Consumer-Driven Health Plans and Health Savings Accounts Consumer-Driven Health Care

Consumer-Driven Health Plan (CDHP) + Tax-free Health Savings Account (HSA)

Provides financial incentive for consumers to pay closer attention to health care costs

2 ConsumerConsumer Driven Driven Health Health Plans Plans and HSA’s& HSAs

PART I – Health Plan Part 2 – HSA

Consumer Driven Health Plan Health Savings Account (High Deductible Health Plan) (HSA)

Intended to cover services for illness or Used to pay for qualified health injury once the deductible has been expenses met WhatWhat is a isHealth a Qualified Savings Account CDHP? (HSA)?

▪ Preventive Care (screenings, exam, well child care, well women care, etc.) must be paid by the plan at 100% with no deductibles, copays, or coinsurance.

▪ ALL OTHER qualified medical expenses, including prescriptions, are subject to deductible. Members have the advantage of negotiated Optima discounts.

▪ The IRS requires participation in one of these plans in order to establish and contribute to a Health Savings Account (HSA) Sample CDHP Plan Design

In Network Benefits1 $3,000 Per Member Deductible $6,000 Family Maximum All Preventive Exams Covered at 100% - NO DEDUCTIBLE Primary Care 100% after deductible Specialist 100% after deductible Emergency Room 100% after deductible Outpatient / Inpatient 100% after deductible After Deductible: Other Prescription Drugs $15/$40/$50/20% to $200 Out of Pocket Max $6,000 / $12,000

1 This is just a brief summary and illustrative example of benefits. Plan pays a percentage of allowable expenses in and out of network. Preventive Care vs. Diagnostic Care

Preventive Care Diagnostic Care Covered 100% No symptoms, illness, or Symptoms require further history prompting the diagnosis screening Previous abnormal test In accordance with age results prompt earlier or and gender guidelines more frequent screenings

Defined by Health Care Previous abnormal test Reform results prompt rescreening

6 Your Visit to the Doctor

1. Show your medical insurance card 2. Doctor sends the bill to your health carrier 3. Your health carrier applies negotiated discount (allowable charge) for the service 4. Allowable charge is credited to your deductible 5. You and the Doctor get the EOB (explanation of benefits) 6. Don’t pay for services until you see the EOB – make sure the bill from the Doctor’s office matches the EOB

Prescriptions should be paid at time of service. Your insurance carrier’s discounts are applied on-the-spot. Relationship with Primary Care Physician

✓ Comprehensive, Individualized Care ✓Fewer Hospital Visits ✓Preventive Care ✓Fewer Long-Term Problems ✓Chronic Disease Management ✓Fewer Complications

8 Virtual Medical Care

✓ Available 24/7 ✓Use for non-emergency, low acuity conditions ✓Often lower cost than Primary Care Physician ✓Use HSA debit card or credit card to pay for services

9 CDHPs and Prescriptions

For Consumer-Driven Health Plans, the prescription deductible is combined with the medical deductible.

This means, the medical deductible must be met before any prescription copay schedule applies.

10 Preventive Rx

Preventive Prescriptions: ✓ Considered “Preventive Care” medications such as some blood pressure, cholesterol, and diabetes medications ✓Covered before the medical deductible has been met

11 Estimate Your Costs

Through your health carrier’s cost comparison tool, you can ✓Compare costs for common medical procedures ✓Find a list of participating facilities ✓ View cost share amounts based on the medical plan you are enrolled in

12 Estimate Your Costs

✓Compare costs for prescriptions through your medical provider’s estimate your costs tool ✓Use Mobile Apps/Websites to search for low cost prescriptions

13 Mobile Apps / Websites for Low Cost Prescriptions Generic Prescriptions

Save on Generic Medications Don’t be afraid to ask your doctor! Health Savings Accounts

A tax free SAVINGS account that helps you pay your insurance deductible and qualified out-of-pocket medical expenses.

