Page 16 - Allegacy 2019 Benefit Guide Part Time

Health Savings Accounts

An HSA is a tax-favored trust or account that can be contributed to by, or on behalf of, an eligible
individual for the purpose of paying qualified medical expenses. For example, individuals can use their HSAs to pay for
expenses covered under their medical plan until their deductibles have been met, or they can use their HSAs to pay for
qualified medical expenses not covered by their medical plan, such as dental or vision expenses. HSAs provide a triple
tax advantage—contributions, investment earnings and amounts distributed for qualified medical expenses are all
exempt from federal income tax, Social Security/Medicare tax and most state income taxes. Due to an HSA’s potential tax
savings, federal tax law includes strict rules for HSA contributions. Please note that, according to IRS Guidelines, you are
not eligible to participate in a Health Savings Account if you are covered under any Government Plan
(Medicare/Medicaid) or also covered (in addition to the Allegacy medical plan) by any other policy that has copays for
services (through a Parent or Spouse).

Contribution Limits:

 For 2019, $3,500 for individuals with self-only coverage and $7,000 for individuals with family coverage.
 Individuals who are age 55 or older may make an additional $1,000 “catch-up” contribution, to help them save for
retirement.
 For employees electing employee only coverage, Allegacy will contribute $500 to your HSA in January 2019. Allegacy will
also contribute another $500 spread equally over the remaining 11 months of 2019, which equals $45.45 per month.
 For employees electing employee plus dependent coverage, Allegacy will contribute $1,000 to your HSA in January 2019.
Allegacy will also contribute another $1,000 spread equally over the remaining 11 months of 2019, which equals $90.90 per
month.
 For employees hiring during the plan year, the HSA contribution by Allegacy will be pro-rated.

Contribution Rules:

 For each month an individual is HSA-eligible, he or she may contribute one-twelfth of the applicable maximum contribution
limit.
 The full-contribution rule is a special rule that allows an individual who is HSA-eligible for only part of a year to make a full
year’s worth of HSA contributions.
 A special contribution limit applies to married spouses when either spouse has family HDHP coverage.

Qualified Medical Expenses (QME)

QMEs include the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any
part or function of the body. These expenses include payments for medical services rendered by physicians, surgeons, dentists and
other medical practitioners. They include the costs of equipment, supplies and diagnostic devices needed for these purposes. Medical
care expenses must be used primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that
are merely beneficial to general health, such as vitamins or a vacation.

Prescriptions For Over-the-Counter Medications/Drugs

If a medication or drug is available over-the-counter but is prescribed by a physician (or other health care provider who has the legal
authority to issue prescriptions), it is considered a QME. This rule does not apply to insulin and diabetic supplies, which do not
require a prescription in order to be considered a QME. It also does not apply to over-the-counter medical devices and supplies, such
as crutches or bandages.

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