1. Considering a Health Savings Account? (HSA)

2. Basic HSA Plan Concept High Deductible health Plan Single 2012 Family 2012 Single 2013 Family 2013 Min. Deductible $1,200$2,400$1,200$2,400 Max. Out of Pocket* $6,050$12,100$6,050$12,100 Health Savings Account ContributionSingleFamily 2012$3,100$6,250 Covers illness or injury after the deductible, and certain preventive care services at no cost to you Pays for Qualified Medical Expenses not covered by the Health Plan. *Out-of-pocket includes deductible & co-insurance

3. HSA Eligibility Covered by qualified high-deductible health plan (HDHP) Not covered by any other non-HDHP Not claimed as a dependent on another person’s tax return Not enrolled in Medicare *Section 152 of the IRS Code excludes spouses from the definition of dependent.

4. What is the catch-up contribution? YearCatch-up Amount 2012$1,000 Accountholders who are age 55 or older and not enrolled in Medicare can make catch-up contributions Note: Spouses of accountholders who are 55 or older and meet the IRS eligibility requirements can open their own HSA and make a catch-up contribution

5. What are Qualified Expenses? A Qualified Expense is generally a medical expense incurred for you, your spouse or your dependents. A complete list is provided in the IRS Publication 502 http://www.irs.gov/pub/irs-pdf/p502.pdf Please consult a qualified tax advisor with questions

6. Other eligible medical expenses Premiums for long-term care insurance Limited to amount listed in 213 (d) (10) Premiums for “COBRA” Premiums for coverage while receiving unemployment compensation Premiums for individuals over age 65 Retirement health Plan Premiums Medicare Premiums

7. Tax Treatment of HSAs For Employees / Accountholders Contributions Exclude (pre-tax) or Deducted (after tax) from Federal taxable income Earnings HSAs grow in the same tax-deferred manner as IRAS

8. Tax Treatment of HSAs (Continued) For Employees/ Accountholders Distributions Withdrawals for qualified medial expenses are always tax-free. After age 65, funds may be withdrawn for any reason without penalty, subject to regular income tax. Upon death of accountholder If the spouse is the beneficiary, the HSA may transfer to the spouse’s name and remain a tax-favored account If the beneficiary is not the spouse, the funds are paid to the beneficiary as a taxable transaction If the HSA does not have a beneficiary, the funds are paid to the estate of the accountholder.

9. HSAs, HRAs, FSAs HSAHRAFSA Account Owner EmployeeEmployerEmployee FundingEmployee, Employer, Other EmployerEmployee, Possible Employer Roll Over Year-to-Year YesGenerally No PortableYesGenerally No

10. Advantage of an HSA For an Employee Funds roll over year to year No need to “use it or lose it” Tax benefits on the contributions, earnings, and distributions Potential for increased take-home pay Long-term investment opportunity

11. Thank You If you have questions or need assistance contact us at 800-508-2265 or email hsa@avidiabank.com hsa@avidiabank.com