Health Savings Option FAQs The following are frequently asked questions and answers regarding the Health+Savings Option in the BP Medical Plan. Refer to the Health+Savings User s Guide for more details. Note: Health Savings Account (HSA) tax laws vary by state. You might also seek the advice of a tax advisor for more on the features and tax savings provided by Health Savings Accounts. More information is also available on the IRS website at www.irs.gov.
Eligibility Q. Who s eligible for an HSA? A. You are eligible for an HSA if you are: Covered by a high deductible health plan, such as the Health+Savings Option. Not covered under a non-high deductible health plan (including a plan your spouse/domestic partner may have). Not enrolled in a Health Care Spending Account (including an account your spouse may have with BP or a separate employer). Not enrolled in Medicare. Not eligible to be claimed as a dependent on another person s tax return. Q. Can I contribute to an HSA if I am a non-u.s. citizen on international assignment in the United States? A. No. You are not eligible to open an HSA or to receive BP s contributions to an HSA. Q. Can I open and contribute to an HSA if I m a U.S. citizen on international assignment outside the United States? A. Yes. You may open and contribute to an HSA, and you are eligible for BP s contributions to the HSA. However, PayFlex will ask you to provide a U.S. street address as part of the verification process. Q. Can I contribute to an HSA and participate in BP s Health Care Spending Account (HCSA), also known as a health care flexible spending account? A. No. Federal regulations do not allow you to contribute to both an HSA and BP s HCSA. Q. My spouse has a Health Care Spending Account. Can I open an HSA? A. No. If your spouse participates in a Health Care Spending Account that is not a Limited-Purpose HCSA, you will not be eligible to open an HSA. Federal regulations do not allow you to contribute to an HSA if your spouse has an HCSA (also known as a health care flexible spending account). 1
Q. My spouse has a Limited-Purpose Health Care Spending Account. Can I open an HSA? A. Yes. If your spouse participates in a Limited-Purpose HCSA, which is a special type of spending account that covers only dental and vision expenses, you will still be eligible to open an HSA. Q. Can I have an HSA and a Dependent Care Spending Account? A. Yes. Dependent Care Spending Accounts are for day care expenses and not for medical care. Q. If I enrolled in Health+Savings and opened an HSA this year and then go back to HealthPlus next year, can I still enroll in a Health Care Spending Account, even though I have an HSA? A. Yes. And you can keep the HSA as long as you want and spend that money whenever you want. But you can contribute to the HSA only if you re enrolled in a high deductible health plan. Q. Can I have an HSA and an IRA? A. Yes. Q. I am enrolled for Medicare. Can I open an HSA? A. No. Federal regulations do not permit an individual enrolled in Medicare to open an HSA. Q. I enrolled in the Health+Savings Option. Do I have to open an HSA? A. No, you re not required to open an HSA. But if you don t open an HSA, you will not receive BP s contributions. 2
Q. Can my spouse have an HSA too? A. Yes. If both you and your spouse have individual high deductible health plan coverage, you may each be able to contribute to your respective HSAs, up to the limit for individual coverage ($3,250 each). However, if one or both of you has family coverage in a high deductible health plan, the maximum combined before-tax contribution cannot exceed the annual IRS limit of $6,450 for family coverage. If you are age 55 or over this year, you can make the $1,000 catch-up contribution. This is also true for your spouse if he or she is age 55 or over this year. Your spouse would have to make the catch-up contribution to his or her HSA, not to your HSA. Please note that, due to ongoing issues of federal law, the answer only applies to a legal spouse of the opposite sex in states that do not recognize same-sex marriage. A legal spouse of the same sex as the employee must still be considered a domestic partner under federal tax rules in those states. This area of the law is in flux, however, and is thus subject to change with little or no notice. Q. Can my domestic partner have an HSA too? A. Yes. If you both have a high deductible health plan, you can contribute up to the limit for individual coverage ($3,250 each) or up to the family limit ($6,450 each). Note: The ability to contribute up to the family limit depends on whether you each have federal tax-qualified dependents. Building your HSA Q. What is metabolic syndrome? A. Metabolism is the process where your body converts food into energy. Your metabolism plays a big part in your weight. When you have metabolic syndrome, you have several conditions affecting your metabolism at the same time. These are: Obesity High blood pressure High blood sugar level High cholesterol Together, this group of problems increases your risk of developing heart disease, stroke and diabetes. While having one of these conditions doesn t mean you have metabolic syndrome, it does increase your chance of developing one of the other conditions. 3
