Monroe County Community School Corporation
2009
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Qualified High Deductible Health Plan
Example Plan - In Network Coverage
Lifetime Maximum - $5,000,000
Health Plan Pays
After you reach the out-of-pocket maximum, the health plan pays 100% of covered charges
You Pay
100% of the deductible
$3,000 - Single / $6,000 - Family
Preventive Care covered at 100%
•
Intended to cover serious illness or injury
• IRS sets parameters on plan design
Examples: Minimum deductible levels;
no copayments for office visits
•
Preventive care can be covered at 100%
Health Savings Account
HSA funds can be used for qualified medical expenses
•
Tax free growth
• Tax free distributions (for qualified expenses)

• Congress created Health Savings Accounts
(HSAs) to help individuals save for qualified medical and retiree health expenses on a taxfree basis.
• Pairs a qualified high deductible health plan with a savings account for eligible individuals to help pay for qualified medical expenses
• Combines the pre-tax treatment of a health flexible spending account, the portability and carry-over characteristics of a 401(k) plan, and the tax-free distribution of a Roth IRA

For eligible individuals it is:
• Very similar to a personal checking/savings account that is owned by you, the account holder, and used to pay for qualified medical expenses
• You can elect an amount to be payroll deducted pre-tax from MCCSC to fund the account
• The HSA is a “custodian account” held at a trustee/bank/Insurance company
• Account balances can be carried over year to year

Who is Eligible?
• To be eligible to contribute to an HSA you:
– Must be covered by a qualified high deductible health plan (HDHP) – MCCSC Medical Plan 3 only
– Cannot be enrolled in Medicare (generally age 65)
– Cannot be covered by other health insurance that is not an HDHP
• Additional coverage for dental and vision is allowed
• Cannot have a broad based health Flexible Spending
Account through employer or spouse’s employer
– Cannot be eligible to be claimed as a dependent on another persons taxes
– May not participate in both Section 125 FSA (Medical) &
HSA
• Can participate in a Dependent Care FSA & HSA

• You enroll in the qualified high deductible health plan
• MCCSC will have established the banking account for your
HSA
• You make contributions to the account through payroll deduction (pre-taxed)
• You receive health care services
• You pay your out of pocket costs associated with your health plan (deductible and coinsurance)
• You decide whether to take money out of your HSA account to reimburse yourself for “qualified” expenses
• The money in your HSA account that you do not use stays with you and is available to use for future costs

What are “Qualified” Expenses?
• Qualified Medical Expenses are described in section
213(d) of the Internal Revenue Service code
– Refer to IRS Publication 502 for examples
• Health insurance premiums are not a qualified medical expense except:
– For HSAs, the following can be reimbursed taxfree:
• COBRA premiums
• Qualified long term care premiums
• Health insurance premiums while unemployed and receiving unemployment
• Medicare premiums (Part A, B, C, & D)

What expenses can be paid by an HSA?
Your HSA covers a wide variety of medical expenses. These medical expenses must be necessary for the treatment or alleviation of a specific illness or injury. They may include hospital or clinic services, prescription drugs and medications, certain over-the-counter drugs, and many other health related expenses as defined by Section 213(d) of the Internal Revenue Code. Medical expenses covered under the
HSA can include expenses that are not covered under the high deductible health plan such as chiropractic, dental, orthodontia, or vision expenses. For more information about eligible expenses, please consult Publication 502 available at your local IRS office or from the IRS website: www.irs.qov
.
Your HSA can also be used to pay premiums for COBRA, Medicare, long-term care insurance (federal limits apply), and health plan coverage you may have while receiving unemployment compensation.
The following are examples of qualified medical expenses:
Acupuncture
Alcoholism Treatment
Ambulance
Artificial Limbs/Teeth
Aspirin
Bandages
Birth Control Pills
Dentures
Diabetic Supplies
Diagnostic Services
Drug Treatment
Drugs/Medicines
Egg Donor Fees
Eye Exams/Glasses
Blood Pressure Monitoring Devices Fertility Treatment
Blood Sugar Test Kit Flu Shots
Body Scan
Chelation (EDTA) Therapy
Glucose Monitoring Devices
Guide Dog
Chiropractors
Circumcision
Copays/Deductibles
Condoms
Hearing Aids
Home Care
Hormone Replacement Therapy
Hospital Services
Contact Lenses/Related Material
Contraceptives
Counseling (excludes marriage)
Crutches
Dental Treatment
Immunizations lnclinator
Insulin
Laboratory Fees
Laser Eye Surgery
Learning Disability
Medical Records Charge
Medical Services
Medications/Drugs
Nursing Services
Obstetrical Expenses
Occlusal Guards
Psychiatric Care
Psychoanalysis
Psychologist
Reading Glasses
Screening Tests
Sleep Deprivation Treatment
Smoking Cessation Programs
Operations
Optometrist
Organ Donors
Orthodontia
Sterilization Procedures
Supplies for Medical Condition
Surgery
Therapy
Osteopath Transplants
Over-the-counter Drugs/Medicines Vaccines
Ovulation Monitor
Oxygen
Vasectomy
Vision Correction Procedures
Physical Exams
Physical Therapy
Pregnancy Test
Prescription Drugs
Prosthesis
Wheelchair
X-Ray Fees

How Much Can I Contribute to an HSA?
The IRS determines the annual contribution limits for HSA. These are based on either single or family enrollment. The contribution limits can change from year to year. For 2010 you may contribute up to:
$3,050 Single
$6,150 Family
*Individuals age 55 and older can also make additional “catch-up” contributions of $1,000 per year.

– Tax savings
– Potential retirement savings
– More control over how you choose to spend your health care dollars
– Can help cover health expenses for periods of unemployment
– Lower health plan premiums
– HSA belongs to you and is portable –
Employees currently contributing to Section
125 FSA could deposit that same amount in an
HSA. With the HSA, there is no “use it or lose it” rule

• Individuals must be eligible to contribute to an
HSA; not required for distributions
• The individual is responsible for compliance with
IRS rules
• If you don’t use your HSA money, you keep it for future years.
• Contributions are subject to limits determined in reference to HDHP annual deductible and statutory limits
• Contributions are tax free, earnings are tax free, and distributions are tax free if used for qualifying medical expenses

Flow Chart for HSA Process
Qualified High Deductible Plan 3 + HSA
Pre-Tax Payroll
Deductions
Filing of Medical/Dental Claims and Use of HSA account
Employee goes to Dr
Premium for
Plan 3
HSA Employee
Contribution
*
Any elected amount by employee up to the max of
$3050 for single plan and
$6150 for family plan
Provider files the claim with Anthem as normal
Anthem processes with in-network discount
There must be funds available through your contributions to pay for the qualified medical expenses
*You only have available what you have contributed – very different from a FSA
Employee receives EOB explaining their responsibility
*Which is 100% after Anthem discount up to the deductible: $3,000 single plan and $6,000 for the family plan
Employee receives bill from provider
Employee pays bill through HSA funds (Debit card or checks) *Just like personal checking account