HEALTH SAVINGS ACCOUNT (HSA) CONSUMER GUIDE

HEALTH SAVINGS ACCOUNT ( HSA ) CONSUMER GUIDE Questions? Toll-free self service by phone 24 hours a day, 7 days a week Customer service representativ...
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HEALTH SAVINGS ACCOUNT ( HSA ) CONSUMER GUIDE

Questions? Toll-free self service by phone 24 hours a day, 7 days a week Customer service representatives available Monday through Friday, 8:00 a.m. - 6:00 p.m. Central time 1-866-234-8913 Visit us online at ExanteBankHSA.com

Now you can.

Want the freedom to spend today or save for tomorrow?

Now you can. Want to take control of your health care savings?

045-0219 9/05

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HSAs

Now you can.

Want to consider a new way to help save and pay for health care expenses?

Many people enrolled in high-deductible health plans are considering Health Savings Accounts (HSAs) as a way to help save and pay for health care expenses. HSAs offer the tax advantages associated with Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs) — but can provide even more value. An HSA gives you the freedom to spend the funds today or save them for the future. Your HSA is your account. You own it. You can fund it. And you can take it with you wherever you go.

What makes a Health Savings Account (HSA) different? Your Health Savings Account (HSA) funds can be: Non-taxable when used to reimburse qualified health expenses Accumulated for future health expenses Portable from one employer to the next Available to spend on non-health purposes on a taxable basis, plus an additional penalty Supplemented by your employer, based on your plan design, by a family member, or by any other individual

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Health Savings Accounts (HSAs) offer: Control: You own the funds in your account from day one. You decide when and how to spend them. Flexible funding: Your account can be funded through employer contributions*, salary reduction, and/or tax-deductible contributions. Unlike other tax-advantaged accounts, family members, or any other individual, can contribute to your account, as long as they meet IRS guidelines. No more use-it-or-lose-it rule: Accumulate funds in your tax-exempt account. The funds are there when you need them — now or in the future. Portability: Take your account with you wherever you go. The funds you accumulate can help you plan for retirement. From age 55 up to when you are enrolled in Medicare, you can make additional contributions to maximize your tax advantages and set aside the money you need.

Expanded use of funds: You can use your HSA dollars, on a tax-free basis, for all eligible medical expenses. You can also use your money for non-health expenses on a taxable basis (plus an additional penalty). Health premium coverage: Your HSA can be used to fund certain health coverage premiums (COBRA, long-term care and coverage while receiving unemployment compensation) in addition to out-of-pocket health expenses. Convenient access to funds and account information: You can access your HSA funds easily with your Health Savings Account MasterCard® Debit Card, and find important account information online at ExanteBankHSA.com. * Please check your plan materials to determine whether your employer will be making supplemental contributions to your account.

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How Your HSA Works Contributions you make to your HSA are tax-deductible. Funds you withdraw to pay for qualified medical expenses, as defined by Section 213(d) of the IRS Tax Code, are tax-free. A list of these expenses is available on the IRS Web site, www.irs.gov, and a sample list of eligible/ineligible expenses is included on pages 4 and 5. If you use your HSA funds to pay for non-health related expenses, the amount will be taxable and you will pay an additional 10 percent tax penalty. The tax penalty does not apply if you are over age 65 or enrolled in Medicare, but gross income tax reporting applies. Your health plan materials provide you with the exact contribution amounts your plan allows.

You can also access your HSA funds through: Online bill payment at ExanteBankHSA.com Checks, if you choose to purchase them

Account Information by Phone or Online With an Exante Bank HSA, account information is available, day or night, through: Toll-free customer service — representatives are available to assist you Monday through Friday, from 8:00 a.m. to 6:00 p.m. Central time Interactive voice response, 24/7 ExanteBankHSA.com

About Your Account

You can: Set up contributions to fund your HSA

Your HSA funds are deposited in a custodial account at Exante Bank, a leading administrator of Health Savings Accounts. Exante Bank is FDIC-insured and will service your account. With expertise in health care and financial services, Exante Bank is uniquely positioned to offer Health Savings Accounts partnered with high-deductible health plans. HSA funds deposited at Exante Bank earn a competitive interest rate.

