Page 6 - Premier EE Guide 01-20 - CA- Updated 01.03.2020

BENEFITS

MEDICAL INSURANCE

How the Health Savings Account (HSA) Works

A Health Savings Account (HSA) is a tax-advantaged account that you own. It works together with a High Deductible Health Plan
(HDHP). You can have a HDHP without an HSA but you cannot have an HSA without a HDHP. You may elect to make contributions
into your account up to IRS maximums. IRS maximums for 2020 are $3,550 for employee coverage and $7,100 for family coverage.
If you are 55 years of age or older in 2019, the IRS also permits you an additional catch-up contribution of $1,000. The portion of
your paycheck that you contribute to your HSA will be taken out before you pay federal income taxes, Social Security taxes and
most state taxes (excluding state taxes in AL, CA and NJ). Any contributions you make can be increased or decreased over the
course of the year.

The money in your HSA is yours to save and spend on eligible health care expenses whenever you need it, whether in this plan year
or in future plan years. You can use the funds in your account to pay tax-free for qualifying out-of-pocket Medical, Dental and
Vision expenses such as deductibles, coinsurance and copays. Your account balance earns interest and the unused balance rolls-
over from year to year. The money is yours to keep even if you leave PACU, no longer participate in a high deductible health plan or
retire. You may continue to make contributions to your HSA if you enroll in another qualified high deductible health plan, or elect
COBRA continuation coverage of your HSA coverage if your employment terminates.

Eligible HSA Expenses Include:
Medical Dental Vision Other
Doctors/Nurses Artificial Limbs Dentists Optometrists COBRA
Prescription Drugs Insulin Treatment Orthodontists Ophthalmologists Premiums
Hospital Sterilization Teeth Cleaning Exams Long-Term Care
Lab work Alcohol Treatment X-Rays Glasses Premiums
X-Rays Acupuncture Fluoride Contact Lenses Medicare
Ambulance Chiropractic Treatments Lasik Surgery Premiums
Durable Medical
Equipment

Ineligible HSA expenses include expenses that are not medical or health related as well as cosmetic surgery.
HSA Tax Savings Comparison Without the HSA With the HSA

Gross Annual Pay $45,000 $45,000
Employee pre-tax HSA contributions are used to pay for annual healthcare Not Elected $2,500
expenses (Medical, Dental, Vision and Other—see above)
Taxable Gross Income $45,000 $42,500

Payroll Taxes (at 30%) $13,500 $12,750
Employee-Funded HSA Bank Account $0 $2,500
Net Pay $31,500 $32,250
Annual Savings with Pre-Tax HSA Deduction $0 $750

About Health Equity HSA
Health Equity is the administrator of our HSA plan through PACU. It is fully integrated with Blue Shield so when you enroll in the
HSA plan, a tax advantaged Health Savings Account (HSA) will be automatically created for you. It is up to you to activate your HSA
account. You will have a single sign-on between Blue Shield and the Health Equity website. Also, it is no longer necessary to
submit claims manually as Blue Shield will automatically send your claims to Health Equity. Check out our HR Resource Center for
additional information from Blue Shield on HSAs and how they work.

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