Building Bridges for Success

1
Building Bridges for Success CACUBO 2009 Annual
Meeting Managing Costs and Strategies for Health
Care
Christopher S. Sears Ice Miller LLP [phone]
christopher.sears_at_icemiller.com
2
Wellness Programs
3
What Laws Are Implicated?

• HIPAA Nondiscrimination
• Internal Revenue Code (taxation of rewards)
• Americans with Disabilities Act (ADA)
• HIPAA (again) Privacy
• Age and Gender Discrimination (ADEA and Title
  VII)
• Smokers Rights Laws

4
HIPAA Nondiscrimination

• HIPAA Non-Discrimination Rules prevent group
  health plans from discriminating in premium
  contributions or eligibility based on health
  status factors
• Health status
• Medical condition
• Claims experience
• Receipt of health care
• Medical history
• Genetic information
• Disability

• Examples
• Nicotine addiction
• Body mass index
• Cholesterol levels

5
HIPAA Nondiscrimination

• Wellness Programs allow conditioning a reward on
  satisfying a standard that is related to a health
  factor
• Reward can mean
• Discount or rebate of a premium or contribution
• Waiver of all or part of a cost-sharing mechanism
  (such as deductibles, copayments, or coinsurance)
• Absence of a surcharge
• Can use carrot or stick

6
HIPAA Nondiscrimination

• If wellness program does not condition reward on
  a health status factor (or does not offer a
  reward), then HIPAA wellness rules not applicable
  as long as program is available to similarly
  situated individuals

• Program that encourages preventative care through
  waiver of copayment or deductible for costs of
  for example, prenatal care or well-baby visits
• Program that reimburses employees for the costs
  of smoking cessation programs without requiring
  quitting

• Program that reimburses all or part of fitness
  center memberships
• Diagnostic testing program that provides a reward
  for participation and does not base any part of
  the reward on outcomes

7
HIPAA Nondiscrimination Wellness Programs

• If conditions for obtaining reward under a
  wellness program are based on an individual
  satisfying a standard that is related to a health
  factor, the wellness program must meet five
  requirements.
• Examples of such programs
• Program reimburses cost of fitness center
  membership if a stated weight or BMI is achieved.
• Program provides lower premiums for employees who
  have a normal cholesterol level.
• Program that reimburses for a smoking cessation
  class if the employee quits smoking.

8
HIPAA Nondiscrimination Wellness Programs

• Reward must not exceed 20 of employee-only cost
  of plan
• Total cost of individual coverage (not just
  employee portion of premium)
• If dependents are included in program, then can
  be 20 of cost of family coverage

9
HIPAA Nondiscrimination Wellness Programs

• Reasonably designed to promote good health or
  prevent disease
• Program must have a reasonable chance of
  improving health or preventing disease
• Not overly burdensome
• Not a subterfuge for discriminating based on a
  health factor
• Not highly suspect in the method chosen to
  promote health or prevent disease
• Allow qualification at least once per year

10
HIPAA Nondiscrimination Wellness Programs

• Available to all similarly-situated individuals
• Must have a reasonable alternative standard (or
  waiver of the otherwise applicable standard) for
  obtaining the reward for any individual for whom,
  for that period, it is unreasonably difficult due
  to a medical condition or medically inadvisable
  to satisfy the otherwise applicable standard
• Plan may seek verification, such as a statement
  from an individuals physician, that a health
  factor makes it unreasonably difficult or
  medically inadvisable to satisfy or attempt to
  satisfy the otherwise applicable standard
• Alternatives could include waiving the
  requirement or following a physicians
  recommendation.

11
HIPAA Nondiscrimination Wellness Programs

• Plan materials must describe availability of a
  reasonable alternative standard
• If plan materials merely mention that a program
  is available without describing its terms, this
  disclosure is not required
• Model language If it is unreasonably difficult
  due to a medical condition for you to achieve the
  standards for the reward under this program, or
  if it is medically inadvisable for you to attempt
  to achieve the standards for the reward under
  this program, call us at insert telephone
  number and we will work with you to develop
  another way to qualify for the reward.