Easy Access to HSA Dollars Exante Bank offers a Health Savings Account CardSM, which can be used at: Any point-of-service location (such as a doctor’s office or pharmacy) that accepts MasterCard debit cards Any ATM displaying the MasterCard logo

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Pay bills online Check current balance See how much interest has been paid Transfer funds Check last five (5) account transactions (deposits and/or withdrawals)

Contribution Guidelines

Save Your Receipts

Please refer to the IRS Contribution/Deductible Guidelines sheet for the specific dollar amount you may contribute during the plan year. Once you are no longer covered by a high-deductible health plan, you cannot continue to make contributions; however, the money in your HSA is yours to keep at Exante Bank or transfer to another qualifying account. Should you choose to transfer your HSA to another qualifying account, you must do so within 60 days of withdrawing the funds from Exante Bank to avoid taxes and an additional 10 percent penalty.

Save your supporting documentation when you withdraw funds. You are responsible to verify qualified health care expenses, as defined by Section 213(d) of the IRS Tax Code. The IRS may require you to provide documentation for your withdrawals. Any expenses that do not fall within IRS guidelines will be considered taxable, and the appropriate tax rules will apply.

Monthly Statements

Online at ExanteBankHSA.com

Exante Bank will provide online monthly statements detailing your account balance and activity. If you prefer to have statements mailed to your home, simply notify Exante Bank. You can opt-out of electronic statements at ExanteBankHSA.com, call customer service to do so, or send your request to P.O. Box 271629, Salt Lake City, UT 84127-1629.

By mailing a deposit with a contribution form, available at ExanteBankHSA.com, or by calling Exante Bank customer service at 1-866-234-8913

Fees associated with your account are outlined in the HSA Schedule of Fees and Charges, included with your HSA enrollment materials.

Making Contributions You can make contributions to your HSA:

Through payroll deduction — if your employer offers this option for your HSA, you can request that your employer deduct a set amount from your paycheck

How Your Health Savings Account Works With Your Health Plan

Activate the Health Savings Account Card Report the card lost or stolen Set or reset password Speak to a customer service representative during business hours View frequently asked questions View monthly statements

While you are contributing to your HSA, you have a high-deductible health plan that provides coverage for health care services for you and your covered dependents. The plan has a high deductible and a maximum out-of-pocket amount that meets the government requirements regulating HSAs. Your specific plan design, deductible, and out-of-pocket amounts are provided to you in your health plan information.

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HSA Eligible Expenses

HSA Ineligible Expenses

The following list provides examples of eligible and ineligible medical expenses. It is not all-inclusive. Remember, the IRS may modify its list of eligible expenses from time to time. As always, consult your tax advisor should you require specific tax advice.

Funds you withdraw from your HSA are tax-free when used to pay for eligible medical expenses as described in Section 213(d) of the Internal Revenue Service Tax Code. These expenses must not have been reimbursed previously by any other coverage, such as your Flexible Spending Account. In general, the IRS requires that expenses must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. A list of these expenses is available on the IRS Web site, www.irs.gov, in IRS Publication 502, “Medical and Dental Expenses,” or can be ordered directly from the IRS at 1-800-TAX-FORM.

Eligible Medical Expenses include: Abortion Acupuncture Alcoholism treatment Ambulance Artificial limb Artificial teeth Breast reconstruction surgery (mastectomy-related) Certain health insurance premiums and health coverage contributions (limited to contributions for COBRA coverage; contributions while receiving unemployment compensation; and coverage for those age 65 and older other than Medigap coverage) Chiropractor Christian Science Practitioner Contact lenses and solutions Cosmetic surgery (if due to trauma or disease) Dental treatment (X-rays, fillings, braces, extractions, etc.) Diagnostic devices (such as blood sugar test kits for diabetics) Doctor’s office (including physicians, surgeons, specialists, or other medical practitioners) visits and procedures Drug addiction treatment Drugs, prescription Eyeglasses and exams (for medical reasons) Eye surgery (such as laser eye surgery or radial keratotomy) Fertility enhancements Hearing aids (and batteries for use) Hospital services Laboratory fees Long-term care (for medical expenses and premiums) Nursing home Nursing services Operations/surgery (excluding unnecessary cosmetic surgery) Optometrist Osteopath Oxygen and oxygen equipment Over-the-counter (OTC) medical expenses for items used solely to treat a medical condition (such as aspirin, pain relievers, decongestants, cough suppressant, etc.)

