2020 Open Enrollment “Best Value” Plans with Tax Advantaged Health Savings Account (HSA)

1. 2020 Open Enrollment “Best Value” Plans with Tax Advantaged Health Savings Account (HSA) October/November 2019

2. Facts about the “Best Value” HDHP Plan & HSA • These plans provide a great opportunity for you to save money… • Contributions are much lower – same Direct and Select networks. • Fallon “Best Value” HDHP is paired with a Fidelity Health Savings Account (HSA). • A great option for participants looking to maximize tax advantaged savings . • It’s your account – goes with you when you leave or change plans (portable). • Any remaining balance carries over to next year;no “Use it or Lose it”. • Can provide additional benefits in retirement; save and invest for the future! Refer to My 2020 Benefit Guide page 11 for additional details. 2

3. Unique Triple Tax Advantages of an HSA • Contributions are tax-free (federal and state). • Funds in an HSA grow tax-free. • Monies used for qualified health care expenses are taken out tax-free.

4. 2020 Medical Plan Summary – Fallon Health 1Individual Embedded Deductible: An individual in a family will not pay more than $2,700 in deductible. This is a brief summary of benefits. If there are any discrepancies between this and the Fallon certificate, the Fallon certificate will always take precedence.

5. “Best Value” HDHP Options Contributions & Savings

6. Health Savings Account - Contributions • Maximum contribution limits in 2020 • $3,550 individual / $7,100 family (all tiers) • Catch up contribution of $1,000 permitted for those age 55+. • Annual maximum includes the College and employee contributions. • College contributes $500 for single individuals and $1,000 for families (all tiers) each year in January. • Flexibility- You may start, stop, increase or decrease your voluntary contributions at any time during the year. • Must re-elect your voluntary contribution each calendar year.

7. Health Savings Account – Who is Eligible? IMPORTANT! • Your responsibility to determine if you are eligible to open an HSA. • You must be enrolled in a “Best Value” Fallon High Deductible plan: • You cannotbe covered by other health plan (i.e. Spouse) that is not HDHP • You cannotbe enrolled in Medicare (note: your spouse may be enrolled in Medicare) • You cannotbe claimed as a dependent on someone else’s tax return • Neither you or your spouse can be enrolled in a Flexible Spending Account (other than a Limited Purpose FSA!) • Your covered dependents must be considered dependents under IRS rules in order for their claims to be eligible for reimbursement from your HSA • You cannot have a balance in your Flexible Spending Account.

8. Health Savings Account - Other Considerations • HSA survives a change in health plans or employers. • You cannot contribute new money into HSA if not enrolled in a qualified High Deductible Health Plan (HDHP). • You may continue to withdraw from your HSA account even if your new plan is not a qualified HDHP. • Consider paying for medical expenses out of pocket now and reimburse yourself later from HSA. • Keep receipts! No substantiation required - may need to prove to IRS that distribution from HSA was for qualified medical expenses.

9. Health Savings Account – A Retirement Account Can and should be viewed as a retirement account. • All money in the HSA is yours! • Funds can be invested - determine how much cash you need in your account to pay for expenses – invest the rest! • All monies including investment gains are not taxed as long as the money is used to pay for qualified health expenses. • You can access your funds for any reason after age 65. • If used for qualified health expenses (No tax) • If used for any other expenses (Taxed as ordinary income) *If expenses are used before age 65, taxed as ordinary income plus 20% penalty

10. Health Savings Account – Eligible Expenses • Expenses incurred on or after the date the HSA was established are eligible. • Qualified expenses include any medical, dental or vision care expense allowed in IRS Publication 502 – as long as it is not an itemized tax deduction on your tax return. • A HSA can be used to pay COBRA premiums. • Medicare Part B and/or Part D premium payment as well as Medicare Advantage plan premiums once you are age 65 or older.

11. HSA Accounts and Your Taxes • HSA Administrator (Fidelity) will report all distributions annually to participants (Form 1099 SA). • Account holders must file Form 8889as part of their annual tax return; this reports the amount of distributions used for qualified health expenses.

12. Limited Purpose FSA (LPFSA) • NEWLimited Purpose FSA (LPFSA) for employees who are participating in a High Deductible Health Plan and Health Savings Account (HSA) • Tax-advantaged account that can be held at the same time as a Health Savings Account (HSA) but can only be used for eligible dental and vision expenses. • Contribution Maximum: $2,700. • Funds go in tax free, and if used for qualified dental and vision expenses you never pay tax. • Contributing to the LPFSA on a pre-tax basis further reduces taxes and allows HSA funds to be conserved for other purposes (e.g. health care expenses in retirement). • “Use it or Lose it" any remaining LPFSA account balances are forfeited at year end.

13. Questions?

14. Appendix - Other 2020 Benefit Changes

15. What’s New For 2020… Medical Benefit Updates ÞSlight increases in prescription drug copayments. ÞCost sharing remains the same—The College will continue to contribute 86% of the Fallon Direct Traditional HMO and 96% of the Fallon Direct Best Value Plan. Þ Employees will experience a modest increase in their per pay period contributions. Dental Benefit ÞNo changes in plan design or to employee contributions. ÞOral exams and cleanings: are covered 3 times per year (once every 4 months).

16. What’s New For 2020… • Voluntary Life Insurance • ÞOne-time only Open Enrollment opportunity to elect additional employee and dependent life insurance. • Þ Employees may elect additional voluntary employee and dependent life insurance coverage up to the non-medical maximum; unless previously declined. • New Limited Purpose FSA (LPFSA) • A limited purpose FSA (LPFSA) is a health care spending account that can be held at the same time as a Health Savings Account (HSA) but can only be used for eligible dental and vision expenses. • Contributing to the LPFSA on a pre-tax basis further reduces taxes and allows HSA funds to be conserved for other purposes (e.g. health care expenses in retirement).

17. 2020 Medical Costs by Plan College pays the same for HDHP plan options (96% of Direct Care HDHP) College pays the same for Traditional plan options (86% of Direct Care HMO)