H ealth S avings A ccount (HSA) Overview

1. Health Savings Account (HSA) Overview Evergreen Park Elementary School District 124

2. What is an HSA? HSA = Health Saving Account. Your own health care funds in a tax-free custodial account that • May be used to reimburse current health care expenses, and / or • Saved for future health care expenses.

3. The Health Savings Account • To manage the risk of the HSA plan’s higher deductibles the Board of Education (tax-free) contributes specified amounts to each employee’s account based on the coverage tier selected. • The amounts are designed to offset the differences in financial exposure from Plan E and are as follows: • Self-only coverage – $1,500 • Employee + 1 dependent coverage - $1,700 • Family coverage – $2,200 • Staff may make additional contributions on a pre-tax basis to their accounts.

4. HSA savings vs PPO PPO E Plan HSA Plan Single E+1 Family Single E+1 Family Monthly Prem. Employee $139 $461 $541 $55 $302 $354 Annual Prem. Employee $1,668 $5,532 $6,492 $660 $3,624 $4,248 Net Prem. Savings per Year by Employee $1,008 $1,908 $2,244 Annual Deductible $340 $680 $680 $1,500 $2,500 $3,000 Board Contribution to Your Health Savings Account $1,500 $1,700 $2,200

5. Max out-of-pocket limits PPO HSA Single $1,188 $3,000 Board Share ($1,500) Premium Savings ($1,008) Net $492 Savings - HSA vs. PPO $696 Family $2,376 $6,000 Board Share ($2,200) Premium Savings ($2,244) Net $1,556 Savings - HSA vs. PPO $820 Note: Single parent coverage savings is $1,484.

6. HSA / PPO plan comparison • VERY IMPORTANT: The provider network for the HSA plan will be the very same PPO network that PPO plan participants currently have.

7. PPO vs HSA – Takeaway BECAUSE of the Board’s contribution to the account, whether you have high, average, low, or no claims, this option financially benefits EVERYONE.

8. HSA / PPO plan comparison Under the HSA planafter one’s deductible has been met: • Most in-network expenses – hospital, surgery, and diagnostic testing, will be covered at 100%. (PPO 90%) • Outpatient emergency care will be paid at 90% (PPO 90%) • Prescription drugs and durable medical equipment are typically paid at 80% (PPO $7/$14/$30)

9. HSA / PPO plan comparison - Rx • HSA plan • Member pays a negotiated (discounted) price at the point of purchase. • One may pay for the prescription with one’s HSA debit card. • The amount of the purchase is credited toward the plan deductible. • PPO plan • Member pays a copay that’s currently not credited toward either one’s deductible or the plan’s out-of-pocket limit.

10. Preventive care benefits under HSA • IMPORTANT POINT: Routine annual physicals, well-baby exam, immunizations, and other preventive health services as defined by the USPSTF (United States Preventive Services Task Force) are covered under HSA plans at 100% without cost sharing. • (See www.uspreventiveservicestaskforce.org/uspstf/uspsabrecs.htm for further details.)

11. The Custodial Account The custodial account through First American Bank offers the following features: • Interest bearing account • No minimum deposit • No monthly fee provided there is a valid email address associated with the account • Free debit card • Free online banking • Free bill payment • Free eStatements

12. Account ownership & control • All moniescontributed to HSAs – whether made by one’s employer or by the employee – are from Day 1 exclusively owned by the employee. • One’s employer has NO incidence of ownership, control over, or access to any of the funds that the employer contributes.

13. HSA vs. Healthcare FSA Under HSA rules one may “use it (the account) or save it” (unused balances simply roll over). There is no requirement with HSAs like there is under the healthcare FSA rules to spend the account prior to the end of the plan year or forfeit the remaining balance. Under FSAs this is commonly referred to as the “use it or lose it” rule.

14. What if HSA funds are insufficient? One may only spend what is in their HSA. Therefore, if an expense is more than one’s employer’s contribution or the accumulated savings in the account: • Take money out of savings or use a personal credit or debit card to pay what’s owed • Then reimburse yourself from your HSA as funds are subsequently contributed to the account

15. Permitted uses of HSA funds • Prior to the age of 65 • Funds may be withdrawn tax-free for qualified medical expenses. • 65 or older (Medicare) • Funds in account may either be used to: • Reimburse health care expenses, including the cost of Medicare premiums for B and D and long term care insurance, or: • Generate income (which is taxable like an IRA)

16. Pre-65 tax penalty If funds are withdrawn under age of 65 for any reason other than to pay for or reimburse qualified medical expenses: • Subject to a 20% non-deductible tax penalty • Entire distribution (including the penalty amount) is also subject to income taxes.

17. Accessing HSA funds • Use the free debit card that comes with the account. • Pay the provider by check (from the account) – Note: Paper checks are available for an additional cost. • Pay the provider with your credit card or check and reimburse yourself from your HSA through BillPay or by writing a check from the account.

18. HSA Conflict with FLEX Acct. • If in HSA and want to continue FLEX account • FLEX will become a “limited scope”, meaning that one may not use FSA funds to reimburse the HSA plan’s deductibles. • Suggest moving FLEX contributions to HSA – it’s yours to keep.

19. Questions? ?