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Physical therapy Psychiatric care Psychoanalysis Psychologist Special education (for learning disabilities) Speech therapy Stop-smoking programs (including nicotine gum or patches) Transplants Transportation (primarily for, and essential to, medical care) Vasectomy Weight-loss program (to treat a specific disease diagnosed by a physician) Wheelchair Wig (for hair loss from disease)

If you pay for anything other than eligible medical expenses with your HSA funds, the amount will be taxable, and you will pay an additional 10 percent tax penalty. The tax penalty does not apply if you are age 65 or older or disabled, but the amount must be reported as taxable income.

Ineligible Medical Expenses include: Advance payment for future medical care Amounts reimbursed from any other source (such as other health coverage or a Flexible Spending Account) Babysitting, child care, and nursing services for a normal, healthy baby Cosmetic surgery (unless due to trauma or disease) Dancing lessons Diaper service Electrolysis or hair removal Funeral expenses Health club dues Household help Illegal operations and treatments

Insurance premiums (except for contributions for COBRA coverage; contributions while receiving unemployment compensation; and coverage for those age 65 and older other than Medigap coverage) Maternity clothes Nutritional supplements Over-the-counter drugs and medicines other than those used exclusively for medical purposes Personal use items (such as toothbrush, toothpaste) Swimming lessons Teeth whitening Veterinary fees Weight loss program (unless prescribed to treat a specific disease)

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Frequently Asked Questions About HSAs Q. What is a Health Savings Account (HSA)? A. A Health Savings Account (HSA) is an account you can

use to pay for qualified health expenses for yourself and your covered dependents. Unlike traditional taxadvantaged accounts for health expenses, your account is portable when you leave your employer. Additionally, you have the flexibility to use your HSA funds for other, non-qualified expenses; however, if you use your HSA funds for non-qualified expenses, that amount will generally be taxable. Also, you will likely be required to pay an additional 10 percent tax penalty on the withdrawal amount. You can only make contributions while you are covered by a high-deductible health plan.

Q. How does the HSA work? A. Contributions you make to your HSA are tax-free; the

amount you contribute is generally not taxable. This reduces your taxable income and, potentially, your tax liability. Consult your tax advisor to determine how your HSA affects your unique tax circumstances. When you withdraw funds to pay for qualified health expenses, the funds remain tax-free.

Q. Who can contribute to the HSA? A. Based on your health plan design, you, your employer

or anyone else may contribute to the HSA, as long as they meet IRS guidelines. Please check your health plan materials to find the specific funding options for your plan.

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Q. What qualifications must I meet to enroll in an HSA?

A. To enroll in an HSA, you must meet the following requirements:

You must be enrolled in a high-deductible health plan that meets IRS requirements You cannot be covered by another health plan that is not a high-deductible health plan (e.g., you can’t be a dependent on anyone else’s plan, except for vision or dental coverage) You cannot be enrolled in Medicare You may not be claimed as a dependent on another person’s tax return

Q. What is a high-deductible health plan? A. The IRS determines the requirements of a qualifying

high-deductible health plan (please refer to the IRS Contribution/Deductible Guidelines sheet for specifics); however, your employer determines your specific plan design. Please check your health plan materials for your plan design.

Q. What is Exante Bank and what role does it play in my Health Savings Account?

Q. What if I already have an HSA? A. a. If you already have an Exante Bank HSA through

the same employer who’s providing your HDHP for the new benefit year, you don’t need to fill out an application again.

b. If you already have an HSA, but not with Exante Bank, you can rollover or transfer your HSA to Exante Bank. First, complete your HSA application. Remember, your signed HSA application must be on file at Exante Bank before you rollover or transfer. Rollover: Download a rollover/transfer request form from ExanteBankHSA.com or call customer service to request one. Close your existing HSA and send the funds to Exante Bank to roll into a new HSA. Transfer: Contact the bank that has your existing HSA and request that they transfer your funds directly to Exante Bank. Rollovers and transfers are subject to IRS restrictions. Please contact your tax advisor for additional information. c. If you already have an Exante Bank HSA, but not through your current employer, you can maintain your HSA with Exante Bank. You don’t need to fill out an application again. As long as you have a high-deductible health plan (HDHP), you can continue to use your HSA. If you are no longer covered by an HDHP, you can still keep your HSA, you just can’t make contributions.

