Employer s

Guide to
Choosing the
Right HSA
 Choosing the Right HSA

Overview

How HSAs work

Benefits of HSAs for your company and your employees

How to evaluate HSA providers

How to implement your program

© 2010 Alliant Credit Union. All rights reserved. 2

 Choosing the Right HSA

The emergence of HSAs

Healthcare Savings Accounts (HSAs) were introduced in 2003 as a way to control
rising health care costs

Way to save premium costs and maintain a competitive health care benefit package

Companies can save 20% to 40% in their premiums. The average savings is around 30%1

Attract and retain valued employees

Today 45% of U.S. companies offer an HSA-eligible High Deductible Health Plan (HDHP)2

Sources: 1. Joe Williams, business development manager for Bay Benefits Insurance Services, 2009. 2. C. William Sharon, AON Consulting/ISCEBS survey, October 2008.

© 2010 Alliant Credit Union. All rights reserved. 3

 Choosing the Right HSA

Four HSA statistics of interest

  Over 8 million Americans GROWTH OF

have an HSA3 HSA HDHP
ENROLLMENT7
  8% of all U.S. employees in (from March 2005
an employee-sponsored health to January 2009)
insurance plan are in an
HDHP/HSA-eligible plan4

  In companies that offer HDHP/

HSA as an option, about 15%
of employees participate5

  By 2012, between 11 and 13 million

Americans are expected to have
an HSA6

Sources: 3.2009 annual census by America s Health Insurance Plans, published May 13, 2009. 4. Kaiser Family Foundation and Health Research Education Trust, Employer Health Benefits 2008 Summary of Findings . 5. Pediatrics, the
official journal of the American Academy of Pediatrics, March 1, 2007. 6. Diamond, Diamond Management & Technology Consultants Issues Updated HSA Estimates, January 7, 2009. 7. 2009 AHIP HSA/HDHP Census.

© 2010 Alliant Credit Union. All rights reserved. 4

 Choosing the Right HSA

The fundamentals of an HSA

Health Savings Accounts: tax-deferred, interest-accumulating accounts
that can only be offered in conjunction with an HDHP

Employees must be covered by a qualified HDHP before enrolling in an HSA

Contributions may be made to employees accounts by company & employee

2010 contribution limit for individual plans is $3,050; $6,150 for family plans

Employees age 55 or older can also make a $1,000 catch-up contribution

© 2010 Alliant Credit Union. All rights reserved. 5

 Choosing the Right HSA

How an HSA Works

  Help employees save money to use for their qualified medical expenses

  Paid for with pretax or tax-deductible dollars and is fully owned

by the employee

  Employees and employers can contribute to an HSA

  HSA accountholders can withdraw funds at any time,

without penalty, if used for qualified medical expenses

  Access to funds typically by debit card, check or

online banking system

  HSA funds earn interest provided by the HSA custodian

  The account is portable and unused funds

accumulate and rollover year to year

© 2010 Alliant Credit Union. All rights reserved. 6

 Choosing the Right HSA

The Advantages of an HSA vs. an HRA or FSA

HSA (Health Saving Account)
Eligibility Employees must be covered by an HDHP.
(Employees no longer covered by an HDHP keep the
HSA, but can no longer make contributions)
Qualifying health Employee must be covered by an HDHP
insurance needed
Contributions Funding can be made by the employer, the
employee or any person on behalf of an eligible
employee
Annual contribution limits In 2011, the contribution limit to individual plans is
$3,050. Limit for family plans is $6,150. Employees
aged 55 or older can also make a catch-up
contribution of $1,000
Qualifying expenses Most unreimbursed medical expenses Note: an
employee may qualify for both an HSA and an FSA.
However, they cannot double-dip – be reimbursed
by both accounts for the same expense
HRA (Health Reimbursement Account)
Employees in companies that offer this benefit.
(Former employees can be included)
Although usually offered in conjunction with an HDHP,
there are no health insurance requirements for an
employee to participate in an HRA
Funding can be made only by the employer
No contribution limits, although employers typically
contribute less than the annual deductible of their
health plan offering
Most unreimbursed medical expenses, although
employers may impose limitations, such as no
payments for long-term care or health insurance
premiums
FSA (Flexible Spending Account)
Employees in companies that offer this benefit.
(Former employees cannot be included)
No health insurance requirements
Funding is usually made by employees through a
reduction in their salary. Contributions can be made
by employer, employee or both
No required contribution limit, although employers
usually impose one
Most unreimbursed medical expenses, although
employers may impose limitations. Cannot be used
for long-term care or health insurance premiums

