What is an HSA?

1. What is an HSA? • A tax-sheltered savings account designed specifically for medical expenses • Predecessor: Medical Savings Accounts (MSA), born in the Kennedy-Kassalbaum Bill of 1996 (also known as “HIPAA”)

2. Tax-Advantages—the Basics • 100% of your annual contribution to your savings account is deductible “above the line” • Earnings accumulate tax-deferred (can invest in almost anything) • Withdrawals are TAX-FREE (if used for qualified medical expenses

3. Similar to an IRA Sounds like an IRA? YES!! (“it’s a medical IRA”)

4. Who is eligible? • Almost everyone, including: • Self-Employed (sole proprietors, partners, sub-S stockholders) • Employees with a company sponsored HSA qualified insurance plan in place

5. What is the Catch? You must first purchase a special health insurance policy: “HDHP” (High Deductible Health Plan)

6. Embedded H.S.A. Plan $5000 100/0% $5000 70/30% IN NETWORKOUT OF NETWORK Annual Deductible $5000 ($10000 family)$5000 ($10000 family) Out-of-Pocket Maximum $7000 ($14000 family) $10000 (20000 family) Maximum Lifetime Benefit Unlimited Unlimited Wellness Covered/Annual Exam 0% NO Deductible$5000 + 30% & UCR (Entire visit must be coded as Wellness/Preventative) Office Co-Pay $20/$40 After Deductible $5000 + 30% & UCR OTHER - Lab, X-ray, MRI 0% After Deductible $5000 + 30% & UCR Eye Care Examinations$20/$40 After Deductible $5000 + 30% & UCR In Hospital 0% After Deductible $5000 + 30% & UCR Inpatient Mental Health/SA0% After Deductible $5000 + 30% & UCR Outpatient Mental Health/SA 0% After Deductible $5000 + 30% & UCR Outpatient Rehab$40 After Deductible $5000 + 30% & UCR Skilled Nursing0% After Deductible $5000 + 30% & UCR Transplant Services0% After Deductible Covered In Net Only DME, Prosthetic 0% After Deductible $5000 + 30% & UCR Emergency Room/Ambulance $150 After Deductible $150 After Deductible Urgent Care $50 After Deductible $5000 + 30% & UCR Chiropractic (26 Annual visits) $40 After Deductible Covered In Net Only Rx Benefit $10/$30/$60 After Deductible Covered In Net Only

7. Non Embedded H.S.A. Plan $3500 80/20% $3500 70/30% IN NETWORKOUT OF NETWORK Annual Deductible $3500 ($7000 family)$3500 ($7000 family) Out-of-Pocket Maximum $5500 ($11000 family) $11000 (22000 family) Maximum Lifetime Benefit Unlimited Unlimited Wellness Covered/Annual Exam 0% NO Deductible30% After Deductible & UCR (Entire visit must be coded as Wellness/Preventative) Office Co-Pay $20/$40 After Deductible 30% After Deductible & UCR OTHER - Lab, X-ray, MRI 20% After Deductible 30% After Deductible & UCR Eye Care Examinations$40 After Deductible 30% After Deductible & UCR In Hospital 20% After Deductible 30% After Deductible & UCR Inpatient Mental Health/SA20% After Deductible 30% After Deductible & UCR Outpatient Mental Health/SA 20% After Deductible 30% After Deductible & UCR Outpatient Rehab$40 After Deductible 30% After Deductible & UCR Skilled Nursing20% After Deductible 30% After Deductible & UCR Transplant Services20% After Deductible Covered In Net Only DME, Prosthetic 20% After Deductible 30% After Deductible & UCR Emergency Room/Ambulance $150 After Deductible $150 After Deductible Urgent Care $50 After Deductible 30% After Deductible & UCR Chiropractic (26 Annual visits) $35 After Deductible 30% After Deductible & UCR RX Benefit$15/$35/$70 After Deductible Covered In Net Only

8. What is the Catch? (con’t...) • Only after you become insured with an HSA-qualified health plan can you then open and fund the actual HSA savings account. •  POINT: The savings account is totally separate from the high deductible insurance policy required to establish eligibility for the savings account.

9. Government “encouragement” • Tax deduction for merely saving money • 100% tax deductible contributions! • Tax-free withdrawals! (for qualified expenses)

10. Other Important Factors-Penalties • 20% tax penalty for withdrawing money not used for eligible medical expenses prior to age 65 (after 65, basically used as IRA—no penalty for “early” withdrawal, but is includable in gross income, unless used to pay qualifying medical expenses) • Ordinary income if withdrawn for ineligible expenses (at any age) • 6% excise tax for contributing more than allowable amount each year

11. Eligible Expenses: Withdrawals are tax-free and penalty-free at any age if made to pay any of the eligible expenses: NOTE: This is the same list used by the IRS to determine if medical expenses you claim qualify for the 10% AGI deduction! • ambulance • gum treatment • prescription medicines • anesthetist • gynecologist • psychiatrist • eyeglasses • pediatrician • physician • blood tests • hospital bills • psychoanalyst • arch supports • healing services • psychologist • lab tests • hearing aids • neurologist

12. You are not allowed to spend your HSA money on these non-eligible expenses:

13. H.S.A. Information • $3250 – Maximum Contribution – Single • $6450 – Maximum Contribution – Family • 55+ - Can save an extra $1000 ($4250/$7450) • Reduce your taxable income through contributions • Choose a bank to manage your H.S.A. • Deposit $ before services are received

14. Monthly Premium

15. Benefit Comparison