everything you need to know about hsa's

Download Everything You Need to Know About HSA's

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This presentation focuses on the eligibility and distribution requirements of HSA's and a number of special rules are reviewed.

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  • 1. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC By Larry Grudzien Attorney at Law
  • 2. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Similar to Archer Medical Savings Accounts (MSAs) in structure and benefits, but there are many important differences. Tax-exempt trust or custodial accounts created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse and/or dependents. Source: Code 223 What is an HSA?
  • 3. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Funding flexibility-employer contributions, employee salary reduction contributions and tax-deductible contributions are all permissible. No use-it-or-lose-it rule-participants may accumulate funds and self-direct investment in a tax-exempt trust or custodial account. Ability to use funds for non-medical purposes without any effect on the tax-free character of amounts used for medical expenses. Account portability for employees changing jobs. Why Consider an HSA?
  • 4. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Participant self-substantiation of expenses is required. The tandem high-deductible plan that is required is almost a mainstream-design. Family members, employers and any other third party may make contributions to an HSA on behalf of the eligible individual. Why Consider an HSA?
  • 5. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC For any month, an eligible individual is defined as any individual who: is covered only by a high-deductible health plan (HDHP) as of the first day of such month is not also covered by any other health plan that is not a HDHP (with certain exceptions for plans providing certain limited types of coverage) is not enrolled in benefits under Medicare may not be claimed as a dependent on another persons tax return. Who is Eligible to Make or Receive Contributions?
  • 6. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC What is a High Deductible Health Plan (HDHP)? It is a insured or self-insured health plan that satisfies certain requirements with respect to deductibles and out- of pocket expenses. In the case of individual coverage, the plan must have an annual deductible of not less than, $1,250 for 2013 and 2014 and $1,300 for 2015. In the case of family coverage, the plan must have an annual deductible of not less than $2,500 for 2013 and 2014 and $2,600 for 2015. Who is Eligible to Make or Receive Contributions?
  • 7. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC What is a High Deductible Health Plan (HDHP)? A health plan may contain the following features and still be considered a HDHP: A reasonable lifetime limit on benefits. Any lifetime limit on benefits designed to circumvent the maximum annual out-of pocket amount is not reasonable. Under the Affordable Care Act, there are no longer lifetime or annual limits on essential health benefits. Limitation of payments to usual, customary and reasonable (UCR). Uses amounts toward the deductible from a prior health plan if newly adopted during the year. Different levels of payment of benefits depending on whether a participant goes in or out of network. Who is Eligible to Make or Receive Contributions?
  • 8. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC What is a High Deductible Health Plan (HDHP)? In the case of individual coverage, the maximum out-of-pocket expense limit on covered expenses cannot exceed $6,350 for 2014 and $6,450 for 2015. In the case of family coverage, the maximum out-of pocket expense limit on covered expenses cannot exceed $12,700 for 2014 and $12,900 for 2015. Out-of-pocket expenses include deductibles, co-payments, and other amounts (other than premiums) that the individual must pay for covered benefits under the plan. Who is Eligible to Make or Receive Contributions?
  • 9. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC An individual who is covered under: a spouses or dependents employers health plan that is not an HDHP; a comprehensive major medical individual insurance policy; or a health FSA or HRA unless coverage under such HRA or FSA is limited to permitted benefits or specific benefits not provided by the high-deductible health plan. Who is Not Eligible to Make or Receive Contributions ?
  • 10. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC H and W have family coverage covering each other and one of the plans is not a HDHP. H and W have family coverage, but not covering each other and one plan is not a HDHP. H and W have single coverage, but W participates in a Health FSA. Who is Not Eligible to Make or Receive Contributions ?
  • 11. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Custodial or Trust Agreement Application and Eligibility Form Designation of Beneficiary Form Disclosure Statement What Documents are Needed to Establish an HSA?
  • 12. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC No - No coverage can be provided below deductible limits provided under a HDHP. Can First Dollar Prescription Drug Coverage Be Provided?
  • 13. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC An employee may invest in investments approved for IRAs (e.g., bank accounts, annuities, certificates of deposit, stocks, mutual funds, or bonds). HSAs may not invest in life insurance contracts, or in collectibles. Are There Any Restrictions on the Types of Investments Available Under an HSA?
  • 14. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Rules similar to those rules that apply to IRAs will apply to HSAs . When would prohibit transactions occur? Loans, account beneficiary provides good or services to the HSA, and purchase of land employee already has an interest. ERISA penalties would apply - 5% of the amount involved in each transaction, but may increase to 100% if the mistake is not promptly corrected. Prohibited Transaction Rules
  • 15. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLCCopyright 2014- Not to be reproduced without express