Allowable non-medical
withdrawals
Carryover of unused
funds and rollovers
Portability
Permitted, but subject to income tax and 20% penalty.
After accountholder reaches age 65, or upon death or
disability, funds used for non-medical expenses are
subject only to income tax
Full amount of funds can be carried over
indefinitely
Portable
Not permitted
Permitted, although some employers limit the
amount that can be carried over. Employees are
allowed a limited, one-time rollover to an HSA
Funds may be portable – it s at the discretion of
the employer. Also, subject to COBRA provisions
Not permitted
Balances left at year s end (or up to 2 ½ months
after year s end, if employer permits) are forfeited to
employer. Employees are allowed a limited, one-time
rollover to an HSA
No, funds usually forfeited at termination, although
COBRA extensions sometimes apply

© 2010 Alliant Credit Union. All rights reserved. 7

 Choosing the Right HSA

HDHPs and HSAs provide key benefits for employers

HOW HSAs BENEFIT EMPLOYERS

  Reduced premiums

  Tax savings

  An enhanced benefit package

  An incentive for your employees

to make responsible health
care spending decisions

  An incentive for your

employees to focus on
maintaining their health

  Less administrative hassles

© 2010 Alliant Credit Union. All rights reserved. 8

 Choosing the Right HSA

HSAs provide your employees tax advantages:

Pre-tax contributions made via payroll deductions will reduce federal tax liability

Contributions and dividends are not taxable if used for qualified medical expenses

Contributions made with after-tax dollars are deductible

Unused funds remain in the HSA year after year, earning tax-deferred interest

© 2010 Alliant Credit Union. All rights reserved. 9

 Choosing the Right HSA

There are many reasons for your employees to open an HSA

Control the way funds

Save for future are spent Account
medical expenses and invested is portable

Can move the

HSA from one
financial institution
to another

© 2010 Alliant Credit Union. All rights reserved. 10

 Choosing the Right HSA

HDHPs/HSAs can be a great investment for your employees

Your company can

HSAs are a great make contributions to Funds left in HSA will
retirement savings tool employees HSAs earn interest tax-free

Once deductible is met, many The HDHP deductible is

HDHP plans pay 100% of typically less than the HSA
qualified medical expenses contribution limits

© 2010 Alliant Credit Union. All rights reserved. 11

 Choosing the Right HSA

Employees can use HSA funds for

qualified medical expenses including
Dental treatment, such as fillings, COBRA insurance
braces and extractions
Medicare premiums (if no longer
Eye exams, eyeglasses and contact lenses covered by an HDHP) but not Medigap

Out-of-pocket expenses, such as deductibles, Retiree health expenses

coinsurance and co-payments
Hearing Aids
Prescriptions
Acupuncture
Qualified long-term care services
and insurance

Qualified medical expenses are subject to change by the IRS. Please visit
www.irs.gov for a current list of qualified medical expenses.

© 2010 Alliant Credit Union. All rights reserved. 12

 Choosing the Right HSA

Your employees can withdraw HSA funds without penalty

  At any time to cover

qualified medical expenses

  Funds used for non-medical

expenses when accountholders
reach age 65, or upon death or
disability, are subject only to
income taxes and will not be
assessed a penalty

© 2010 Alliant Credit Union. All rights reserved. 13

 Choosing the Right HSA

How to increase HDHP enrollment by offering the right HSA

Educate
Employees

Fund
Employees Offer
Wellness
Programs
Accounts

© 2010 Alliant Credit Union. All rights reserved. 14

 Choosing the Right HSA

Fund your employees HSAs

72% 61%
61% of consumers are more likely to
72% of the firms that offer an
participate in an HDHP if their employer
HDHP/HSA fund the account8
contributes to their HSA9

$898/ $1,522
single coverage
The average employer contribution
is $898 for single coverage;
$1,522 for family coverage10
family coverage
71%
71% of employees who received employer
contributions opened an HSA versus 48%
of those who received no contribution11

How much should your company contribute to your employees HSAs?

