Optional Health Care PlanH S A Q&AFall 2013

A Qualified High Deductible Health Care Plan (QHDHCP)

with a Health Savings Account (H S A)

Optional Plan – H S A Q&A

Who owns the H S A?

A: You do

Note: The account is portable

Optional Plan – H S A Q&A

Are employee contributions pre-tax?

A: Yes, up to the IRS maximum

Note: Employees over age 55 may make catch-up contributions

Optional Plan – H S A Q&A

How much can I contribute to my H S A?

A: In 2014:

Single individual $3,300

Family $6,550

55+ catch up amount $1,000

Optional Plan – H S A Q&A

Is there a deadline for H S A contributions?

A: Contributions for current taxable year may be made until April 15 of following taxable year

Optional Plan – H S A Q&A

Can money be taken out of the H S A at any time?

A: Yes, tax free to pay qualified medical expenses

Note: non-qualified expenses are taxable income and incur a 20% penalty

Optional Plan – H S A Q&A

What is a qualified medical expense?

A: Expenses that would generally qualify for IRS medical and dental expenses income tax deduction

Optional Plan – H S A Q&A

Whose medical expenses can the plan be used to pay?

A: Any family member reported as a dependent on your tax return

Note: If the family member is not covered under your plan, the expenses will not be applied to your deductible

Note 2: Adult children up to age 26 may qualify as a dependent for insurance purposes but cannot qualify for the H S A if they are not dependents on the parent’s tax return

Optional Plan – H S A Q&A

Who can put money into your H S A?

A: Anyone

Note: Only employee’s contribution is tax-free

Note 2: Only account holder may receive tax deductions

Optional Plan – H S A Q&A

Does the H S A account balance earn interest?

A: Yes, and tax-free

Optional Plan – H S A Q&A

Is the account balance FDIC insured?

A: Yes, except for funds in investments

Optional Plan – H S A Q&A

What are the tax benefits of the H S A?

A: There is triple tax savings•Contributions are not taxed and reduce your taxable income•Withdrawals are not taxed•Earnings are not taxed

Optional Plan – H S A Q&A

What happens to unused funds at the end of the year?

A: Funds are rolled over year to year without penalty

Optional Plan – H S A Q&A

Can I rollover my HRA funds into the H S A?

A: A one-time rollover can be made by the employer

Note: The rollover does not affect the annual limit for H S A contributions

Optional Plan – H S A Q&A

Are there other ways to fund the H S A?

A: A one-time rollover may be made from a Roth IRA to the H S A

Note: The transfer is limited to the H S A maximum annual contribution for that year

Optional Plan – H S A Q&A

Can married couples who are employees have different coverage?

A: Yes, but if one employee elects an FSA the other cannot elect an H S A

Optional Plan – H S A Q&A

Can an employee participate in the H S A with a spouse covered under a different employer’s plan?

A: Yes, as long as the spouse does not participate in an FSA

Note: a limited scope FSA, such as for vision/dental benefits only, is permitted

Optional Plan – H S A Q&A

Can employee and spouse access H S A funds if spouse has coverage with a different employer?

A: Yes, a spouse would be considered a dependent as long as the spouse is a dependent for tax purposes

Optional Plan – H S A Q&A

What happens if employee leaves job or retires?

A: Since the account is portable, you take it with you wherever you go

Note: Must have HDHP to continue to make contributions to H S A

Optional Plan – H S A Q&A

What if I die?

A: The beneficiary receives the H S A account to continue use as an H S A if it is a spouse

Note: If the beneficiary is not a spouse the value of the H S A is taxable to the beneficiary or estate

Optional Plan – H S A Q&A

How do I access the H S A account?

A: A debit card will be issued to pay providers directly

Also, expenses may be submitted for reimbursement after the provider bills you

Optional Plan – H S A Q&A

What happens if my H S A account does not have enough funds to pay a bill?

A: The account will not issue funds prior to deposit of funds

Note: Scheduled payments can be set up to the provider from the H S A

Optional Plan – H S A Q&A

Should I pay the doctor at the time of service if my deductible is not met?

A: Your bill may be sent by the provider to the insurance company first for repricing. Then it will be returned to you for payment at the discounted rate.

Note: The provider may require partial or full payment up front

Optional Plan – H S A Q&A

How will I track my H S A funds?

A: The H S A administrator will make a periodic statement available to you

Optional Plan – H S A Q&A

Other Questions?

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