12
Tax Issues

• Value of rewards must be included in employees
  income unless an exception exists

• Taxable rewards
• Cash
• Gift cards
• Movie or other entertainment ticket
• Airline points

• Tax-free rewards
• Cafeteria plan flex credits
• Contributions to an FSA, HRA, or HSA
• Premium discounts
• Reductions in deductibles

13
Americans With Disabilities Act

• Americans With Disabilities Act
• Limits post-employment medical examinations and
  inquiries unless job-related and consistent with
  business necessity
• Information must be kept in a separate file and
  must be treated as confidential (remember HIPAA,
  too!)
• May conduct voluntary medical examinations (not
  required to participate and not penalized for not
  participating)
• Mandatory exams to enroll in health plan?
• Little formal EEOC guidance Compliance with
  Wellness Rules good enough?
• EEOC March 6, 2009 Informal Discussion Letter
  says enrollment conditioned on taking health risk
  assessment is NOT voluntary

14
HIPAA Privacy

• Beware of HIPAA Privacy
• Make wellness programs part of group health plan
• Can use protected health information for
  treatment, payment, and health care operations
• Do not use PHI for employment related decisions
• Use PHI only as minimally necessary in connection
  with wellness program and group health plan
• Consider using a vendor that will only provide
  aggregated information to the employer.

15
Age Gender Discrimination

• Age Discrimination in Employment Act
• Prohibits discrimination against individuals who
  are age 40 or over
• Wellness program standards should take into
  consideration limits that someone who is older
  may face
• Title VII
• Prohibits discrimination on the basis of race,
  color, religion, sex, or national origin
• Potential gender discrimination claim could arise
  if a health standard targets weight, as opposed
  to body mass index (which factors into account
  that women generally carry greater percentages of
  body fat than men)

16
Smokers Rights Laws

• Beware of Indianas Smokers Rights law
  (Indiana Code 22-5-4-1)
• Prevents employers from discriminating with
  respect to an employees compensation and
  benefits and terms and conditions of employment
  because of employees use of tobacco products
  outside the employees or prospective employees
  employment
• Effective July 1, 2006, new exception to allow
  employer to provide financial incentives
• Intended to reduce tobacco use and
• Related to employee health benefits provided by
  the employer
• Whole law preempted by ERISA?

17
Onsite Health Clinics
18
The Next Layer Onsite Clinics

• More employers offering onsite health clinics
• 23 of surveyed employers with more than 1,000
  employees reported offering onsite medical
  services in 2007
• Staffed by physician, nurse practitioners, and
  health advocates
• Employees can visit on breaks or before/after
  work for minor illnesses and wellness benefits
• Increases time with health care providers
• Routine visits can lead to discovery and
  treatment of more serious problems.

19
The Next Layer Onsite Clinics

• Clinics can provide more than basic care
• Wellness screenings
• Tobacco cessation programs
• Personalized health coaching
• Lunchtime seminars on health topics such as
  diabetes management or stress reduction
• Standing appointments to have glucose or BP
  checks
• May be considered by employers with at least 500
  to 1,000 employees that are self-funded

20
The Next Layer Onsite Clinics

• Can reduce health plans costs and absenteeism
• Reports of 3-to-1 return on investment
• Legal issues
• Privacy of health information
• Staffing
• Employ health care providers
• Contract with outside vendor
• Malpractice, licensure, and credentialing issues
• Supervision of non-physicians
• Indemnification

21
HEALTH REIMBURSEMENT ARRANGEMENTS
22
HRA Overview

• What are Health Reimbursement Arrangements?
• Employer agrees to reimburse participants for
  specified medical expenses up to a stated amount
  per year and (usually) to let unused amounts
  accumulate from year to year.
• The value of the employer-provided medical
  coverage and the reimbursements are excluded from
  the employees gross income and deductible to the
  employer.
• First formally approved by the IRS in July of
  2002 (Notice 2002-45 and Rev.Rul. 2002-41).

23
HRA Overview

• Employer contributions only (can be funded or
  unfunded)
• Used to reimburse qualified medical expenses /or
  insurance premiums
• May be rolled over into next taxable year
• Must substantiate expenses before reimbursement

24
Who is Eligible to Participate?

• Current and former employees
• No self-employed individuals
• Excludes sole proprietors, partners, 2 or more
  shareholders in a sub-S corporation
• Excludes independent contractors
• Excludes non-employee directors

25
Who is Eligible to Participate?

• Retirees Along with actives or retiree-only.
  (Notice 2005-24 and PLR 200452013).
• For plan years beginning after 12/31/05, employer
  may base HRA contribution for retiring employees
  on the value of unused sick time or vacation
  leave, if
• Those contributions are automatic and mandatory,
• The retiree has no choice to receive the amounts
  in cash, and
• The entire amount of unused time goes to the HRA.

26
Whose Expensesare Eligible for Reimbursement?

• Participants
• Spouses
• Tax dependents under IRC 152

27
Who Makes Contributions?

• All contributions MUST be made by the employer.
• There is no limit on contributions.
• May be monthly, quarterly, or annually.
• There is no requirement that the full annual
  amount be available for a participants use on
  the first day of the plan year.
• Plan design is flexible.

