1. QHDHPs and Health Savings Accounts
Mechanicsburg Area School District
March 29, 2018

2. Agenda Health Savings Account Basics Eligibility
Health Savings Account Contributions
Distribution Rules
Qualified Medical Expenses
Claim Process Flow
BenefitWallet

3. Health Savings Account Basics
*Please refer to detailed footnote on slide 2.

4. What is a HSA?
*Please refer to detailed footnote on slide 2.

5. What are the benefits of a HSA?
Pre-tax Contributions
Flexibility
Money stays with Employee if they retire or change Employers
Tax-free withdrawals for qualified medical expenses for Employee, their spouse and eligible dependents
Retirement savings vehicle
Funds can be withdrawn for any purpose without penalty after reaching age 65 (income taxes may apply)
Beneficiary eligible
*Please refer to detailed footnote on slide 2.

6. What are the HSA tax advantages?
*Please refer to detailed footnote on slide 2.

7. Offers Family coverage or Single (self-only) coverage
What is a QHDHP?
Offers Family coverage or Single (self-only) coverage
Except for preventive care, no benefits can be paid until annual deductible is met
*Please refer to detailed footnote on slide 2.

8. Qualified High Deductible PPO
Structured to utilize the same Provider Network and cover the same services as low deductible PPO Plans, such as the current Capital BlueCross offering.
Provides the same deep, negotiated discounts for services performed in-network (allowable amounts).
Requires an established deductible to be satisfied prior to paying benefits, in accordance with annual IRS minimums.
Deductible satisfied through medical, prescription drug or combination of both.
Covers out-of-network services, but at a significantly lower benefit level.
Covers preventive care at 100%, not subject to deductible
Offers protection from catastrophic medical events through relatively low out-of-pocket maximums.
*Please refer to detailed footnote on slide 2.

9. Minimum Deductible for 2018:
QHDHP PPO Design
Minimum Deductible for 2018:
$1,350 Single
$2,700 Family
Maximum Annual Out-of-Pocket for 2018:
$6,650 Single
$13,300 Family
Proposed Maximum Annual OOP for 2019 is $7,900 Single/$15,800 Family
*Please refer to detailed footnote on slide 2.

10. Eligibility
*Please refer to detailed footnote on slide 2.

11. HSAs are available to any individual that:
Who is HSA Eligible?
HSAs are available to any individual that:
Is covered by an IRS Qualified HDHP
Is not entitled (eligible and enrolled) in Medicare
Can’t be claimed as a dependent on someone else’s tax return
Is not covered by any other health insurance plan
*Please refer to detailed footnote on slide 2.

12. Medicare Entitlement
Individuals entitled to Medicare are not eligible for HSA contributions;
Medicare entitlement means being both eligible and enrolled;
Individuals can contribute to their HSA as long as they are an eligible individual and have not enrolled in Medicare Part A, B or D;
If an Individual turns age 65, is still working and are not enrolled in Medicare, they are still eligible to contribute to an HSA.
*Please refer to detailed footnote on slide 2.

13. Eligibility Verification
Employee is primarily responsible for determining HSA eligibility
IRS Notice : Employer is only responsible for determining:
Whether employee is covered under HDHP (or any other health plan) sponsored by employer
Employee’s age (for catch-up contributions)
*Please refer to detailed footnote on slide 2.

14. Health Savings Account Contributions
*Please refer to detailed footnote on slide 2.

15. Contributing Sources
*Please refer to detailed footnote on slide 2.

16. Contributing Limits
*Please refer to detailed footnote on slide 2.

17. Contribution Limits 2018 Individual HSA Contribution Limit = $3,450
2018 Family HSA Contribution Limit = $6,850
At age 55, an additional $1,000 is allowed annually
*Please refer to detailed footnote on slide 2.

18. Special Rules for Married Individuals
If either spouse has family coverage, both spouses are treated as having only that family coverage
If both are HSA-eligible, HSA contribution limit is divided between spouses and cannot exceed the annual family limit
Rule applies even if one spouse has family and other has self-only coverage
*Please refer to detailed footnote on slide 2.

19. Distribution Rules
*Please refer to detailed footnote on slide 2.

20. Distribution Rules-Qualified Medical Expenses
*Please refer to detailed footnote on slide 2.

21. Distribution Rules – Age 65+
For individuals age 65 and older, HSA distributions can be used for non-qualified medical expenses without facing the 20 percent penalty
Income taxes will apply for non-medical distributions
This rule is regardless of whether the individual is enrolled in Medicare
*Please refer to detailed footnote on slide 2.

22. Qualified Medical Expenses
*Please refer to detailed footnote on slide 2.

23. Qualified Medical Expenses
The IRS defines expenses that are considered “qualified medical expenses” for HSA distributions.
Expenses must be primarily to treat or prevent a physical or mental defect or illness.
If an Individual uses HSA funds for expenses beyond what the IRS defines as qualified, they will be subject to income tax on the distribution and an additional 20 percent penalty.
*Please refer to detailed footnote on slide 2.

24. Examples of Qualified Expenses
Qualified medical expenses include:
Most medical care expenses, including out-of-pocket expenses
Prescription drugs
Over-the-counter drugs, with prescription
Dental or vision care
Some insurance premiums:
COBRA
Health insurance premiums while receiving unemployment benefits
Qualified long-term care premiums
Any health insurance premiums paid, such as premiums for Medicare Part B, C, D or Medicare HMO products (other than for a Medicare supplement policy, such as Medigap) by individuals age 65 and over
*Please refer to detailed footnote on slide 2.

25. Ineligible Medical Expenses
Most insurance premiums
Over-the-counter drugs without a prescription (except insulin)
Most cosmetic surgery or cosmetic procedures
General health items (for example, hand sanitizer, toiletries)
Expenses covered by another health plan
Expenses incurred before HSA was established
*Please refer to detailed footnote on slide 2.

26. Non-Eligible Expenses
If an HSA distribution is not used for qualified medical expenses:
*Please refer to detailed footnote on slide 2.

27. Recordkeeping
Employers are NOT required to determine if an HSA distribution is used for a qualified medical expense
HSA account holders are responsible for keeping track of their distributions and reporting to the IRS (Form 8889)
HSA account holders should retain all receipts necessary for verification of expenses in the event of an IRS audit as failure to provide receipts could result in a penalty
*Please refer to detailed footnote on slide 2.

28. Claim Process Flow
*Please refer to detailed footnote on slide 2.

29. QHDHP with an HSA Claim Process Flow
*Please refer to detailed footnote on slide 2.

30. BenefitWallet

31. BenefitWallet Key Features

32. HSA Account Set Up

33. BenefitWallet “Click To Pay”
View your claims online with a simple click
Pay your outstanding claims balances
Upload receipts
Web and mobile
Set-up auto pay

34. Online Services

35. Questions
*Please refer to detailed footnote on slide 2.