Consumer Directed Health Plans w/ Health Savings Accounts

1. Consumer Directed Health Plans w/ Health Savings Accounts

2. Consumer Directed Health Plans: Health Savings Accounts Design features • HDHP must meet minimum design criteria • Minimum deductible/maximum out-of-pocket • Non-network benefits can have higher out-of-pocket amounts • Deductibles and OOP maximums are per family and not per individual • Prescription drug coverage must also be subject to the plan’s deductible • Preventive care may be provided without any deductible/coinsurance • Coordination with “Limited Purpose” FSA • FSA can be used to cover dental/vision expenses only, or coinsurance after deductible is met (cannot be used toward deductible)

3. Consumer Directed Health Plans: Health Savings Accounts HSA-Eligible High Deductible Health PlanRequirements – 2012 1 Catch-up contributions for individuals over age 55 of $1,000 annually.

4. Consumer Directed Health Plans: Health Savings AccountsWhat is a Health Savings Account? • Health Savings Account (HSA) is an account tied to high deductible PPO plan • HSA funds can be used to reimburse self for qualified medical expenses or saved as long term investment vehicle • HSA can be funded with employer or employee money • HSA balances are “owned” by employee, unused balances roll over to future years, and employees can take the money with them if they leave • Plan is designed to create new incentives, and to encourage employees to be more actively engaged in healthcare as a consumer • Improved personal health • More efficient use of “discretionary” services • Utilizes information and tools to support effective decision making regarding health care • Overall, designed to slow the increase in total cost over time • Costs intended to increase at a slower rate than “traditional” insurance offerings • Results have been generally positive and have created intended results

5. Consumer Directed Health Plans: Health Savings Accounts Eligibility • To contribute tax-free to a Health Savings Account (HSA), individual must be covered by a “High-Deductible Health Plan” (HDHP) • Individual cannot be: • Covered by other non-HDHP coverage • Covered by Medicare (but they can be eligible) • Eligible to be claimed as a dependent on another’s tax return • Permitted coverage includes: • Dental, vision, accident, disability • Disease-specific plans • Workers’ compensation • Auto liability • Employee assistance, disease management, and wellness programs • As long as no significant benefits in the nature of medical care/treatment are included

6. Consumer Directed Health Plans: Health Savings Accounts Distributions • HSAs allow tax-free distributions for qualified medical expenses • No HDHP coverage required at time of distribution • Qualified expenses are not defined by employer/trustee; all section 213(d) expenses are reimbursable • No employer/trustee substantiation required • Premium payments are generally not allowed; limited exceptions: • COBRA • Coverage while on unemployment compensation • Premiums paid after age 65 (except Medigap) • Long-term care insurance premiums • All other distributions are permitted, but taxable as ordinary income • Generally a 20% penalty, as of 1/1/2012 • Penalty does not apply if account holder dies, is disabled or reaches age 65

7. Consumer Directed Health Plans: Health Savings AccountsWhat is a Health Savings Account? • Accounts are triple tax-favored, if conditions are met: • Contributions are tax-free (subject to limits) • Earnings grow tax-free • Distributions for qualified medical expenses are tax-free

8. Consumer Directed Health Plans: Health Savings Accounts Plan overview Traditional HealthCoverage (In network/out of network) Employer provides coverage above the deductible – typically coinsurance up to an out-of-pocket maximum Insurance coverage begins when expenses exceed plan deductible Employee is responsible for paying an out-of-pocket amount to “bridge” to more coverage Bridge Deductible $1,500 Single / $3,000 Family* HSA Account Can be used by members for expenses or rolled over and saved for future health care needs Employee/employer pre-tax contribution *All covered services, except preventive care, are subject to the plan’s deductible

9. Consumer Directed Health Plans: Health Savings Accounts

10. Tomkins Consumer Driven Health Plan (CDHP) w/Health Savings Account (HSA) option Deductibles: • Employee Only: $1,500 • Employee +Family: $3,000 • No co-pays associated with this plan, all costs are paid out of pocket by member, excluding preventive care exams • In-Network Services • Preventive care services covered at 100% include: • Well woman exam, well child visit, certain cancer screenings, etc • Physicians - 80% after deductible • Specialists - 80% after deductible • Hospitals - 80% after deductible • Coinsurance limits - Individual = $3,000 and Family = $6,000 (includes deductible) • Out-Of-Network Services • Physicians and Hospitals - 60% after deductible • Coinsurance limits - Individual = $9,000 and Family = $18,000 (includes deductible) • Prescription Benefit • Drug expenses will go towards medical deductible • Once medical deductible is met, normal pharmacy co-pays apply • Once maximum out-of-pocket is met, the plan will pay 100%

11. 100% After Out - of - Pocket Maximum Tomkins Consumer Driven Health Plan (CDHP) w/Health Savings Account (HSA) option • Health Savings Account • Pre-Tax Deductions • Employee can contribute up to IRS limits • Contribution maximum* $3,100 single/ $6,250 family • *If age 55 can make $1,000 catch-up contribution 100% After Out 100% After Out of Pocket Maximum - of - Pocket Maximum In-Network Insurance: 80% Maximum Out of Pocket: (Includes Deductible) $3,000 single $6,000 family Out-of-Network Insurance: 60% Maximum Out of Pocket: (Includes Deductible) $9,000 single $18,000 family Preventive care covered at 100%, no deductible Annual Deductibles: $1,500 EE Only $3,000 EE + 1 or more

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