HSA Educational Meeting July 13, 2016

Agenda  Why consider a HDHP/HSA plan offering?  What is an QHDHP?  What is an HSA?  HSA Contributions  How an HSA works  Specifics for adaQuest

Why Consider a HDHP/HSA?  Studies have shown:  13% lower medical trend in first year  Higher use of preventive care services  No sacrifice in quality of care  Sustainable savings year over year  More members: use online health information are actively engaged in health improvement programs chose lower-cost care options

Why Consider a HDHP/HSA?  Studies have shown:  Over 6 years, $208,000 of savings for every 100 employees (full replacement)  Members: have fewer gaps in care shop for commodity-type services like lab and radiology and choose lower price providers

What is an QHDHP?  QHDHP = Qualified High Deductible Health Plan  By law, cannot cover first dollar medical expenses, including prescriptions (except for preventive care)  IRS requirements: 2016 Minimum Deductible Maximum Out of Pocket Single$1,300$6,550 Family$2,600$13,100

 Plan design is restricted by law  If you’re covering more than one person:  Deductible is an aggregate deductible What is an QHDHP? Expenses from everyone in your family accrue to one family deductible

 Plan design is restricted by law  If you’re covering more than one person:  Out-of-pocket maximum is also aggregate What is an QHDHP? Expenses from everyone in your family accrue to one family limit

HSA Overview  Health Savings Account (HSA)  Save to pay for current and/or future medical expenses  Unused funds rollover from year to year  No requirement to use HSA funds to pay for medical expenses – if you have the means, fund your HSA and pay for current healthcare expenses with after-tax $  Account holder must substantiate eligible expenses

HSA Overview  Tax Savings – three ways  Contributions are made via pre-tax payroll deductions  Contributions grow tax free  Withdrawals are tax free for qualified medical expenses.

HSA Overview  Ownership – it’s all yours  Funds remain in the account from year to year like an IRA.  No “use it or lose it” rules  Portability – take it with you  If change jobs or become unemployed  If change your medical coverage  If move to another state

HSA Contributions  Who can contribute?  HSA account holder  Employers  Family members

HSA Contributions To make HSA contributions, you must be:  Covered by qualified HDHP  Not covered under other 1 st dollar health insurance plan*  Not enrolled in Medicare  Not claimed as a dependent on another person’s taxes * Includes FSA and FSA grace period—including your spouse’s participation in an FSA, but does not include insurance for accidents, dental, disability, vision or long-term care.

HSA Contributions  The IRS allows a maximum amount to be contributed to your HSA based on your election tier—single or family. Included in this limit are contributions made by the employee, employer and family members. Combined total contributions can not exceed the allowed maximum.  Employees may change contributions at any time IRS Limits Employee$3,350 Family$6,750

HSA Contributions  HSA Administrator:  HealthEquity Group Health’s “preferred” HSA vendor relationship: discounted administration fees claims integration

How the HSA Works Health Savings Account Plan QHDHP Group Health Pays 100% for preventive services and protects you from large medical bills HSA Health Equity Pays deductible/coinsurance Tax deductible deposits Tax deferred growth Tax free for qualified medical expenses

How the HSA Works  Use HSA to pay for “qualified medical expenses”  Medical, dental and vision care, and over-the counter drugs (with prescription)  HSA funds can be used for eligible expenses:  Account holder  Spouse  Tax dependent children  Keep good records  In case of IRS personal audit

Other HSA Eligible Expenses  Premiums for:  Long-Term Care insurance  COBRA continuation of coverage  for coverage while receiving unemployment  Medicare if over age 65

How the HSA Works  If used for Non-Qualified Expenses  Withdrawals become taxable as income  Subject to 20% tax penalty  Exception to Penalty  you turn age 65 and/or  you become disabled and/or  enrolled in Medicare

Questions?