Considering a Health Savings Account?

1. Considering a Health Savings Account?

2. Basic HSA Plan Concept

3. HSA Eligibility • Individuals who are covered by an HSA-compatible health plan are eligible if they are: • Not covered by any other non-HDHP • Not claimed as a dependent on another person’s tax return. • Not enrolled in Medicare part A or B *Section 152 of the Internal Revenue Code excludes spouses from the definition of dependent.

4. Catch-up Contributions • Individuals and/or their spouses, over the age of 55 and not enrolled in Medicare can make an additional $1,000 catch-up contribution annually. Note: If a husband and wife are covered by a HDHP and both are over the ages of 55 and not enrolled in Medicare, they can both contribute the additional catch-up contribution if they each open an HSA.

5. Eligible Medical Expenses • An eligible medical expense is generally any expense incurred to maintain the health of you or your family • Doctor and hospital visits • Medical equipment • Dental care, braces, dentures • Vision care, glasses, contacts • Medications, including many over-the-counter versions • Medical related transportation *A list of Qualified Medical Expenses can be found in IRS Publication 502,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 considered Qualified Medical Expenses for HSA purposes.

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 Benefits • Medicare Premiums

7. Tax Treatment of HSAs For Employees/Accountholders • Contributions • Contributions deducted from accountholder’s federal taxable income • Earnings • HSAs grow in the same tax-deferred manner as IRAs • Distributions • HSA funds used for eligible medical expenses are not included in the accountholder’s federal taxable income

8. Tax Treatment of HSAs For Employees/Accountholders • Distributions • Withdrawals for qualified medical expenses are 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 After age 65, funds may be withdrawn for any reason without penalty, subject to regular income tax.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 spouses 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. Tax Savings Example For illustrative purposes only. Actual savings may vary. Visit www.hsabank.com and click on Calculate Savings for a personalized estimate.

10. HSAs, HRAs, FSAs

11. Advantages of an HSA • Funds roll over from year to year • No “use it or lose it” philosophy • Tax benefits on contributions, earnings and distributions • Contributions are either pre-tax (via paycheck) or tax-deductible • Portability • Funds follow you • Tax-free withdrawals for Qualified Medical Expenses even if qualifying coverage ends

12. 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.

13. Mutual Fund Selection • Devenir Investment Advisors • Selection Options • Employer can choose to offer our standard selection of historically top-performing mutual funds • For an additional fee, employers can choose to 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.

14. Accountholder 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

15. 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://www.hsabank.com/calculators/decision_tool.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://www.hsabank.com/calculators/future_value.aspx

16. Account Support • Toll-free Bankline • 24-hour account access via touch tone phone (800)-565-3512 • Toll-free Client Assistance Center (800) 357-6246 7 a.m. – 9 p.m., CT, Monday – Friday • Toll-free Spanish Language Assistance Line (866) 357-6232 7 a.m. – 9 p.m., CT, Monday – Friday

17. For more information, please visit www.hsabank.com