A. Exante Bank is an FDIC-insured financial institution.

The bank will be the holder of your HSA funds and will service your account. You will receive communications directly from Exante Bank regarding your HSA.

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Q. When do I contribute to my HSA?

Q. How do I withdraw funds from my HSA?

A. You can begin sending contributions to your HSA as soon

A. You can use:

as you receive your account number from Exante Bank.

Q. How much can I contribute to the HSA? A. Please refer to the IRS Contribution/Deductible

Your Health Savings Account Card at a doctor’s office, pharmacy or health care facility that accepts MasterCard debit cards, or at any ATM displaying the MasterCard logo. Online bill payment at ExanteBankHSA.com

Guidelines sheet for specifics.

Q. What information will I receive about my Q. How do I make contributions to my HSA? A. You can make a contribution to your HSA: By mailing a deposit with a contribution form. The form is available at ExanteBankHSA.com, or you can call customer service at 1-866-234-8913 to request one. Through payroll deduction — if your employer offers this option for your HSA, you can request that your employer deduct a set amount from your paycheck.

someone else to make a contribution for me?

A. That individual should write a check payable to you,

the HSA account holder. You fill out an HSA Employee Contribution/Investment Worksheet and write “family or friend contribution” under HSA Special Instructions. Then, simply attach the check to the form and mail it to Exante Bank, P.O. Box 271629, Salt Lake City, UT 84127-1629. Remember, the annual limits apply to all contributions.

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than my family deductible — how much can I contribute?

A. You cannot deposit more than the overall or total family deductible.

Q. What if my total contribution for the year exceeds the IRS limits?

A. You can contact customer service to request an excess

contribution refund. If you request a refund of the excess funds, there is no penalty as long as the distribution is made before the tax filing deadline, generally April 15th. Earnings on the excess amount will be taxable; however, the 6 percent excise tax will not apply as long as the excess contributions and earnings are paid out before the due date (including extensions) for filing your tax return.

HSA from Exante Bank?

A. You have access to online monthly statements at

ExanteBankHSA.com to track account balance and activity. If you prefer to have statements mailed to your home, simply notify Exante Bank. You can opt-out of electronic statements at ExanteBankHSA.com; call customer service to do so, or send your request to P.O. Box 271629, Salt Lake City, UT 84127-1629.

Q. How often can I contribute? Is there a limit as Q. What is the best way for a family member or

Q. What if my per-person deductible is different

to how much I deposit with each contribution?

A. You can contribute as frequently, or as much, as you

wish, provided your total contribution does not exceed the limits specified by the Internal Revenue Service. HSA contribution limits are excludable (if made by your employer) or tax-deductible (if made by you) up to the lesser of either your qualified annual deductible or the statutory maximum amount for single or family coverage, as stated by the IRS. Please refer to the IRS Contribution/Deductible Guidelines sheet for the specific dollar amount you may contribute during the plan year. If you no longer are covered by a high-deductible health plan later in the year and have contributed the maximum annual amount, you will have to withdraw some of the contribution from the account.

Q. How much tax will I have to pay on contributions over the IRS limit?

A. Excess contributions are subject to a 6 percent excise tax. Q. When can I start to use the funds in my HSA? A. Once your account is open, a deposit has been made

to your account, and funds are available, you can start using your HSA. You are 100 percent vested as soon as the funds are deposited and you have total control over the funds. Keep in mind that if your employer also contributes to the account, they can determine their contribution schedule yearly, monthly, or weekly. Please check with your employer to see what their contribution schedule will be.

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Q. How much tax will I pay if I use my HSA

Q. Can I return funds to my HSA if I withdraw

A. Any funds you withdraw from your HSA for non-qualified

A. Withdrawals that were made for what you thought

funds for non-qualified expenses?

expenses will be taxed at your income tax rate plus 10 percent of the amount paid.

Q. How do I report withdrawals that are used for non-eligible expenses?

A. You must report distributions for ineligible expenses. Consult your tax advisor for specifics.

Q. When I withdraw funds from my HSA, what information do I need to keep?

A. Save all receipts and records of withdrawals for tax

reporting to the IRS. If you don’t use your funds for health-related expenses, you must report those withdrawals accordingly. You are responsible for maintaining all records associated with your HSA — not your employer or Exante Bank.

