Considering a Health Savings Account? (HSA)

1. Considering a Health Savings Account? (HSA)

2. Basic HSA Plan Concept 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? 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 After age 65, funds may be withdrawn for any reason without penalty, subject to regular income tax.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

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