Q. What are the five measurements for metabolic syndrome? A. Metabolic syndrome testing measures: Weight Blood pressure Cholesterol Blood glucose Triglycerides Q. If I elect You + Child(ren) coverage, can my child complete a physician certification form to receive the $1,000 additional contribution from BP? A. No. Children are not eligible to receive the incentive for completing a physician certification form. Q. Are retirees eligible for the BP contributions to the HSA? A. No. But if retirees are not enrolled in Medicare, they can contribute to the HSA post-tax and make catch-up contributions. Q. What if I contribute more to my HSA than the IRS allows? A. You will be required to pay income taxes on the excess and any earnings. If you do not withdraw your excess funds before the tax-filing deadline (usually April 15 of the next year), you will also be subject to an excise tax. Q. Are HSA rules similar to IRA rules where I can make a deposit into my HSA up to April 15 and have it count toward my prior-year tax return? A. Yes, as long as you did not contribute up to the maximum in the prior tax year. 4
Q. How do I make contributions to my HSA? A. You can contribute to your HSA through automatic payroll deductions at BP. You can also link your personal savings account with your HSA on the Aetna Navigator member website (accessible via LifeBenefits at bp.com/lifebenefits) and make one-time payments or schedule repeating payments. Or, you can mail a deposit coupon directly to PayFlex, our HSA administrator. Q. How much money can I put into my HSA? A. For 2013, the IRS allows you to contribute up to $3,250 for You Only coverage and up to $6,450 for You + Spouse, You + Child(ren), or You + Family coverage. If you re over age 55, you re also eligible to make an additional $1,000 catch-up contribution per year to your HSA. Because BP s plan year is April 1 through March 31, you can make contributions according to the last-month rule. Q. How often can I contribute to my HSA? A. You can contribute frequently or all at one time, provided your total contribution does not exceed the IRS annual limits. Q. What is the last-month rule? A. BP s benefits plan year is April 1 through March 31. Even though you weren t eligible to contribute from January through March, under the last-month rule, as long as you re eligible for an HSA on December 1, you can contribute to your HSA up to the maximum annual limit for the calendar year. However, the IRS requires that you continue to be eligible through December 31 of next year. This is called the testing period. If you fail to remain an eligible individual during the testing period, other than because of death or becoming disabled, you will have to include in income the total contributions made to your HSA that would not have been made except for the last-month rule. You include this amount in your income in the year in which you fail to be an eligible individual. This amount is also subject to a 10% additional tax. For more information, please consult your tax advisor or see IRS Publication 969. Spending your HSA Q. Can I request additional debit cards one for me and one for my spouse? A. Yes. You can request additional debit cards by logging in to the Aetna Navigator member website via LifeBenefits at bp.com/lifebenefits. 5
Q. What is the earliest I can begin paying claims with my HSA? A. You can use your HSA for eligible expenses that you incur after you have established your HSA. This means that the date of service for the expense must be on or after your HSA becomes effective. Expenses that you incur before you open your HSA are not eligible expenses. Q. Is there a time limit for reimbursing yourself from the HSA? A. No. There is no time limit on reimbursements from the HSA. Q. What if funds are not available when I have an eligible medical expense? A. If you do not have enough money in your HSA to pay for an eligible medical expense, you ll need to pay for the expense by some other means. Once the money is in your HSA, you can reimburse yourself for the amount you personally paid for the expense. If you know you ll have a large expense before you have enough money in your HSA, you can also link your personal savings account with your HSA on Aetna Navigator and make one-time payments or schedule repeating payments. Q. Can I spend my HSA on non-health care expenses? A. No. If you use your HSA for expenses other than eligible health care expenses, you automatically subject yourself to income taxes and possible IRS penalties on that amount. The penalty is 20% of the total ineligible withdrawal. You must report these withdrawals accordingly. Keep in mind that the inappropriate use of your HSA may leave you without available funds for future medical expenses. The 20% penalty does not apply if the withdrawal is made after you: Turn age 65. Become completely and permanently disabled. 6
Q. Can I use my HSA to pay insurance premiums? A. Generally, insurance premiums are not an eligible medical expense for your HSA. However, premiums for the following are eligible expenses: Long-term care coverage Health care coverage while you receive unemployment benefits Health care continuation coverage required under any federal law (e.g., COBRA) Retiree insurance premiums (other than premiums for a Medicare supplemental policy, such as Medigap) if you are age 65 or older Q. Who is responsible for ensuring that I am using my HSA for eligible medical expenses only? A. How you use your HSA is solely between you and the IRS. You should save all receipts, invoices and statements that provide evidence for how you used your HSA, in case you are audited. By law, BP cannot ask you to substantiate your reason for withdrawing money from your account; therefore, you will be responsible for improper withdrawals. And remember, you ll pay income taxes and a 20% penalty on the amount withdrawn the penalty for improper withdrawals is 20% of the amount withdrawn. Q. On whom can I spend the funds in my HSA? A. You can use your HSA to pay for eligible health care expenses for: Yourself. Your spouse even if he or she is not covered by a high deductible health plan (note: domestic partner expenses are generally not eligible for reimbursement). Anyone you claim as a dependent on your personal income tax even if that person is not covered by a high deductible health plan. You cannot, however, spend your HSA on eligible expenses for dependent children between ages 24 and 26. While changes due to health care reform mandate that children up to age 26 can be covered by your medical plan, they are not considered dependents for tax purposes. Q. Can my HSA be used on dependents not covered by my health plan? A. Yes, as long as the expense is eligible and not paid for by another health plan (e.g., copays, deductibles, and coinsurance). Dependents include anyone you claim as a dependent on your personal income tax and who is under the age of 24. 7
