Health Savings Plan For Vibrant Life Staff

October 8, 2005

Last Revised: May 23, 2012 4:50 PM

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Vibrant Life has never had any employee benefits such as pension or health coverage.

We do now. With the advent of the new emphasis on staff Bonuses, described HERE, there will be SOME bonuses that give Staff an incentive to create and maintain the savings they can enjoy with a "Health Savings Plan.

It will be voluntary, of course. Staff may participate in this plan, or not, as they wish. Information about such plans is below on this page.

Health Savings Accounts Questions About Health Savings Accounts

1. What is a health savings account (HSA)?

2. What is a high-deductible health plan?

3. What fees apply to a Wells Fargo HSA?

Eligibility

4. Who is eligible for an HSA?

5. Can my spouse and I both contribute to an HSA? Contributing to an HSA

6. How much can I contribute to an HSA?

7. Do I lose contributions I don't use?

Using HSA funds

8. What are qualified medical expenses?

9. Can I use funds from an HSA for non-qualified medical expenses?

10. How does the debit card work?

11. How are expenses paid when I don't use the debit card?

12. What happens to my HSA if I am no longer enrolled in a high-deductible health plan?

13. What happens to the money in an HSA if I die?

Investing in an HSA

14. How are HSA funds invested?

15. When I withdraw money from an HSA, how do you convert the assets?

About Health Savings Accounts

1. What is a health savings account (HSA)?

A health savings account is a tax-advantaged savings account that works with a high-deductible health plan. You can pay for qualified medical expenses tax-free1, or grow the account and use it for qualified medical expenses in the future.

2. What is a high-deductible health plan?

A high-deductible health plan (HDHP) is a health insurance plan with a minimum deductible of $1,100 (single coverage), or $2,200 (family coverage). Maximum annual in-network out-of-pocket expenses are $5,600 (single coverage) or $11,200 (family coverage). In 2009, the minimum HDHP deductible will increase to $1,150 (single coverage), or $2,300 (family coverage) and maximum annual in-network out-of-pocket expenses expense will increase to $5,800 (single coverage) or $11,600 (family coverage).

3. What fees apply to a Wells Fargo HSA? There are no set up or transaction fees for a Wells Fargo HSA, just a low administrative fee of $4.25 per month (unless otherwise specified by your insurance carrier).

[Karl Loren Note: Vibrant Life will pay this administrative fee for any VL Staff Member who is also being paid on the basis of the Proportionate Pay System.]

Eligibility

4. Who is eligible for an HSA?

To participate, you must be enrolled in a high-deductible health plan (HDHP), and cannot be covered by any other plan that is not an HDHP, with certain exceptions.

Additionally, you cannot be enrolled in Medicare, be a dependent on someone else's tax return, or have received VA medical benefits in the past three months.

[Karl Note: You do not need to be a VL Staff Member, or in any way associated with VL to enroll in a HSA by yourself. There are certain Company Contributions made to YOUR HSA if you do have one of those qualified associations with VL]

If you have questions about your eligibility, please consult your tax advisor.

5. Can my spouse and I both contribute to an HSA?

You and your spouse cannot have a joint HSA. However, if you are both eligible, you can both have HSAs. You'll need to divide the maximum HSA contribution limit between the two of you. If you have questions about your contribution limit, please consult your tax advisor.

Contributing to an HSA

6. How much can I contribute to an HSA?

Yearly maximum contribution levels are set by the federal government. For 2008, you can contribute up to $2,900 if you have single HDHP coverage, or $5,800 if you have family HDHP coverage.

Contributions can be made at any time. If you are age 55 or older, you can make an additional catch-up contribution amount of up to $900 in 2008.

This amount will increase to $1000 in 2009.

If you become newly eligible to contribute to an HSA in a month other than January, you're entitled to the full-year HSA contribution amount for that year, as long as you remain eligible for a period beginning December 1 of the year in which you become eligible and ending on December 31 of the following year. If you do not remain eligible during this period, there will be tax consequences.

