Comprised of Two Fundamental Components

• Qualified High Deductible Health Plan (HDHP)
  • Insurance used to cover medical expenses after
    the deductible has been met (except for prevention)
• HSA Deposit Account
  • Transaction account used to cover medical expenses before the deductible is met.

• Tax advantaged account, similar to IRAs, but for medical expenses
• Established by the Medicare Bill in december 2003
• Available through banks, brokerage houses or bundled with health insurance plans
• Funds managed by a trustee or custodian

HDHP must have:
        Single Coverage

• $1,000 deductible
• $5,000 maximum out of pocket expenses
  Family coverage
• $2,000 deductible
• $10,000 maximum out of pocket expenses

Any Individual

• This covered by a HDHP
• Generally not covered by any other health plan that is not a HDHP (exceptions apply)*
• Not entitled AND not enrolled in Medicare benefits
• Not claimed as a dependent on another person's taxes

* HSA Beneficiary may have other insurance, not considered to be an HDHP, such as accident, disability, dental, vision, or long-term care insurance. Beneficiary cannot have a prescription drug benefit, unless it considered an HDHP. However, Transitional Relief in Rev. Ruling 2004-38 states that an individual remains eligible until January 1, 2006 even if they are covered by a prescription drug benefit not considered to be an HDHP.

• Contributions are tax deductible1 and withdrawals for qualified medical expenses are tax free (both current and future expenses)
• Funds left in your HSA can grow with tax-deferred interest earnings

Reduced Insurance Premiums

• Your insurance premiums are lowered by 20-40% when you convert from a low to a high deductible plan.
• You can use these savings to contribute to your HSA

Portability and Convenience

• You own your account
• Even if you change jobs, your HSA funds go with you.

Life-long Benefits and Savings

• You have the option to let the funds in your account grow tax-deferred
• Can be used as an additional retirement medical account
• Can be used as an additional retirement account
• Can be used for out-of-pocket expenses for Medicare

1. Consult your tax advisor for further details

• Individuals, employees, family members, and employers may contribute
• Contributions must be in cash not entitled AND not enrolled in Medicare benefits
• Current Annual contribution limits are the lesser of:
  • 100% of the deductible for the HDHP, or
  • $2600 for self-only, $5150 for family (indexed for inflation)
  • Individuals age 55-64 can make catch-up contributions ($500 for 2004, increases by $100/year thereafter)
  • Contributions are pro-rated for the number of months the HDHP has been in effect per year

• Employee contributions are tax deductible
  Above-the-line deduction or pre-tax through payroll deduction
• Employer contributions are tax deductible
  Excludable from the employee's gross income
  and not subject to withholding from wages for
  income tax, Social Security and Medicare taxes
  (FICA), federal unemployment tax (FUTA), or the
  Railroad Retirement Tax Act
• Earnings are tax deferred
• Distributions for qualified medical expenses are tax free

• A complete listing provided in Section 213 of IRS
  Ruling.
• Actual medical expenses, including physician
  visits, prescriptions, and dental care
• Long-term care insurance
• Health care coverage when unemployed
• Certain continuation of benefit health care coverage

• Contact a personal banker at Advantage National Bank
• Educate yourself about your current healthcare costs and programs
• Set up your account with Advantage National Bank