28
What is the Coverage Period?

• The employer may choose the coverage period.
• To be reimbursable, the expense must be incurred
  during the coverage period.
• Wont cover expenses incurred before the HRA took
  effect
• Wont cover expenses incurred before
  participation
• The expense may be reimbursed after the coverage
  period and after employment terminates, if the
  plan permits.

29
Can You CarryoverUnused Amounts at Year End?

• An HRA is permitted to allow for the carryover of
  unused expenses.
• Carryover is not required but is permitted.
• It is permissible to set a cap on the amount that
  may be carried over.
• It is also permissible to limit the carryover
  feature to active employees.

30
Spend-Down

• Employer may allow terminated employees to
• Continue to receive reimbursements until the
  account is depleted, or
• Forfeit unused amounts at termination.
• Unused amounts may not be paid in cash to
  participants.
• Can revert to employer, or
• Be allocated among other participants.
• Employers may offer the spend-down to certain
  classes of participants (i.e. retirees).

31
What Expenses Are Eligible?

• Medical care under IRC Section 213(d)
• Including over-the-counter drugs
• Some weight loss items if diagnosis is present
• Some cosmetic procedures
• Health insurance premiums
• Medicare premiums
• Premiums for long-term care
• Consult IRS Publication 502 (www.irs.gov/formsandp
  ublications)

32
What Substantiation is Required?

• Medical claims
• Written statement from 3rd party of expense
  incurred
• Written statement that no other reimbursement is
  available
• Insurance premiums
• Proof of amount of premium
• Proof that premium was paid and date of payment
• Proof that policy is in effect

33
Reimbursement of OTCs

• Rev. Rul. 2003-102 allows HRA to reimburse for
  OTCs
• proper reimbursable items (e.g. pain relievers)
  vs. non-reimbursable items (e.g. vitamins)
• But for a medical condition would the
  participant purchase the item? medical care vs.
  general health

34
Substantiation for OTCs

• Require detailed receipts (including name of item
  purchased, date and purchase price) and
  certifications.
• Informal IRS Guidance requires third-party
  substantiation (if detailed receipt not
  available, must submit OTC drug label with
  purchase price attached).

35
Can You Use Debit Cards With an HRA?

• Rev.Rul. 2003-43 permits use of debit cards with
  HRAs.
• Substantiation of expense
• Procedures to collect improper reimbursements
• Substantiation requirements
• When issued, employee certifies use will be
  limited to medical expenses that are not
  otherwise reimbursable
• Certification printed on card and reaffirmed
• Employee agrees to maintain records to support
  claims

36
Substantiation with Debit Cards

• Automatic Approvals
• Co-Payments
• Recurring Expenses
• Real-Time Substantiation
• Conditional Approvals
• Employees Must Submit Bills, EOBs, Etc., About
• Service or Product
• Date of Service or Sale
• Amount
• Card Only Valid At Specified Merchants/ Providers

37
Substantiation with Debit Cards

• Improper Reimbursements
• Employee Pays it Back
• Withhold From Wages (If State Law Allows)
• Offset With Future Reimbursements
• Deny Access to Card For Future Reimbursements
• Treat Like Any Other Business Debt
• Card Cancelled When Employee No Longer in Plan

38
What if HRA Pays for Ineligible Expenses?

• Plan disqualified for all payments for all years.
  
• All amounts distributed from the entire HRA plan
  become includible in employees taxable income.
• Subject to both income and employment taxes
• Applies to reimbursements of qualified medical
  expenses as well
• Also, cannot structure another benefit by
  calculating it based upon an HRA forfeiture.
• See Notice 2005-24

39
What are theNon-Discrimination Requirements?

• IRC 105(h) Plan cannot favor HCEs with respect
  to eligibility or benefits
• HCEs include the 5 highest-paid officers, a 10
  shareholder, or one of the highest 25 of
  employees
• Plan is nondiscriminatory if
• it benefits 70 or more of all employees
• 80 or more of all employees who are eligible
  actually benefit, and
• 70 of all employees are eligible, or the
  eligible employee class, is determined to be
  non-discriminatory

40
What are the Non-Discrimination Provisions?

• Benefits provided for HCEs must be provided for
  all other participants.
• If the plan fails, benefits provided to HCEs are
  taxable.

41
Are There Limitson the Employers Deduction?

• An employer may deduct amounts contributed to an
  HRA, subject to limits in IRC 419A.
• If unfunded employer is accruing unfunded
  liability that will appear on balance sheet.

