Health Savings Account HSA Presentation John Alden Life Insurance Company

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Health Savings Account - HSA PresentationJohn
Alden Life Insurance Company
Welcome to John Alden
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About John Alden

• United States Individual Medical market leader
• In business over 110 years
• More than 1,000,000 customers

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John Alden an HSA Leader

• First to offer MSAs in the individual market
• In the forefront of HSA legislation
• John Alden sold the first HSA in the country
• Experts in account administration
• One of the only custodial accounts in the country
  that provides seamless administration with no
  fees.

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What is an HSA?

• An HSA is a tax-favored savings account designed
  to allow for the accumulation of funds to pay for
  qualified healthcare expenses and to save for the
  future. It works in combination with a qualified
  high deductible health insurance plan.

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Huge New Opportunity

• HSAs are
• New
• Tax-Free
• Flexible
• Permanent
• Portable
• A significant improvement over MSAs
• We make HSAs simple and easy.

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Easy to explain and sell

• An HSA is a tax-favored savings account designed
  to allow for the accumulation of funds to pay for
  qualified healthcare expenses and to save for the
  future.
• The HSA works with a qualified high deductible
  health insurance plan. Together they provide
• Premium Savings
• Tax Advantages
• Investment Opportunities

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How big is the HSA market?

• Congressional analysts estimate the creation of
  up to 40 million accounts over the next 10 years.
  
• The White House estimates 3-5 million in 2004
  alone.
• Since everyone with a qualified high deductible
  plan is eligible the HSA market is enormous.
• And, HSAs make high deductible medical plans more
  attractive and easier to sell than ever before.

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Federal Guidelines

• Annual Contribution limits for 2004 are the
  lesser of 1) 100 of the amount of the
  deductible or
• 2) 2,600 individual or 5,150 family.
• Individuals 55 and over are allowed to contribute
  an additional 500 for 2004.
• Unused funds from an MSA plan may be rolled over
  into an HSA account with no penalty.
• No first dollar benefits except for wellness

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HSA Deductibles

• Single Family
• Qualified high deductible 1,000 2,000
• Maximum Out-of-Pocket 5,000 10,000
• John Alden New Deductibles 1,000 2,000
• 1,500 3,000
• 2,050 4,100
• 2,550 5,100
• 4,950 9,900

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Family Deductibles

• What is a common family deductible?
• Under John Alden Life Insurance Company
  plans, a common family deductible refers to the
  accumulation of all medical expenses for all
  covered persons to meet a single deductible. In
  order for a plan to be a qualified high
  deductible family plan, no one individual can
  have a deductible of less than 2,000.

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HSAs Plus High Deductible Plans

• Invested funds are tax-free.
• Funds gain interest thats tax-free.
• Withdrawals for qualified expenses are tax-free.
• Funds can be withdrawn at age 65 - only ordinary
  income tax applies.
• Funds can be withdrawn, at age 65, tax-free for
  non Medicare covered medical expenses and
  prescriptions.
• A 10 penalty plus ordinary income tax applies if
  funds are withdrawn before 65 for non medical
  expenses.
• Funds can be used to pay Medicare Part AB
  premiums (not medical supplement premiums).

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Eligible Expenses

• Qualified Withdrawals
• Eligible medical expenses as defined under
  Section 213 (d) of the IRS Code.
• Medically necessary services
• Deductibles and Coinsurance
• Glasses
• Dental
• Non-prescription drugs
• Qualified Long-Term Care Premiums
• COBRA Continuation Premiums
• Premiums while unemployed
• Medicare Part AB Premiums (but not supplemental
  premiums)

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Withdrawals after age 65

• Non-qualified Withdrawals
• Under age 65
• Ordinary income tax and a 10 penalty on
  withdrawals for non-qualified expenses
• 65 or older
• No penalty
• Subject to income tax but likely at a
  lower rate just like a 401k, for
  non-qualified expenses

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Cost Comparison Scenario

• Family Coverage (Husband and Wife are both 37
  years old with two children)
• 28 federal tax bracket
• Living in Illinois
• 1,500 in claims

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Cost Comparison
Typical Family Plan(three times single
deductible) 1,00080/20 7,1151,000 for
deductibles, 100 for coinsurance, 550 for
other non-covered medical expenses1,650
8,7650 8,765
Fortis Health HSA PlanCommon family deductible
5,100 100 3,1251,500 for medical expenses
and 550 for dental/eyewear expenses2,050
5,175 1,428 3,747 5,018
Coinsurance Premium paid
Your share - medical care expenses
(1,500 claim) Expenses subtotal
Tax Savings on HSA deposits Net
expenses (out-of-pocket minus
savings)Total net savings with HSA Plan
HSA Account Balance
3,050!
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Tax-Deferred Investment Options

• John Alden HSA
• MSAver HSA
• Any custodial account the client chooses

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John Alden HSA

• Several contribution options
• Monthly, quarterly, semi-annual, annual
• No additional fees
• No administrative, set-up or user fees
• Very competitive interest rates
• Optional automatic claims payment

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MSAver HSA

• Account options
• Checkbook
• Debit card
• Brokerage account
• provides access to stocks, bonds and mutual funds

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How Can Funds Be Used?

• Withdraw any time for eligible medical expenses
• glasses dental deductible coinsurance
  long term care premium etc.
• (See John Alden Medical Expense Sheet, Form
  28557)
• Non-eligible withdrawals before age 65
• Taxed as ordinary income
• Plus 10 penalty
• Age 65 or Medicare eligibility withdrawals
• Lower tax bracket
• No penalty
• Tax-free for non-Medicare covered medical
  expenses and prescriptions

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Money Withdrawal Methods

• John Alden Life Insurance Companyautomatic
  disbursement method
• John Alden Life Insurance Company manual
  disbursement method
• MSAver checkbook

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Clients Save Premium, Reduce Taxes and Build
Savings

• Unused funds accumulate from year to year.
• Use the money to pay for qualified expenses
  tax-free as they occur
• Save money tax-free for future medical
  expenses
• Accrue savings and build a tax-sheltered
  nest egg for retirement

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Want More Information?

• For more information or to obtain additional HSA
  materials
• www.ronhaleandassociates.com
• Phone [phone]