7. Do I lose contributions I don't use?

Your HSA balance plus investment earnings carry over from year to year — tax-free. State taxes may still apply, so please consult your tax advisor.

Using HSA funds

8. What are qualified medical expenses?

Typically, qualified medical expenses include:

All medical, dental, and vision expenses, as well as chiropractic visits and acupuncture Eldercare and retirement facilities Expenses generally can be for yourself, your spouse, or your dependent children. Your spouse and dependents do not need to be covered by the same health plan. View a complete list of qualified medical expenses (PDF)*.

Generally, you cannot use HSA funds to pay insurance premiums.

Exceptions include COBRA premiums, long-term care premiums, or premium payments that allow you to retain health coverage while you’re receiving unemployment benefits.

It's your responsibility to determine whether expenses qualify for tax-free reimbursement.

Wells Fargo pays reimbursements but does not determine if they are for tax-free withdrawals.

9. Can I use funds from an HSA for non-qualified medical expenses?

Yes, but you'll be required to pay income tax and a 10 percent tax penalty on the amount you use for non-qualified medical expenses.

(The 10 percent penalty doesn't apply to distributions made after your death or disability, or after you've reached age 65.)

10. How does the debit card work?

The Wells Fargo Health Savings Account Visa® debit card is tied to your current HSA balance. You can use it to pay for qualified medical expenses billed from insurance companies, doctors' offices, and pharmacies. However, if you make purchases for non-qualified medical expenses, you'll be subject to taxes and penalties (unless you're over the age of 65).

The debit card will work wherever Visa debit cards are accepted.

You cannot use it at an ATM to get a cash advance.

11. How are expenses paid when I don't use the debit card?

You can request reimbursement using the HSA Reimbursement/Disbursement Request Form (PDF)*.

Mail the form to the address listed on the form, and we'll process it within a few days of receipt.

Depending on your account preferences, we will deposit the funds directly into your bank account, or mail you a check.

12. What happens to my HSA if I am no longer enrolled in a high-deductible health plan?

You will no longer be eligible to contribute to the HSA. However, you will still have access to the HSA, and can use the funds as you choose.

Withdrawals for qualified medical expenses will still be tax-free.

Additionally, similar to how IRAs and 401(k)s work, you can roll over your HSA funds into another HSA at any time.

13. What happens to the money in an HSA if I die?

If the named beneficiary is your spouse, your spouse can continue to access the HSA tax-free for qualified medical expenses.

(Your spouse will need to pay income taxes on any non-qualified expenses.)

If your beneficiary is not your spouse, the account will no longer be an HSA, and the beneficiary or estate must pay taxes on the fair market value of the account in the year of your death, or in the last taxable year of the estate.

However, no penalties apply. The taxable amount is reduced by any qualified medical expenses incurred by you that the beneficiary pays for within one year of the date of death.

Investing in an HSA

14. How are HSA funds invested?

The Wells Fargo HSA offers both an FDIC-insured interest bearing deposit account plus the option to direct funds into pre-selected investments once you have reached the minimum deposit account balance of $2,000.

The FDIC-insured feature rewards you with graduating rates of interest as the balance in your deposit account grows.

You may pre-select investment options for contributions exceeding the minimum deposit account balance requirement.

The investment options available consist of six Wells Fargo Advantage Funds® (PDF)* designed to help you meet your investment objectives.

Your contributions are automatically directed into the investments you’ve selected once your minimum balance is met.

If you do not pre-select investment options, contributions exceeding the minimum balance will continue to accumulate in your deposit account.

Because Wells Fargo is a qualified trustee, there is no need to manage a separate brokerage account for your HSA investments.

15. When I withdraw money from an HSA, how do you convert the assets?

Distributions are paid first from your FDIC-insured deposit account, rather than investments - even if your cash balance dips below $2000. If your cash balance drops below $2,000, future contributions will be deposited into your deposit account until the cash balance reaches $2,000 before additional investments can be made.

Investments will only be liquidated if your cash balance reaches $0 and funds are needed for transactions or Distributions.

1 All tax references are at the federal level. State taxes vary. Please consult with your tax advisor.

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