42
Does COBRA Apply?

• Yes, because HRAs are group health plans.
• Unclear who is eligible or who would elect.
• Premium calculation is unclear.
• It is permissible to charge the same premium,
  regardless of the employees account balance.
• Also permissible to bundle with group health
  plan if offered as a combined benefit for actives.

43
Does ERISA Apply?

• Yes, HRAs are group health plans (exceptions
  governmental entities and church plans)
• You must have a written plan document.
• You must provide SPDs and SMMs to participants.
• The ERISA claims rules apply.
• You must file a form 5500 if there are more than
  100 participants.
• You are subject to ERISAs fiduciary duties in
  your administration of an HRA.

44
What Reports Must an HRA File?

• Form 5500 Annual Report
• If the HRA has 100 or more participants, and
• If the plan is subject to ERISA
• Due by the last day of the 7th month after the
  end of the plan year.
• No 1099 required.

45
Does HIPAA Apply?

• It appears that HIPAA would apply.
• Portability Unclear how special enrollment,
  creditable coverage, and nondiscrimination rules
  would apply.
• Privacy HRA must protect PHI in claims
  substantiation information. HRA administrator is
  BAA. All administrative requirements, including
  requirement for written policies, NPP, and
  Privacy Officer would apply.
• Security Would apply to the extent any PHI is
  maintained electronically.

46
How Does anHRA Impact HSA Participation?

• Participation in an HRA will disqualify the
  individual from participating in an HSA unless
  the HRA
• Limits coverage, such as to dental and vision
• Reimburses expenses only if excess of the high
  deductible (other than preventative care)
• Limits eligibility to non-participants in HSA
• Does not reimburse participants until retirement
  or
• Suspends reimbursement while HSA contributions
  are being made (except for permitted insurance
  and preventative care)

47
What Notices Must an HRA Send?

• SPD/SMM
• COBRA
• WHCRA
• NPP
• MEDICARE D Creditable Coverage

48
Similarities Between HRAs and FSAs

• No trust required
• Self-employed, partners, and 2 s-corp
  shareholders are ineligible
• No maximum contributions
• Affect HSA eligibility
• Substantiation of expenses is required
• Can stand alone or accompany a health plan
• Contributions are not subject to FICA or FIT

49
Differences Between HRAs and FSAs

• Employer owns HRA -- not portable
• Only employer may contribute to HRA
• HRA does not mandate a 12-month coverage period
• HRA amounts may be carried over
• HRAs are not required to give participants access
  to full amount of annual contribution
• Retirees may receive HRA contributions
• There are no mid-year election change limits for
  HRAs

50
Coordinating HRAs and FSAs

• Typically, the HRA will reimburse first, then any
  unreimbursed amount may be reimbursed by the FSA.
• If the HRA plan specifies that the HRA will pay
  last, then the FSA may reimburse first.
• Alternatively, the HRA may cover a limited type
  of expenses (e.g. dental and vision) while the
  FSA covers other benefits (e.g. medical
  deductibles, co-insurance, and co-pays).

51
Should You Consider an HRA?

• Cost control Does the HRA provide an incentive
  for employees to control health care spending?
• Not portable
• Not interest bearing
• But carry-over eliminates year-end rush for
  non-essentials
• Popularity Is this a competitive benefit?

52
Health Savings Accounts
53
HSA Overview

• The Medicare Prescription Drug Act was signed
  into law on December 8, 2003
• This law added new Section 223 to the Internal
  Revenue Code to create and govern Health Savings
  Accounts (HSAs)
• Amended Internal Revenue Code Section 106 to
  allow for exclusion of amounts contributed to
  HSAs by an employer from employee income

54
What is an HSA?

• An IRA-like account used to pay for qualified
  medical expenses
• Has unique tax featurescontributions are
  tax-deductible going in, and tax free upon
  withdrawal if used for qualified medical
  expenses.
• Must be coupled with a high deductible health
  plan (HDHP)
• Must be established with a qualified HSA trustee
  (such as an insurance company, bank, or other
  person or entity approved by the IRS to be a
  trustee or custodian)

55
Why did Congressand the President Adopt HSAs?

• The government hopes that HSAs will
• Increase personal control over health care
  dollars
• Increase private ownership of health insurance
  policies. (This will shift the currently
  dominant employer-offered insurance model so it
  will resemble how we purchase car insurance.)
• Decrease the number of uninsured Americans
• Ownership Society People will be more careful
  about their health care dollars if they own the
  money and could profit from prudent decisions.

