and what you pay in premiums for your coverage. The chart below shows what you pay for some select expenses. Expense/Cost Premium Amount you pay toward cost of your coverage MAP Plus Option 1 Low Deductible Higher premium Lower out-of-pocket cost MAP Plus Option 2 Lower premium Higher out-of-pocket cost In-network Out-of-network In-network Out-of-network Annual $125 / $250 / $375 $500 / $1,000 / $1,500 $2,000 / $4,000 $4,000 / $8,000 Doctor s office visit (Primary/specialist) $20 / $50 30% after 20% after 40% after Inpatient hospital stay $250 co-pay then 15% after 30% after 20% after 40% after Outpatient surgery 15% after 30% after 20% after 40% after Maternity, inpatient delivery 15% after 30% after 20% after 40% after Annual out-of-pocket maximum Individual 3% of base annual salary 6% of base annual salary $4,000 (includes ) $8,000 (includes ) Family 6% of base annual salary 9% of base annual salary $8,000 (includes ) $16,000 (includes ) Save the date! Annual Enrollment is November 6 20, 2012 3
How Option 2 Works with an HSA An HSA is an account you use to help pay for qualified medical expenses. You can use it for current expenses or you may let it accumulate for future medical expenses, even those in retirement. Unused contributions to your HSA roll over each year. Besides giving you a convenient way to save for health care expenses, the HSA saves you money on taxes. Plus, you own your account. You decide when and how to use it, and it s yours if you leave Dow. Who is Eligible for an HSA? To be eligible for an HSA: You must be enrolled in Option 2 and cannot be enrolled in any other health coverage (including your spouse s health coverage) except for another Plan. You must not be enrolled in Medicare. You cannot be claimed as a dependent on someone else s tax return. You or your spouse cannot have a traditional Flexible Spending Account or Health Care Reimbursement Account (HCRA). (You may, however, have a Limiteduse FSA. See page 7.) Making Contributions When you enroll in Option 2, you can set an HSA contribution for the coming year. Your contribution is then deducted from your paycheck in equal amounts throughout the year. Similar to your 401(k) contribution, your HSA contributions are deducted before income taxes are withheld, reducing your taxable income, and the amount you pay in taxes (see Tax Advantages on page 7). Your maximum contribution to an HSA in 2013 is: Employee only: $3,250 Employee & Spouse/Domestic Partner/Child(ren) or Family: $6,450 In addition to regular, payroll-deducted contributions You can make a one-time rollover from an IRA to your Health Savings Account. Your tax advisor can help with this. You may contribute an additional $1,000 as a catch up contribution to your Health Savings Account if you are 55 or older and not enrolled in Medicare in 2013. If you already have an HSA, you can roll over your account to the new Dow HSA through Fidelity. You can then take advantage of pre-tax contributions via convenient Dow payroll deductions. Pre-tax payroll-deducted contributions will be made only to an HSA with a trustee who has been contracted by the Dow health plans, which for 2013 is Fidelity. You may change the amount of your contribution at any time during the year, up to the limits shown above and you don t need to have a qualified life event to make this change (i.e. marriage, birth of child, etc.) 4 Save the date! Annual Enrollment is November 6 20, 2012
Using Your Account You use your HSA to pay qualified medical expenses, as defined by IRS Code 213(d). Some examples of qualified medical expenses are medical plan s and coinsurance, dental care, overthe-counter drugs (with a prescription), and contact lenses. For a complete list (IRS Publication 502), visit www.irs.gov and click on Forms and Publications or call 1-800-829-3676. You can access funds in your account using a debit card. After you open an HSA with Fidelity, you will receive a debit card. You can use the debit card to pay qualified expenses. Plan for tomorrow s health care expenses by growing your HSA today. Think of your HSA as a 401(k) for health care. With it, you can start putting away money now toward health expenses later in life. Check your balance by logging into your secure Fidelity account at www.netbenefits.com/dow. Once you open your HSA with Fidelity, view your account balance on your home page. Growing Your Account HSA balances can roll over year-to-year and earn interest, tax-free. If you choose, you can pay current expenses out of your own pocket and let your HSA account grow for the future. Your HSA will be an interest-bearing account. Once your account balance reaches certain thresholds, generally $2,500, you can take advantage of numerous investment options offered by Fidelity. For more information on investment options, call a Fidelity Representative at (877) 440-4015. Saving on Taxes An HSA offers you a triple tax advantage: 1. You pay less in income taxes. Your pre-tax, payroll-deducted HSA contributions reduce your adjusted gross income. Because there is less income to be taxed, you pay less in federal, state (if applicable) and other income taxes. 2. You pay no taxes on the interest earned by your HSA. Like money in an IRA, the money in your account grows free from federal taxes. 3. You pay no tax on the money you use to pay qualified medical expenses. You are required to pay taxes on any money withdrawn for nonmedical expenses. However, once you reach age 65, you can withdraw money from your HSA for any reason without paying a penalty. Save the date! Annual Enrollment is November 6 20, 2012 5
