1. Health Savings Accounts and Long Term Care

2. HSA’s and Long Term Care 1. Focus on Financial Wellness 2. Tax-Efficient Opportunities 3. Long Term Goals for Asset/Wealth Management

3. 2014 HSA Education – General Overview

4. What is an HSA Plan? High Deductible Health Plan Minimum $1,250/$2,500 deductible Maximum $6,350/$12,700 out-of- pocket Deductible applies to all costs (except preventive) - Prescriptions - co-pays No other coverage + Health Savings Account Triple-Tax Advantage 2014 Contribution Limits: $3,300/$6,550 Additional $1,000 Contribution allowed for age 55+ You own the account Use for any qualified Health Care expense (IRS Pub 502)

5. The Health Savings Account The HSA Advantage Triple Tax Advantage Contributions - Only when covered by an HSA plan Growth Distributions (for Health Care expenses) - At any time, while covered under any plan - Dental, Vision, and non-covered medical services (ex. Lasik) - Even in retirement - Long Term Care premiums - COBRA/Individual/Medicare (not including Medigap)plan premiums

6. The Health Savings Account HSA Limitations No other Medical/Prescription coverage while contributing (including FSA) Age 65+ may not contribute if enrolled in Medicare (A or B) No individual limit on the family deductible Non-qualified withdrawals Over age 65: normal withholding Under age 65: normal withholding + 20% penalty Creditable Coverage requirements for Medicare Part D are not always met under an HSA plan

7. Comparison of Traditional and HSA Compatible Medical Plans Plan FeatureTraditional PlanHSA Compatible Plan Preventive CareCovered at 100% Routine Care (non- preventive), such as office visits with your physician Often covered at 100% after you pay a co-pay Subject to the deductible – you pay 100% until you meet the deductible Deductible Limits for a family Individual limits added together = family deductible limit. No individual limits Out of Pocket Limits After you meet your “coinsurance maximum,” you continue to pay co-pays for office visits. After you meet your out of pocket maximum, you have 100% coverage, even for prescriptions.

8. Who Should Participate? Consider HSA if you: Prefer a lower monthly premium as a trade off for higher costs when you use care. Typically have low health care costs – your HSA can grow over time, helping you cover an unexpected medical expense in the future. Expect to meet your out of pocket maximum – in an HSA plan, there are no additional co-pays for office visits or prescriptions once you hit this limit. Have sufficient cash flow, or are willing to fund your HSA to cover out of pocket medical expenses while meeting your deductible. Would like the tax advantaged account, and are willing to keep good records.

9. Who Should Not? Consider a Traditional Plan if you: Like the predictability of office visit and prescription drug co- pays. Do not have the cash-flow to fund your HSA or pay for an unexpected medical expense in full. Are a “medium user” of health care. With the higher deductible and the loss of co-pays, your out of pocket health expenses could be higher. Do not want additional recordkeeping or paperwork when you file your taxes.

10. HSA Compatible Plans with APC Grandfathered Plans: Priority Health HMO/HSA - Physicians Priority Health POS/HSA – Physicians Non-Grandfathered Plan: Priority Health HMO/HSA – CRNA/Staff

11. HSA Compatible Plans HMO/HSA - Physicians POS/HSA - PhysiciansHMO/HSA – CRNA/Staff Preventive Care 100% (not subject to Deductible) Annual Deductible $3,000/$6,000$1,250/$2,500 (in-network)** $3,000/$6,000 (out-of-network) $1,250/$2,500** Out of Pocket Maximum $5,000/$10,000$2,000/$4,000 (in-network) $4,000/$8,000 (out-of-network) $2,000/$4,000 ** In 2015, the in-network deductible will increase to $1,300/$2,600

12. HSA Account Contributions 2014 Funding Limits Single$3,300 Family$6,550 Catch-up (55+)$1,000 additional for each person 2015 Funding Limits Single$3,350 Family$6,650 Catch-up (55+)$1,000 additional for each person

13. Flex Accounts Flex and HSA Plans If you enroll in an HSA Compatible Plan, there are special rules: You may not use the Flex Account for the first $1,250/$2,500 of deductible expenses Use your HSA or Pay out of pocket After meeting your deductible, or for other expenses: You must choose HSA or your Flex Account

14. Founders Bank – Health Savings Accounts General Information APC continues to partner with Founders Bank for Health Savings Accounts. All individuals have the option to use either Checking or Investment accounts. Eight percent (8%) of ALL HSA holders use an investment account. APC assumes Physicians will contribute the maximum amount allowed in each year to benefit from the triple tax treatment. The Fund options have been modified for 2014. They align with the Retirement funds with Fifth Third and also provide access to “Lifestyle/Target Dated” funds, both actively managed and well as index funds. Individuals may also choose to remain with their current investment choices.

15. Founders Bank – Health Savings Accounts Option Summary

16. Founders Bank – Health Savings Accounts MAUIWeb

17. One Time IRA Rollover to HSA Account You are allowed to move money from your IRA to your HSA and avoid the taxation and penalties generally associated with early IRA withdrawals. You may do this once in your lifetime. From a traditional IRA or Roth IRA Only up to the Federal HSA limit for the calendar year. Tax considerations: HSA treatment – not deductible as an HSA contribution IRA treatment – not a taxable distribution. After-tax basis dollars have special rules, as they cannot be transferred into the HSA. See the HSA Resources handout for more information.

18. Estate Planning and Your HSA General guidelines for your estate: Spousal beneficiaries can rollover the HSA account balance to his/her own account. Non-spousal beneficiaries: The fair market value of the account is included in your estate in the taxable year of death. The beneficiary can deduct from the amount any qualified medical expense not yet reimbursed from the HSA.

19. Tracking Expenses for current and future reimbursement The HSA is the ONLY fully tax free mechanism for saving money. Spenders: you use your HSA for every out of pocket medical expense. Savers: you pay for all of your medical expenses from your daily budget and let your HSA grow. Hybrid: you pay for smaller expenses, like office visits and prescriptions out of your daily budget and reserve your HSA for a large, unexpected expense. No matter what kind of HSA account holder you are, save all of your medical receipts!

20. Tracking Expenses for current and future reimbursement The advantage of being a “Saver” You can allow your account to grow (interest or mutual fund earnings) tax free. There is no time limit for reimbursement. Expenses you have now can be filed away and reimbursed at any point in the future without tax consequences. Remember – you need to be able to demonstrate actual medical expenses that match your distribution in the event you are audited. Keep your receipts!

21. Health Savings Accounts Year End Forms 21 Form 8889 filed with Form 1040 with taxes Form 5498-SA – Tells IRS what was contributed to HSA for the year Form 1099-SA – Tells the IRS how much came out of the HSA for the year

22. HSA Tax Forms – Form 8889 File with 1040 22

23. HSA Tax Forms – Form 5498 Contributions for the Year 23

24. HSA Tax Forms – Form 1099-SA HSA Funds used during the Year 24

25. Questions? 616.459.1069 Lisa Murphy, CEBS, LIC lmurphy@millsbg.com