Your High Deductible Health Plan and Health Savings Account

1. Your High Deductible Health Planand Health Savings Account Presented by: Iowa Bankers Insurance and Services

2. IBBP HSA High Deductible Plan • Deductible • Single $2000 • Employee/Spouse $4000 • Employee/Child $4000 • Family $4000 • Maximum Out-of-pocket • Single $2000 • Employee/Spouse $4000 • Employee/Child $4000 • Family $4000

3. Deductible – Maximum out of Pocket If you notice, the deductible and maximum out of pocket limits are the same on the IBBP High Deductible Health Plan. There are no co-payments after the deductible is met. The insurance plan picks up at 100% after the deductible is met.

4. $4000 Deductible • For those with multiple insured/participants • Employee plus Spouse • Employee plus Child(ren) • Family • Total $4000 must be met before claims are paid • Total amount can be met by one person • Total amount can be split between all covered insured

5. Deductible Waived For: • Well child care • immunizations • Specific preventative services • One routine physical and related lab/x-ray • Newborn initial hospitalization • Practitioner services

6. Covered Services Applied to Deductible • Prescriptions • Visions – one exam per year • Office visits • Inpatient/outpatient hospital and physician • Emergency services • Maternity care • Chiropractic care • Mental health • Infertility

7. Reminder! There is NO 4th quarter carryover of the deductible.

8. Same IBBP Coverage of: • Blue Card coverage will follow you • Disease Management program • Pregnancy Care program • Private Member online services found at • www.bankers-ins.com • Myhealth@wellmark.com

9. Office Visit Claim −Before Deductible Is Met Traditional Plan vs. HDHP Traditional Plan High Deductible Health Plan

10. Office Visit Claim −After Deductible Is Met Traditional Plan vs. HDHP Traditional Plan High Deductible Health Plan

11. Outpatient Claim −Before Deductible Is Met Traditional Plan vs. HDHP Traditional Plan High Deductible Health Plan

12. Outpatient Claim − After Deductible Is Met Traditional Plan vs. HDHP Traditional Plan High Deductible Health Plan

13. Pharmacy Claim −Before Deductible Is Met Traditional Plan vs. HDHP Traditional (Blue Rx) Plan High Deductible Health Plan

14. Pharmacy Claim −After Deductible Is Met Traditional Plan vs. HDHP Traditional (Blue Rx) Plan High Deductible Health Plan

15. HDHP & HSA Must have a High Deductible Health Plan before you can open a Health Savings Account

16. What is an HSA? • A tax exempt trust or custodial account established exclusively for the purpose of paying or reimbursing qualified medical expense • Must be administered by a bank, insurance company or a Third Party Administrator (TPA) • Can not be opened without coverage under a qualifying high deductible health plan

17. 2013 Federal Limits for Savings Account & Health Plan • Maximum contribution to the HSA • $3100 for individual coverage (2012 - $3100) • $6450 for family; employee+spouse or children (2012 - $6250) • Plus an additional $1000 catch up contribution for eligible individuals 55 or over • Minimum deductible for Health Plan • $1250 for individual coverage • $2500 for family; employee+spouse or children • Maximum out-of-pocket for Health Plan • $6250 for individual coverage (currently $6050) • $12,500 for family; employee+spouse or children ($12,100)

18. Qualifications to Open Account • Must have qualifying coverage on first day of the month • Must not be receiving Medicare or Social Security • Must not be listed as a dependent on another tax return • Must not be a participant in a Medical Flex Spending account. Your spouse must not be a participant in a Flex Medical Spending Account • Must not have other qualifying insurance coverage

19. Other Acceptable Coverage • Dental, vision or Limited Scope Medical Flex Spending • Disease Management or Preventative Care • Employee Assistance Programs • Worker’s Comp, disability • Auto coverage for medical, travel insurance, etc • Supplemental insurance such as accident or cancer • Business liability

20. Benefits of the HSA • Contributions are: • Tax deductible or • Pre-tax • Can change payroll deduction amount during year as allowed by payroll • Distributions are: • Tax Free • If for qualified expenses, will carry a 20% penalty plus tax if not qualified and before age 65 • Earnings grow: • Tax deferred

21. Contributions • Who may contribute? • The account owner • The spouse or family member • The employer • Federal Limits for 2013: • $3250 for individual coverage • $6450 for family; employee+spouse or children • Both account holder and spouse may open an account. Total contributions between two accounts must not be more than $6250 • $1000 catch-up contribution for those 55 or older • If both account owner and spouse are covered under health plan and 55 or older, then both may contribute, but spouse must open an account

22. Date Account is Opened • The date the account is opened is critical for claim payments. The first contribution must be made after the coverage begins, however, claims incurred before the account is open are not eligible distributions. The HSA account becomes effective the date the account is opened and funded.

23. Total Contributions • IRA rollovers/transfers do count towards your total annual contribution limits for the year • Items that do not count towards your total annual contributions are: • Rollovers from other HSA accounts • Direct trustee to trustee transfers • Rollovers form an Archer MSA • Direct rollovers from Health FSA or HRA

24. Funding Your Contributions • Deposit the savings between your current health plan premium and the premium for the new HDHP coverage • Instead of funding your Medical Flex Spending Account, revert your dollars to your new Health Savings Account • If money allows, do an additional contribution through payroll deduction up to the maximum allowable annual contribution

25. Excess Contributions • Contributions made in excess of your annual allowable limit for the current tax year are subject to a 6% excise tax each year they remain in the account • A correction can be made to the account to remove the excess contribution by April 15 of the next year (federal tax filing deadline) • Check with your custodian for procedures • Amount of the excess contribution PLUS the earning must be removed • Removal of amount is not reported as a distribution

26. Distributions • Tax Free • If made for a qualified medical expense • Taxable • If made for a non-qualified medical expense • Carries a 20% penalty if made before age 65

27. Qualified Medical Expenses • Premiums for • COBRA, Long Term Care (expense also); Medicare • Medical doctors, Nursing services • Dental and optical • Physical therapy, chiropractic • Emergency care • Acupuncture, alcohol or drug treatment • Prescribed weight loss program, birth control • Prescription drug, medical equipment • Costs associated with seeking treatment • Others as listed on the IRS website

28. Non-Qualified Expenses • Cosmetic surgery, teeth whitening • Maternity clothes, diaper services • Health club dues • Electrolysis, hair transplant • Household help, babysitting • Marijuana or other controlled substances • Food supplements or vitamins if not prescribed by a doctor • Swimming lessons or weight loss programs • Funeral expenses • Others as listed on IRS website

29. Distributions Used For • Account owner • Account owner’s spouse • Spouse not required to be on HDHP insurance • Account owner’s dependent(s) • Dependent not required to be on HDHP insurance

30. Distributions Made After 65 • For medical expenses are totally tax free • For non-medical expenses, pay income tax only • No more penalty

31. Mistaken Distribution • Must be corrected before April 15 of the following year (federal tax filing deadline) • Must follow the rules of the custodian • Replacement of the distribution is not counted as a contribution for reporting purposes

32. Tax Reporting • W-2 from employer if contributions are made on a pre-tax basis through payroll • 5498-SA (contributions) form prepared by custodian • 1099-SA (distributions) form prepared by custodian • 8889-HSA completed by account holder and filed with Federal Tax Return. • This is a simple reporting of account activity, balance, contributions, and distributions

33. Presented by: Iowa Bankers Insurance & Services 8800 NW 62nd Avenue PO Box 6210 Johnston, IA 50131-6210 Phone: 515-286-4300 Toll Free: 800-258-1415 Fax: 515-286-4244 Email: flexadmin@bankers-ins.com