✓No Use It or Lose it! ✓ Lower Premiums ✓ Complete Ownership ✓ Triple Tax Savings ✓ Retirement Source

16 HSAHSA EligibilityEligibility

IRS defines specific rules on participation. To establish an account and contribute to an HSA, you:

• Must be enrolled in a qualified Consumer-Driven Health Plan • Cannot be claimed as a dependent on another person’s tax return • Cannot have any other disqualifying health coverage: – Spouse’s medical or pharmacy plan (non-CDHP) – Medicare (any parts) – TRICARE – General-purpose Medical Flexible Spending Account (either your Employer’s or Spouse’s) Triple Tax Savings

Pre-tax Contributions Tax-free Earnings

Tax-free Withdrawals

Triple Tax Savings! 18 HSA Contributions

Since HSAs offer special tax advantages, the IRS sets limits on the maximum amount that can be contributed to the account from all sources. For the TAX YEAR 2020, you can contribute:

• Up to $3,550 if CDHP individual coverage • Up to $7,100 if CDHP family coverage

If you are age 55 or older: An additional $1,000 “catch-up” contribution is allowed HSA Qualified Expenses

• IRS Code Section 213(d), Publication 502

• Expenses for you, your spouse or dependents (do not have to be covered by a CDHP)

• Expenses not reimbursed by insurance coverage

• Must be incurred after your HSA has been established

• Long Term Care Services (not covered by insurance)

• Medicare Premiums for Part A, B and D

• COBRA premiums

• Long Term Care Coverage premiums

• Medical insurance premiums while receiving unemployment compensation Qualified Medical Expenses

✓Prescriptions ✓Deductibles, coinsurance and copayments ✓Eyeglasses, contact lenses or LASIK ✓Dental and orthodontia expenses and more...

• Prescription sunglasses • Wheelchair and / or crutches • Artificial teeth/dentures • Assistance for the disabled • Smoking cessation programs • Diabetic supplies • Vaccinations • Orthopedic shoes • School and work physicals • Well baby care • Chiropractic care • Amounts over plan limits • Psychiatric care • Ambulance • Hearing aids/batteries • Physical therapy • Dermatologist’s fees • Acupuncture HSA Withdrawals

• Withdrawals for qualified expenses are tax-free

• HSA Debit Card • Can pay with personal funds and reimburse • Not required to withdraw from the HSA in the same tax year • Carry unreimbursed expenses forward if account balance is insufficient • Save receipts! • Withdrawals for non-qualified expenses are subject to income tax plus an additional 20% penalty • Withdrawals for non-qualified expenses taken after age 65 are only subject to income tax (no penalty) Preparing for Retirement

The funds in your Health Savings Account can be invested! This means your HSA can grow and be used in your retirement for health expenses (tax-free)!

✓Remember, your HSA earns tax-free interest as well!

23 HSA Examples

Let’s meet Carol! Carol has an Health Savings Account (HSA) plan. Each year she allocates $3,050, pre-tax, to her health savings account to cover eligible health care expenses. Since in-network preventive care is covered 100%, she doesn’t have to pay for her annual well woman exam and related lab tests. Her prescription drug bill for the year of $150, is paid from her HSA. Carol doesn’t have any other health care expenses for the year, so she pays $0 out-of-pocket. Her HSA covers her prescriptions, and her medical plan covers her preventive care. She rolls $2,900 over to her HSA for next year. HSA Examples

Meet the Wilson Family! The Wilson family also has an HSA plan. This year, the Wilsons allocated $2,200, pre-tax, to their HSA to cover eligible expenses for the entire family. In-network preventive care visits cost $500, and they are covered 100% by the plan. Mr. Wilson completes physical therapy costing $800 and takes prescriptions in the amount of $200 for his bad elbow. The family’s HSA covers those expenses totaling $1,000, leaving $1,200 to rollover to their HSA next year. What if I Retire?

✓ Account belongs to you - take it with you ✓ Continue to pay medical expenses tax free - even after Medicare eligibility ✓ Available for any future medical expenses - For yourself, - Your spouse, and - Tax dependents ✓ You cannot make further contributions unless covered by another qualified CDHP ✓ Withdrawals for non-qualified expenses taken after age 65 are only subject to income tax (no penalty)

26 Thank you!

Information contained in this presentation is not a guarantee of benefits. Our Summary Plan Descriptions and Wrap SPD are the guiding legal documents for our plans. If there any discrepancies between this presentation and the legal document, the legal document will prevail.

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