1. Considering a Health Savings Account?

2. 2 Basic HSA Plan Concept Part 1: High Deductible Health Plan Part 2: Health Savings Account Made by: Employer, Employee, and/or other party HSA Concept Intended to cover serious illness or injury Can pay for eligible expenses not covered by the health plan For 2009SingleFamily Min. Deductible $1,150$2,300 Max. Out of Pocket $5,800$11,600 For 2010SingleFamily Min. Deductible $1,200$2,400 Max. Out of Pocket $5,950$11,900 For 2009SingleFamily Max. Contribution $3,000$5,950 For 2010 SingleFamily Max. Contribution $3,050$6,150 Individuals can contribute the maximum regardless of their deductible.

3. 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 Internal Revenue Code excludes spouses from the definition of dependent.

4. 4 What is the catch-up contribution? Accountholders who are age 55 or older and not enrolled in Medicare can make catch- up contributions. YearCatch-up Amt. 2009+$1,000 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. 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 IRS Publication 502 http://www.irs.gov/pub/irs-pdf/p502.pdf http://www.irs.gov/pub/irs-pdf/p502.pdf  As described in IRS publication 969 http://www.irs.gov/pub/irs-pdf/p969.pdf, over-the counter medications are also considered eligible expenses for HSA purposes. http://www.irs.gov/pub/irs-pdf/p969.pdf Note: HSA does not provide tax advice. Please consult a qualified tax advisor with questions.

6. 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. 7 Tax Treatment of HSAs… For Employees/Accountholders  Contributions  Excluded (pre-tax) or deducted (after tax) from federal taxable income  Earnings  HSAs grow in the same tax- deferred manner as IRAs

8. 8 Tax Treatment of HSAs (Continued) For Employees/Accountholders  Distributions  Withdrawals for qualified medical 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. 9 Tax Savings Example Contribution$3,000 per year for 25 yrs Annual medical expenses$500 per year Tax Bracket28% (Federal) Average interest rate2% TAX SAVINGS ON CONTRIBUTIONS = $17,500.00 TAX SAVINGS ON DEFERRED GROWTH = $4,921.21 ACCOUNT BALANCE AT THE END OF 25 YEARS = $80,075.75 For illustrative purposes only. Actual savings may vary. Visit www.hsabank.com and click on Calculate Savings for a personalized estimate.www.hsabank.com

10. 10 HSAs, HRAs, FSAs HSAHRAFSA Account Owner EmployeeEmployerEmployee Funding Employee, Employer, Other Employer Employee, Possible Employer Roll Over Year-To-Year Yes Generally No No PortableYes Generally No No

11. 11 Advantages 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

12. 12 Savings Account Option  Interest bearing “bank” account  Accounts are opened as an FDIC-insured bank account through Webster Bank, N.A.  Current interest rate and annual percentage yield information is available on our website, www.hsabank.com or by calling (800) 357-6246.  Interest Rate and APY are subject to change, at our discretion, at any time. Fees may reduce earnings.

13. 13 Self-Directed Investment Option  TD Ameritrade Corporate Services  Access to stocks, bonds and over 11,000 mutual funds  Trades are made online or over the phone  Transfer funds from your HSA to your investment account:  Online through Internet Banking  By calling the Client Assistance Center Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the principal amount invested.

14. 14 Mutual Fund Selection  Devenir Investment Advisors  Selection Options  Employer can offer our standard selection of historically top-performing mutual funds  For an additional fee, employers can select mutual funds similar to their 401(k) offering  Trades are completed online through HSA Bank’s Internet Banking system Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by the bank, and are subject to investment risks including possible loss of the principal amount invested.

15. 15 Accountholder Communication and Reporting  Account statements  Periodic account inserts with valuable legislative information, account features, and more  IRS reporting  Year-end status report  1099-SA (distributions)  5498-SA (contributions)  Online Account Access through Internet Banking  Account balance and transaction history (Up to 18 mo. for convenient tax reporting)  View cancelled checks  Year-to-date information (Including a breakdown of contributions by source.)  Ability to download transaction history to Quicken or Money  Email confirmation of account opening and ongoing activity  Online address changes  Access to Online Contributions

16. 16 Calculation Tools  Is an HSA Right for Me  Allows you to compare a traditional health plan and an HSA qualified plan to determine potential savings http://hsabank.com/HSABank/Education/HSA_Right_For_Me.aspx http://hsabank.com/HSABank/Education/HSA_Right_For_Me.aspx  Future Value Calculator  Calculates tax savings on contributions and tax-deferred growth as well as the future value of your Health Savings Account http://hsabank.com/HSABank/Education/futurevalue http://hsabank.com/HSABank/Education/futurevalue HSAFORM

17. 17 Account Support  Toll-free Bankline  24-hour account access via touchtone phone (800)-565-3512  Toll-free Client Assistance Center (800) 357-6246 7 a.m. – 9 p.m., Central Time, Monday – Friday  Toll-free Spanish Language Assistance Line (866) 357-6232 7 a.m. – 9 p.m., Central Time, Monday – Friday

18. 18 Thank You for Considering…