PNC Health Savings Account FA Q g U I D E F O R EMPLOYERS

More savings. More flexibility. More boost for your benefits! Enhance your Health Benefits Offerings with the PNC Health Savings Account If your company already offers a High Deductible Health Plan (HDHP) or is thinking about switching to one, the PNC Health Savings Account (HSA) can help you offer the total package for employees. A PNC Health Savings Account, combined with a high deductible health plan, can help you share the high cost of healthcare with employees in a way that benefits everyone.

The benefits they want. The flexibility you need.

Employee Advantages

Employees strive for good health and wellness, but when the unexpected happens or an ongoing illness surfaces, they should be prepared financially to do what’s best for their health. If you offer a High Deductible Health Plan, employees will benefit from lower premiums, but this also means they may need to be prepared financially to pay a higher deductible.

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A PNC HSA is designed to help them save for qualified medical expenses on a tax-advantaged basis. It’s easy – they contribute money saved on low premiums to their HSA and that money has the potential to grow so they can afford the deductible when needed.

Employees benefit by contributing savings on insurance premiums to their HSA and using that savings to pay for future medical expenses. Additional benefits include:

Employer Advantages Your company benefits by sharing the cost of healthcare benefits with employees, which means: Attraction and retention of quality employees – healthcare benefits, such as an HSA, are a highly desirable component of a benefits package.  ealthcare cost savings – can help your H company and your employees save on healthcare costs. Flexible contribution guidelines – you choose whether or not to contribute on your employees’ behalf, how much and how often. Potential tax savings.1

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Cost savings – when they choose a lowpremium HDHP, instead of paying more to the health insurer, the invested difference in their HSA helps to build financial security.  ontrol – they own the account and the money C in the account.  ax savings – benefit from tax-advantaged T contributions, earnings and withdrawals for qualified expenses.1  ong-term savings – funds roll over from L year-to-year if unused. The balance in their HSA will generally grow tax-free with no pressure to use the full balance by year-end. They may be able to use unused balances to supplement retirement income after age 65, subject to applicable income taxes. Ownership – their money stays with them even if they switch jobs, change medical coverage, become unemployed or retire.

Flexibility and Features for Employers

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Minimal administration – a PNC representative can come to your workplace for HSA education. Multiple payroll contribution options – as the employer, you decide what is the best method for your business: through your payroll provider, web upload via our payroll portal or data file (employees can also contribute through a scheduled or one-time ACH contribution from their personal bank account or by check contribution through U.S. mail). Flexibility – you have the ability to switch health insurance carriers without changing financial institutions. Cost savings – no setup fee or transaction fees and low monthly administration fee. •A  bility to pay low monthly administration fee on behalf of the employee.

Frequently Asked Questions Source: The U.S. Department of the Treasury www.irs.gov/pub/irs-pdf/p969.pdf  1

Who is eligible for an HSA?

Eligible individuals are those who: • Are covered by a HDHP on the first day of the month • Are not covered by any other health coverage • Are not enrolled in Medicare • Cannot be claimed as a dependent on someone else’s tax return 2

Does income level affect whether an employee can have an HSA?

There are no income limits that affect HSA eligibility. 3

My company offers an FSA and HRA; can an employee have an FSA or HRA along with an HSA?

Yes. As long as your employee is an Eligible Individual, HSA contributions can be made while your employee is covered by: • a limited-purpose FSA or HRA • a post-deductible FSA or HRA • a suspended HRA • a retirement HRA

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When can contributions to an HSA begin? Contributions may begin on the first day of the month in which the Eligible Individual is enrolled in the HDHP.

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Are annual HSA contributions limited?

Yes. The Department of the Treasury establishes limits on the annual contributions to a HSA based on the type of HDHP coverage, (self-only or family). If a person is not considered an Eligible Individual during the entire tax year the contribution limit may vary.

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Do HSA contributions have to be made in equal amounts each month?

No. An employer and/or an employee may contribute any amount into an HSA, up to the maximum annual contribution limit, during the tax year.

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Who can contribute to an HSA?

Contributions to an HSA can be made by your company, the employee or both. All contributions are aggregated to determine whether the employee contributed the maximum allowed.

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What are the contribution rules for married couples?

Spouses that are covered under Family medical coverage are allowed to have separate HSA accounts, though they are not required to. However, the total contributions to both HSAs cannot be more than the contribution limits set annually. For example, if the family contribution limit is $6,450 each spouse can put $3,225 in their account or split it however they would like. If either spouse is 55 or older and not enrolled in Medicare, each spouse’s contribution is increased by the additional contribution limit. Each spouse must make the additional contribution amount into his or her own HSA account.

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As an employer, do I have to contribute the same amount to every employee’s HSA?

If an employer elects to contribute to their Employee’s HSA, they must make comparable contributions to all participating employees’ HSAs, subject to any requirements by the HDHP. These are similarly situated employees who: • are enrolled in an HDHP and qualify for an HSA; • have the same type of coverage, (e.g., self only or family coverage); and • fall into the same employment category, (e.g., part-time, full time, or former employee)

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My employees want to contribute to their HSAs but want to make sure they get a tax benefit. How does that work?

Employee contributions can be made to HSAs on either an after-tax or pre-tax basis. If made on an after-tax basis, they should be counted as an abovethe-line deduction on their tax return. If they want to make the contribution pre-tax, it can be done through a Section 125 (also called a “salary reduction” or “cafeteria plan”). Employees should consult their tax advisor regarding the tax treatment of HSA contributions.

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Who owns the HSA?

The HSA is owned by the Eligible Individual, (e.g., the employee). The Eligible Individual may use tax-free distributions to pay for qualified medical expenses.

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What are qualified medical expenses?

Qualified medical expenses are those that would generally qualify for the medical and dental deduction for federal income tax purposes. (See IRS Publication 502, Medical and Dental Expenses).

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Can an employee have more than one HSA account?

Yes, an individual can have more than one HSA account. The total contributions to all of the HSAs cannot be more than the limits set by the IRS.

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If an employee has an HSA with another institution can they transfer it to PNC?

Yes, the employee can transfer their existing HSA to PNC by completing a Transfer of Assets form.

For additional information on Health Savings Accounts, see www.irs.gov/pub/irs-pdf/p969.pdf

Contact Information HSA PROGRAM www.pnc.com/hsa 1-866-622-3946 HSA ACCOUNT

www.smart-hsa.com/pnc

HSA INFORMATION

www.irs.gov/pub/irs-pdf/p969.pdf 1-800-829-1040 Individuals 1-800-829-4933 Businesses

Mailing Address PNC Bank HSA Account Services P.O. Box 9776 Providence, RI 02940-9776

1 PNC does not provide legal, tax or accounting advice. Consult your tax advisor about tax benefits applicable to Health Savings Accounts. This material is intended to provide readers with useful information. The information was obtained from sources deemed reliable and such information is not guaranteed as to its accuracy. Opinions expressed herein are subject to change without notice. PNC does not provide legal, tax, accounting or investment advice to any person. You should seek the advice of your tax advisor, attorney, or accountant for recommendations regarding your financial needs. PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”) Bank deposit products and services are provided by PNC Bank, National Association, a wholly-owned subsidiary of PNC and Member FDIC. ©2013 The PNC Financial Services Group, Inc. All rights reserved. CON S&L PDF 1013-099-166005