Q. What happens to my HSA when I reach age 65? A. You can continue to use your HSA for eligible health care expenses, including retiree Medicare premiums, deductibles, copays and coinsurance and any other retiree insurance premiums (other than premiums for a Medicare supplemental policy, such as Medigap). Once you turn age 65, you can also use your HSA to pay for things other than eligible health care expenses. The money used will be taxable as income, but it will not be subject to the 20% penalty. Maintaining your HSA Q. What happens if I have money left in my HSA at year-end? A. Just like a bank account, any money left over at the end of the year will be yours to keep, no matter what. Whatever funds you don t spend in one year remain in your HSA, earn interest and are available for the next year. Q. What happens to my HSA if I don t enroll in a high deductible health plan next year? A. If you are no longer covered by a high deductible health plan, such as the Health+Savings Option, you cannot continue to contribute to your HSA. However, the account is still yours and you can use the money to pay for eligible health care expenses or save it for future medical expenses. Q. What happens to my HSA if I leave BP? A. All funds contributed to your HSA, even the money contributed by BP, are yours to keep. In the event that you leave BP, you can: Keep your HSA with PayFlex. Transfer your funds to an HSA with your new employer. Establish a new HSA and transfer your balance. Roll over your funds to another qualifying HSA within 60 days of distribution. If you don t keep your funds with PayFlex and don t roll them over to another qualifying HSA within 60 days of distribution, the funds are taxable and likely subject to a penalty. 8
Q. Can my HSA money be rolled into an IRA? A. Not without incurring tax consequences. The only way to avoid those would be to roll it into another qualified HSA. Q. What happens to my HSA if I die? A. Like your other assets, your HSA will go to your legal beneficiaries. You need to complete a beneficiary designation form that states to whom your account should be transferred in the event of your death. If your beneficiary is your spouse, the HSA will not be taxable to your beneficiary if the funds are used for qualified medical expenses. However, if your beneficiary is not your spouse, the HSA distribution will be taxable. You can select a beneficiary online or request a form when you log in to the Aetna Navigator member website via LifeBenefits at bp.com/lifebenefits. Q. What would cause my HSA to terminate? A. PayFlex will close your HSA only at your request. Q. Is my HSA protected from fraud? A. Yes. Subject to the terms and conditions of the cardholder agreement, if your HSA debit card is stolen or you suspect fraudulent activity, PayFlex will immediately replace your funds and work to resolve the issue. In the event of fraud, your account will be treated just like your checking account. Q. Do I have to pay maintenance fees on the HSA? A. As long as you are an active employee and enrolled in the Health+Savings Option, BP will pay the maintenance fees on your behalf. However, once you are no longer actively enrolled in the Health+Savings Option, you will be responsible for any fees required by PayFlex. Accounts for domestic partners and retirees will be charged a small monthly fee. For more information, go to the Aetna Navigator member website via LifeBenefits at bp.com/lifebenefits. Select the link to access your HSA and click the fee schedule link on the left-hand side of the HSA account page. 9
Medical coverage Q. What makes a drug a preventive drug, and what are some examples of the generic preventive drugs covered at 100% under Health+Savings? A. Preventive prescription drugs that can help you avoid developing a health condition are considered preventive prescription drugs. They can help you maintain your quality of life and avoid expensive treatments, helping to reduce your overall health care costs. A list of generic preventive prescriptions is available on the Express Scripts website. Go to LifeBenefits at bp.com/lifebenefits and click Express Scripts under the Contacts tab. Q. Does the deductible apply toward my out-of-pocket maximum? A. Yes. This document is presented as a matter of information, and is not intended to constitute a promise or contractual commitment by the company. The company reserves the right to unilaterally change or terminate any or all of the programs discussed herein, as well as all of its benefit plans and programs, at any time and without prior notice. Also, modifications may be necessary to comply with applicable legal requirements. In the event of any inconsistency between a statement contained in this document and the relevant plan document or summary plan description, the plan document or summary plan description will control over this document. Employees covered by collective bargaining agreements will be subject to these benefit plan provisions to the extent consistent with the terms of BP s policy and benefit programs, the applicable collective bargaining agreement and any applicable legal guidelines. 10