High Deductible Health Plan + Health Savings Account

2014

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What is a High Deductible Health Plan? A High Deductible Health Plan (HDHP) has:  A lower premium than typical health plans  A higher annual deductible than typical health plans  A maximum limit on the total amount you have to pay out of your own pocket for the deductible, out of network coinsurance and in some cases your prescriptions.  After you meet the deductible, the insurance company begins to pay

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HDHP 

Preventive Care is covered at 100% in network – – –

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Annual physical Age based testing (mammograms, colonoscopy, etc) Well child visits

What is a Health Savings Account? A Health Savings Account (HSA) is:

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A tax-advantaged savings account that belongs to you

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Always paired with a High Deductible Health Plan

HSA continued…

Because HSA plans have special tax advantages, the IRS defines specific rules for participation. It is recommended you consult your tax advisor for any tax related questions.

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HSA continued…

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To be eligible for an HSA, you:  Must be enrolled in a High Deductible Health Plan  Cannot have any other coverage  Cannot be covered through Medicare Part A or Part B  Cannot be claimed as a dependent on another person’s tax return  Cannot have received VA Medical Benefits in the last 90 days, except for preventive care  Not be participating in a spouse’s Healthcare FSA or HRA

What can HSA funds be used for? 

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HSA funds can be used for qualified medical expenses (as defined by the IRS) on a tax free basis. Qualified medical expenses include services under your medical plan as well as other qualified expenses outside of the medical plan (i.e. vision hardware, dental, etc). Go to www.irs.gov Publication 502 for a listing of qualified medical expenses. http://www.irs.gov/pub/irs-pdf/p502.pdf

What can HSA funds be used for? Continued… 

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When you retire you can continue to use the HSA funds you have accumulated to pay for Medicare Part A, B and D premiums, as well as any out-of-pocket expenses not covered by Medicare or other insurance At age 65 you can use HSA funds for nonqualified expenses subject to income tax but no penalty

What can HSA funds be used for? Continued… 

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Prior to age 65 you may use the HSA funds for non-qualified expenses; HOWEVER, those funds will be subject to tax and a 20% penalty.

HSA Contribution Rules 

Contributions from all sources are limited to the IRS maximums each year. Sources include: –

Employee HSA contributions Direct to the bank via deposit slip – MUST be done via mail. Local branches do not take deposits. Pro: Money will be available to you immediately Con: You will not have the tax benefit until you file your tax return for that year Payroll contributions Pro: Lowers your payroll taxes Con: Your full contribution will not be available to you until the end of the year after your last payroll deduction

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Employer HSA contributions The Town of Greenwich is contributing $1,250/$2,500 depending on coverage level

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What is the maximum I can contribute annually to the HSA? For 2014, the IRS has set the following limits: Under age 55 – –

Up to $3,300 for individual coverage Up to $6,550 for couple or family coverage

Over age 55 –

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Maximum contribution increases by $1,000

Can I still participate in the Town’s Flexible Spending Accounts? 

If you are enrolled in the HDHP/HSA you cannot also be enrolled in the Healthcare Flexible Spending Account (FSA) –

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Please note, if you are currently enrolled in the FSA, you must exhaust all funds from your account by December 31, 2013. Otherwise, you will not be eligible to open or contribute to an HSA.

There is no connection between the Dependent Care Flexible Spending Account and the HSA – therefore you may continue to participate in DC FSA

Life Of A Medical Claim Sick visit to an in-network doctor/hospital/facility.

Show CIGNA ID card to doctor/hospital/facility

You will be billed by your provider. It is your responsibility to pay your provider Doctor files claim with CIGNA

Cigna receives the claim and processes it based on the HSA- qualified plan deductible, covered expenses and Cigna-negotiated discounts.

Cigna provides an Explanation of Benefits or EOB showing: Provider fee, Cigna discount, amount you may be billed, and what you saved.

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How do I pay for my healthcare using my HSA? There are several ways to pay utilizing your HSA… Debit Card • Pro: Money automatically comes from your account at point of sale (doctor’s office, pharmacy, etc). Extra card can be ordered for family members. • Con: Many providers do not take debit cards (i.e. behavioral health providers).

Check Book • Pro: Can be used when paying out-of-network provider at point of service. More control over your funds. • Con: You must purchase the check book when setting up your HSA.

On-line Bill Pay • Pro: Similar to personal banking on-line bill pay. You decide when to pay the provider. Better control of your account. • Con: You need to have a computer to use this feature. 14

How do I pay for my healthcare using my HSA? Automatic Claim Forwarding • Pro: Cigna “talks” to your bank account and payment is automatic when a claim is processed. • Con: No control over your account.

Pay out of your own pocket You can “pay yourself back” from your HSA if you use your personal funds. • Pro: You can save the funds in your HSA and build your account balance. • Con: You would be using money from your personal bank account. There is no tax advantage.

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What to Expect at Tax Time 

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JP Morgan Chase will mail IRS Forms for annual tax reporting – 1099-SA (HSA Distributions) in January – 5498-SA (HSA Contributions) in May At tax time, IRS Forms 1040 and 8889 must be completed – IRS Form 1040-EZ is not allowed Always keep receipts – If audited by IRS, it is participant’s responsibility to show distributions from HSA were for qualified medical expenses

What happens next? 

OPEN ENROLLMENT November 11th - November 22nd you will enroll online within this timeframe 

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If you want to contribute to the HSA you must elect your payroll deduction during open enrollment

EARLY DECEMBER – Open your HSA account with JPMorgan Chase if new to the plan JANUARY 1, 2014 – The Town of Greenwich will fund your HSA. Your Cigna HDHP coverage is effective.

To Review… High Deductible Health Plan (Cigna) + Health Savings Account (JPMorgan Chase) = HDHP/HSA Plan The Town of Greenwich will deposit $1,250 or $2,500 into your JPMorgan bank account at the beginning of the year to be used towards your healthcare expenses

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Questions??? 203-861-3100 [email protected]

Please note, this presentation is a simple summary of how the HDHP/HSA plan works. If there are any discrepancies between this presentation and the full Plan Document, the Plan Document rules

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