Q. What happens if I withdraw too much and

them by mistake?

were qualified medical expenses, but turned out not to be, can be returned to the HSA if you made the withdrawal in error. Complete and mail or fax an HSA Excess Contribution Form, available at ExanteBankHSA.com, on or before April 15th following the year in which you mistakenly withdrew funds. Consult the HSA Schedule of Fees and Charges for the fee associated with this transaction.

Q. Will I earn interest on my HSA funds? A. Yes, you will earn tax-free interest on the funds in your HSA. The exact interest amount, and any updates to this amount, will be provided to you directly from Exante Bank.

Q. Will I have to pay any fees for my HSA? A. Account set-up fees, maintenance fees, and ATM

withdrawal fees are determined by Exante Bank and provided to you in the HSA Schedule of Fees and Charges in your enrollment materials.

don’t spend it on qualified medical expenses?

Q. Do I have to use my HSA funds for all of

Q. What expenses are qualified for

A. You control your HSA funds and can decide whether

A. You are eligible to receive tax-free reimbursement for

my out-of-pocket medical expenses?

to spend them for your current medical expenses, or to spend out-of-pocket and save your HSA money for the future.

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reimbursement from my HSA?

qualified health expenses not covered by your insurance as defined by Section 213(d) of the Tax Code. A list of these expenses is available on the IRS Web site, www.irs.gov, and a sample list of eligible/ineligible expenses is included on pages 4 and 5. HSA distributions used for any purpose other than the qualified medical expenses listed will be taxable, and the appropriate tax rules will apply.

A. If you use your HSA funds for anything other than a

qualified health care expense as defined in IRS Publication 502, the amount withdrawn is subject to both income tax and a 10 percent penalty, unless you are over age 65. If you are 65 or older, the amount you withdraw for non-medical purposes is treated as retirement income and is subject to normal income tax, but not subject to the 10 percent penalty.

Q. What income tax forms will I need to file when I have an HSA?

A. You’ll need to file IRS Form 8889, along with the standard

Form 1040, to report contributions to and distributions from your HSA. If you have excess contributions to your HSA, you must also file Form 5329.

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Q. Once I am eligible (age 55 up to when I

am enrolled in Medicare), how can I make “catch up” contributions — all at once or over time?

A. We can accommodate either method — a one-time contribution or several contributions over time. For more specifics on eligibility, please refer to IRS guidelines or a tax advisor.

Q. Is it true that individuals 65 or older can take out funds from their HSAs for any reason without a penalty?

A. If an individual is age 65 or older, regardless of whether the individual has been enrolled in Medicare, there is no penalty to withdraw funds from the HSA. As always, normal income taxes will apply if the distribution is not used for unreimbursed medical expenses (expenses not covered by the medical plan).

Q. What happens to my HSA if I leave my employer?

A. All funds contributed to your HSA, including funds contributed by your employer, are yours to keep. You can: Keep your HSA at Exante Bank Transfer your funds to another qualifying HSA within 60 days of withdrawing the funds from Exante Bank to avoid taxes and an additional 10 percent penalty

Q. What are catch-up contributions?

Q. A person has an HSA and accumulates

$5,000 in it. Three years later, the person is on a plan (not HDHP) and is married. Can the spouse use funds out of the HSA for expenses not covered by the health plan?

A. Yes. HSA funds can be removed tax-free for eligible

medical expenses for a tax dependent at any time, regardless of whether either person is enrolled in an HDHP. Please note: If you are no longer covered by a high-deductible health plan, you cannot continue to contribute to your HSA.

Take control of your health care savings today and start saving for tomorrow. Now you can. Enroll in an HSA. It’s your money and you can take it with you!

A. Generally, when you reach age 55, up to when you are

enrolled in Medicare, you can make additional contributions to your HSA to maximize your tax advantages and set aside the money you need. Assuming you are in a high-deductible health plan for the full year, the year that you turn 55, you are eligible for the full amount of the catch-up contribution. Please refer to the IRS Contribution/Deductible Guidelines sheet for exact dollar amounts.

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