Health Savings Account Plan Examples*

HSA

Health Savings Account Plan Examples*

Individual

Mary enrolled in an HSA-compliant health plan with individual coverage for herself. She chooses to contribute $2,500. She may contribute up to $3,300 (maximum allowed for 2014) into her HSA on a pretax basis.

Mary's health plan In-network deductible: $2,500 Maximum out-of-pocket costs: $5,000 (including deductible)

In-network

Health plan pays

80%

Employee pays

20%

Preventive care: 100% covered (deductible does not apply)

Pharmacy coverage: Subject to deductible

Out-of-network 60% 40%

Scenario 1

During the year, Mary has in-network health care expenses of $1,000 that are not considered preventive care. Because her deductible is $2,500, Mary is responsible for all of these costs. She chooses to pay only $600 of these expenses from the balance of her HSA because she wants to start saving for her health care needs.

Estimated

reduction in

Amount in HSA

federal income tax

Amount paid from HSA

$625

$2,500

$600

Amount paid by health plan

Remaining out-of-pocket expense

$0

$400

Amount remaining in HSA to roll over

$1,900 (plus earnings)

Scenario 2

Mary is very healthy during the year and has no health care expenses except for regular checkups and screenings, which are all considered preventive care. Since her plan covers preventive care at 100 percent and it does not apply to her deductible, Mary is able to roll over her entire $2,500 HSA balance into the next year.

Estimated

reduction in

Amount in HSA

federal income tax

Amount paid from HSA

$625

$2,500

$0

Amount paid by health plan

Remaining out-of-pocket expense

$0

$0

Amount remaining in HSA to roll over

$2,500 (plus earnings)

*These examples are for illustrative purposes only. Situations will vary depending on the specifics of the health care plan, as well as individual and employer contributions.

continued on other side

Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

Family

John enrolled in an HSA-compliant health plan with coverage for himself, his wife and two children. He chooses to contribute $5,000. He may contribute up to $6,550 (maximum allowed for 2014) into his HSA on a pretax basis.

John's health plan In-network deductible: $3,000 Maximum out-of-pocket costs: $6,000 (excluding deductible)

In-network

Health plan pays

80%

Employee pays

20%

Preventive care: 100% covered (deductible does not apply)

Pharmacy coverage: Subject to deductible

Out-of-network 60% 40%

Scenario 1

During the year, John and his family have in-network health care expenses of $4,000 that are not considered preventive care. John chooses to pay these expenses from the balance in his HSA. Because his deductible is $3,000, the health plan covers 80 percent of the remaining $1,000, or $800. This leaves $200 (20 percent) as John's out-of-pocket expense.

Estimated reduction in federal income tax

Amount in HSA

Amount paid from HSA

$1,250

$5,000

$3,000

Amount paid by health plan

Remaining out-of-pocket expense

$800

$200

Amount remaining in HSA to roll over

$2,000 (plus earnings)

Scenario 2

During the year, John and his family have in-network health care expenses of $1,200 that are not considered preventive care. Since his total expenses are less than his deductible, John is responsible for all of the expenses. John chooses to pay these expenses from the balance of his HSA.

Estimated reduction in federal income tax

Amount in HSA

Amount paid from HSA

$1,250

$5,000

$1,200

Amount paid by health plan

Remaining out-of-pocket expense

$0

$0

Amount remaining in HSA to roll over

$3,800 (plus earnings)

HealthEquity, Inc. is an independent company supporting Blue Cross Blue Shield of Michigan by providing health care spending account administration services. An independent, FDIC-insured bank holds the health saving account dollars.

CF 11552 NOV 13

R022255

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