Health Savings Account (HSA) - PowerPoint Presentation

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Health Savings Account (HSA)

Town of Medfield

What is a Health Savings Account?

A HSA is a tax-advantaged medical savings account available to employees who are enrolled in a high-deductible health plan (HDHP).

The funds contributed to an account are not subject to federal income tax at the time of deposit.

HSA funds roll over and accumulate year-to-year if they are not spent.

HSAs are owned by the Employee, not the Employer

HSA funds may currently be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Allows contributions by the Employer and/or the Employee

Eligibility

You must be enrolled in a High Deductible Health Plan (HDHP)

A HDHP is defined as the following:

Minimum annual HDHP for 2018 is $1,350 for an individual and $2,700 for a family

Annual HDHP out-of-pocket maximum for 2018 is $6,650 for an individual and $13,300 for a family

Cannot provide first dollar coverage, with certain exceptions – preventive care, dental, vision, limited-purpose FSAYou must be a US Citizen, a Permanent Resident, or a Legal AlienYou cannot be enrolled in Medicare When you become Medicare-eligible you can remain enrolled in the HDHP, but must stop your contributions to the HSA. You can still use the HSA for all eligible expenses.

You cannot be enrolled in an FSA plan with your spouse. You may enroll in the HSA once the FSA plan ends.

Expenses are eligible for reimbursement if incurred after the effective date of the HSA. This may be different than the effective date of your medical plan.

Annual contribution limits

2018: $3,450 individual (+$50 from 2017)

2018: $6,900 family (+$150 from 2017)

2018 Catch Up Contribution for employees over the age of 55 - $1,000

Employer contributing $600/$1,200 when you open the account the 1

st plan year onlyEmployees can contribute the difference between the IRS Maximum and Employer Contribution

How Does the HSA work?

You and your Employer can deposit money into your HSA, up to an annual per person or family limit set by the IRS. You can use money in your HSA to pay for insurance deductibles and medical care/supplies like dentistry, ophthalmology, and prescription drugs.

When you enroll, an account will be created for you at Healthcare Bank, a division of State Bank & Trust—a $4 billion financial institution. You’ll be given access to a secure, easy-to-use web portal where you can track your account balance, view your investment accounts, and submit requests for reimbursement.

You will receive a convenient VISA debit card to make it easy to access the money in your HSA. The card contains the current value of your HSA, and you can use it to pay for qualified medical expenses not covered by your health insurance. When you use the card, the cost of your eligible expenses will be automatically deducted from your account. Just swipe and go. It’s that easy!

You do not have to submit receipts in order to receive a reimbursement. However, you will still need to keep receipts and documentation for each year’s federal tax return (Form 8889 attached to Form 1040), as required by the IRS.

What are some eligible expenses?

*Subject to change based on IRS Guidelines.

Triple Tax Savings

HSAs are unique—with triple tax advantages:

Tax-deductible contributions

Tax-free accumulation of interest and dividends

Tax-free distributions for qualified medical expenses

With an HSA, taxpayers receive a 100% income tax deduction on annual contributions. They may withdraw HSA funds tax-free to reimburse themselves for qualified medical expenses, and they may defer taking such reimbursements indefinitely without penalties.Tax Implications If you use HSA funds for ineligible expenses prior to turning 65. The amount used would be subject to Income Tax and a 20% penalty.If you use HSA funds for ineligible expenses when 65 or older. The amount used would be subject to Income Tax only, not the 20% penalty.

Benefits of a HSA!

It is YOURS.

Funds in your HSA contributed by you and/or your Employer stay with you wherever you go, even if you change jobs.

Reduces your taxable Income.

The money is tax-free, both when you put it in and when you take it out to cover qualified expenses.

Funds grow. If you maintain a minimum balance of $2,000, your additional funds may be invested in mutual funds yielding tax free earnings. Helps you plan for your future. Until you turn 65, withdrawals used for eligible expenses are tax-free. After you turn 65 or if you become disabled, your HSA becomes similar to an IRA. Withdrawals used for non-eligible expenses will be taxed at your regular income tax rate but you will not incur any penalties.

Investing with your HSA

Enrolling in an HSA can help you save money in several ways. Choosing a high-deductible health plan helps you reduce your monthly insurance premiums. You can use these savings to fund your HSA.

Money you keep in your HSA can be invested in mutual funds with no taxes to you on qualified withdrawals, interest, or growth.*

*A $2,000 minimum balance is required to move money into investment funds.

Integrated Investments

Powerful Features

Account Information

Balance by Investment

Personal Rate of Return

Fund PerformanceTransaction DetailFund Activity SummaryPending/Activity historyManage My AccountInvestment Elections

Realign Investments

Transfer Investments

Automatic Rebalance

Automatic Sweep

Saving and Earning with your HSA!

The long-term benefits of a Health Savings Account are shown in the illustration, which represents a $3,000 annual contribution with a 5% annual rate of return on mutual fund investments.

*This illustration shows the typical savings of a single person with a high-deductible health plan and an HSA. Results may vary depending on tax brackets, etc.

This illustration shows the typical savings of a single person with a high-deductible health plan and an HSA.

The HRCTS Advantage

We’ve made it simple for Employees!

No minimum balance

FDIC insured cash and interest

bearing account

Attractive investmentsIndustry leading investment optionsNo fees for tradesConvenient 24/7 self-service Intuitive participant Portal

Online enrollment

Single sign-on to investments

Seamless, flexible fund access

Integrated debit card

Online access to accounts

Automatic, intuitive 2-way sweep

Employee Experience Focused!

Participant Portal

Robust online portal empowers participants, providing everything they need to know about their account with an industry-leading design that enables quick and easy navigation of content

Mobile

Allows employees to:

Check available balances

View account activity

Drill into claim transactions and contributions

Access convenient customer service contact info

Submit claims

Upload receipts using device’s camera

Convenient 24/7 Self-Service

Participant Portal

Mobile application

Integrated investment management

Flexible Payment Options

Participants can choose from:

Debit card, which increases participant satisfaction by reducing paperwork.

Participant-initiated payment

on Participant Portal

You have options

Sara goes to the doctor

Sara receives bill from provider and matching EOB showing amount owed

Sara has options!

Pay bill with Debit Card

Use Online Participant-Initiated Payment

Pay bill with after-tax dollars and leave money in HSA to accrue interest

Pay bill with after-tax dollars and submit for reimbursement

Health plan processes claim and applies discounts

Provider submits expense to health plan

Online Tax Forms

Form 8889 – Participant files with taxes

Form 1099 – Distributions

Distributed by February 1st

Form 5498 – Contributions

Distributed by March 1stMust include yearly total of contributions and form 8889 with tax forms

CONTACT US!

QUESTIONS?