50% to 70% of the deductible, benefit experts recommend12
Sources: 8. Kaiser Family Foundation and Health Research Education Trust, Employer Health Benefits 2008 Summary of Findings . 9. Guardian Life Insurance, Benefits & Behavior: Spotlight on Consumer-Driven Health Care,
2008.10. U.S. Bureau of Labor Statistics, 2008, cited in Benefits Marketplace 2009, on Benefitnews.com. 11. Blue Cross & Blue Shield Association study, cited in Members of CDHPs more engaged, Business Insurance, October
27, 2008 12. Joe Williams, business development manager for Bay Benefits Insurance Services, 2009.

© 2010 Alliant Credit Union. All rights reserved. 15

 Choosing the Right HSA

Communicate early and often

Be prepared to address a learning

Be prepared curve when introducing an HSA

Have materials to explain how the plan

Have materials works and the benefits

Communicate via intranet, newsletters,

Communicate payroll stuffers, staff meetings, etc.

© 2010 Alliant Credit Union. All rights reserved. 16

 Choosing the Right HSA

Choosing the Right HSA Custodian

Although some HDHP insurance companies have

a preferred relationship with an HSA custodian,
there s no requirement to choose that custodian
Although large banks are
If you change insurance winning HSA market share
Wider range of investment due to deals with large plan
providers, its affiliate HSA
options and higher interest consultants and employers,
provider will often raise
rates offered through smaller providers and third-
your fees or lower
independent HSA providers party administrators may
your interest13
provide the best products and
services for the end user

Source: 13. ehow.com, tips on choosing an HSA provider by Diane Monde Dill, cited in HR Management, July 28, 2009.

© 2010 Alliant Credit Union. All rights reserved. 17

 Choosing the Right HSA

In choosing an HSA custodian

  Look at the relationship from your employees point-of-view

  Choose an HSA custodian with a high interest rate

  Choose an HSA custodian with a low-fee or no-fee structure

  Choose a custodian that provides your employees with

easy access to their HSA funds

  Choose a custodian with good investment options

  Choose a custodian that provides

excellent customer service for its HSA

  Choose a custodian that works

well with its clients

© 2010 Alliant Credit Union. All rights reserved. 18

 Choosing the Right HSA

Employer s roles and responsibilities

Include your accounting and programming departments for tax purposes

and record keeping

Plan to offer HSA contributions? Involve your payroll department or vendor

Make sure the HSA custodian is compatible with your processes and operations

Define which activities are the responsibility of the HSA custodian

You will not be involved with any claim reviews, adjudications

or reimbursement checks

© 2010 Alliant Credit Union. All rights reserved. 19

 Choosing the Right HSA

Ensure a Healthy Future with an Alliant HSA

24/7
EARN MORE Personal and automated
with one of the industry s member service twenty
highest dividend rates four hours a day, seven
days a week

SAVE MORE GET MORE

with no fees for account with a Free VISA® HSA
opening, maintenance Debit Card, Free HSA
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Alliant membership is an exclusive benefit available to employees, retirees and members of qualifying Select Employee Groups, organizations/associations and their
family members; and individuals who live or work in qualifying communities and their family members. Applicants must also meet other eligibility requirements for
Alliant membership. Please visit www.alliantcreditunion.org for details regarding Alliant membership eligibility.

© 2010 Alliant Credit Union. All rights reserved. 20

 Choosing the Right HSA

HSA Investment Option

trustworthy full-service no cost, no

obligation
consultations
Retirement Income
Experienced advisors with Planning, 401k and Get the assistance you
a credit union service Pension Plan Rollovers, need, consistent with
philosophy IRA Services, College your risk tolerance,
Saving Plans & Wealth investment
Management timelines & goals

*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/ SIPC, a registered broker/
dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Deposit investment and insurance products are not federally insured, involve
investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services
program, to make securities available to members. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America.
FR121002-4F80

© 2010 Alliant Credit Union. All rights reserved. 21

 Choosing the Right HSA

For more information or to download our white paper, Is an HDHP/

HSA the right prescription for your company?, visit
http://www.alliantatwork.com/.

© 2010 Alliant Credit Union. All rights reserved. 22

 Choosing the Right HSA

This material is prepared for educational purposes only and was developed
by Alliant Credit Union. All reasonable efforts were taken to ensure the
accuracy of the information provided and to properly attribute sources.

However, consult your plan administrator, tax and legal advisors for advice.
Alliant disclaims any liability for your reliance on the information presented.

© 2010 Alliant Credit Union. All rights reserved.

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