How Does the HSA Work with an FSA? Dow offers two types of FSAs Health Care Reimbursement Account (HCRA) and Dependent Day Care Reimbursement Account (DCRA). If you enroll in Option 2, IRS regulations do not allow you to have both an HSA and/or HCRA. Therefore, you can enroll in a Limited-use Flexible Spending Account (Limited-use FSA) which is new for 2013. DCRA is not affected by this Regulation and will not change. What is a Limited-use FSA? As with Dow s HCRA you set a contribution amount to be payroll deducted, on a pre-tax basis, in equal amounts over the course of the year. The 2013 contribution limit for HCRA and the new Limited-use FSA is $2,500. This is a reduction from the 2012 HCRA limit of $5,000 as required by the IRS. The limited aspect of an FSA refers to what eligible claims you can submit for reimbursement before and after you ve met the Option 2. The chart below gives you examples of what qualifies for reimbursement: Dental cleanings, fillings, crowns, orthodontics Contact lenses, eyeglasses, vision correction procedures (such as LASIK) Medical & Pharmacy annual expenses Medical & Pharmacy coinsurance (office visits, in-patient hospital stay, surgery Over-the-counter drugs with a prescription Before Option 2 Deductible is Met Eligible for reimbursement under HSA Eligible for reimbursement under HSA After Option 2 Deductible is Met N/A You must use the money in your Limited-use FSA by March 15 of the following year. You lose any funds remaining in your account after this date. Because HSA funds can be used to cover the same medical expenses as a Limited-use FSA, and any unused funds can be carried over each year, you may only want to consider contributing to a Limiteduse FSA if you meet all of the following: You are contributing the maximum amount allowed to your HSA You are anticipating incurring expenses that can be covered by the Limited-use FSA You do not want to pay those expenses out of your HSA 6 Save the date! Annual Enrollment is November 6 20, 2012
Comparing the HSA, HCRA, Limited-use FSA and RHCAP The chart below provides an at-a-glance comparison of these savings tools. While we realize this may seem complex, we offer all of these options to provide you the opportunity to get the greatest possible tax advantage regardless of which plan you select. Keep in mind that we must comply with government rules and regulations around these plans. Feature/ Provision HSA HCRA Limited-use FSA RHCAP** health plan requirement You must enroll in MAP Plus Option 2 You may not be enrolled in HCRA if you are enrolled in the MAP Plus Option 2 You may have a Limited-use FSA if you are enrolled in the MAP Plus Option 2 High Deductible You may be enrolled in any health plan Funding Payroll-deducted pretax contributions to an HSA with Fidelity Payroll-deducted pre-tax contributions Payroll-deducted pre-tax contributions After-tax payroll deductions 2013 contribution limits Single: $3,250 Family: $6,450 $2,500 $2,500 $180 per month Eligible expenses IRS-approved qualified expenses* IRS-approved qualified expenses* Dental and vision expenses (only) before, qualified expenses* after. Qualified retiree medical premiums only Rollover of unused balances No No Portability No No, based on retiree eligibility Use of funds You may use up to the amount of funds currently in account. You may use funds up to the full contribution amount you set for the year. You may use funds up to the full contribution amount you set for the year. Available after you retire *Expenses must be qualified medical, vision, pharmacy or dental expenses, as defined in Section 213(d) of the Internal Revenue Service Code. **Based on eligibility Save the date! Annual Enrollment is November 6 20, 2012 7
The Dow Chemical Company 2030 Dow Center Midland, MI 48674 Open Immediately Important Benefits Information Questions? Contact the Dow HR Service Center at HR@dow.com or 877-623-8079. You can also download a copy of this newsletter on My HR Connection or www.dowfamilyhealth.com. The foregoing descriptions of benefit plans provide only general information. You should refer to the plan document and summary plan description of the applicable plan for a more complete description of the plan s terms. If there is any conflict between the information provided above and the plan document for the applicable plan, the plan document will govern. The foregoing descriptions are subject to change based on the terms of the plan and applicable law. The Dow Chemical Company reserves the right to amend, modify, and terminate any of the plans described in this document at any time in its sole discretion. This document is not a contract of employment and is not intended to affect the employment-at-will status of any employee in any way whatsoever. Coming in Future issues: Enhancements to your Aetna pharmacy program including mail order. On the go? Mobile access to your benefits. Dow Benefits website it s not just for Annual Enrollment. Live well, stay well with Aetna programs and services. 2012 The Dow Chemical Company All rights reserved. Lit.# 318-60965