56
How Can HSAs Foster an Ownership Society?

• PERSONAL RESPONSIBILITY HSA holders will take
  time to become more savvy consumers.
• FREEDOM TO CHOOSE Structure will allow
  consumers to choose ones own doctor and health
  insurance policy.
• COMPETITION BETWEEN PROVIDERS Individual
  ownership will make markets more competitive.
  Doctors and insurance companies must work harder
  to earn business.

57
Are HSAs a Silver Bullet that will Cure the
Broken Health Care System?

• No, HSAs are an alternative option, not a
  replacement to other health care options such as
  conventional employer-sponsored insurance
  programs or Medicare/Medicaid.
• Potential negative impacts during a transition to
  HSAs
• Employers could reap the cost savings from
  offering only HDHPs, and not pass any of the
  savings on to employees.
• This interim period could leave sick, lower-paid
  employees vulnerable if they do not have the
  means to pay the high deductible
• The oldest and sickest consumers (those who are
  responsible for most health care costs) can not
  effectively shop for health care.
• Availability of consumer data to compare
  providers and services is currently very poor

58
Who is Eligible to Establish an HSA?

• Eligibility status is determined on a
  month-by-month basis
• Any individual who as of the first day of the
  month
• Is covered under a high-deductible health plan
  (HDHP)
• Is not covered under any other health plan
  (whether as an individual, spouse, or dependent)
  that is not an HDHP and that provides for any
  benefit covered by the HDHP
• Is not entitled (eligible and enrolled) to
  benefits under Medicare
• May not be claimed as a dependent
• Do not need to be an employee can set up as an
  individual

59
What is a High-deductible Health Plan?

• Deductible limits (indexed to increase with
  inflation)
• At least 1,200 for single coverage (for 2010)
• At least 2,400 for family coverage (for 2010)
• Pay attention to embedded deductibles

60
What is a High-deductible Health Plan?

• Deductible limits do not apply for preventative
  care (see IRS Notice 2004-23)
• Periodic health evaluations
• Routine prenatal and well-child care
• Child adult immunizations
• Tobacco cessation programs
• Obesity weight-loss programs
• Screening services
• Treatment that is ancillary to preventative care
  (e.g., removing polyps during a routine
  colonoscopy)
• Preventative care drugs
• Someone with risk factors, but asymptomatic
  (e.g., treatment of high cholesterol with statins
  to prevent heart disease)
• To prevent the reoccurrence of a disease from
  which a person has recovered (e.g., treatment of
  recovered heart attach or stroke victims with ACE
  inhibitors to prevent a reoccurrence)

61
What is a High-deductible Health Plan?

• Out-of-pocket expense limits (includes
  deductibles co-pays, but not premiums)
• No more than 5,950 for single coverage (for
  2010)
• No more than 11,900 for family coverage (for
  2010)
• Both can be higher for out-of-network services
• Can be a self-insured employer plan

62
What Non-HDHP Coverages are Allowed?

• Coverage for accidents, disability, dental care,
  vision care, or long term care
• HRA or FSA coverage would be impermissible
  non-HDHP coverage if it can be used on a
  first-dollar basis to cover medical expenses
  generally
• Limited Purpose FSA/HRA
• Post Deductible FSA/HRA
• Suspended HRA
• Retirement HRA
• Cafeteria Plan Grace Period An employee covered
  under a health FSA grace period that lasts into
  the next calendar year cannot participate in an
  HSA until the first of the next month after the
  grace period ends (unless limited purpose FSA)

63
What Non-HDHP Coverages are Allowed?

• Permitted insurance
• Guidance indicates that separate drug plans that
  are not subject to the high deductible are not
  allowed without losing HDHP status.
• Workers compensation, tort liabilities,
  liabilities relating to ownership or use of
  property, insurance for specified diseases, per
  diem hospitalization insurance
• Discount cards are allowed

64
How are HSAs Funded?

• Contributions must be in cash
• Contributions can only be made for those months
  that a person is an eligible individual
• Contributions are fully vested and portable
• Once made, employer contributions cannot be
  forfeited the account belongs to the employee
  without condition

65
How are HSAs Funded?

• Contributions by an eligible individual
• Through an employer-sponsored cafeteria plan
• Through after-tax contributions made directly to
  the HSA
• Rollover contributions from an Archer MSA or
  another HSA

66
How are HSAs Funded?

• Contributions by an employer of an eligible
  individual
• Employers must make comparable contributions to
  comparable participating employees or face a 35
  excise tax on all HSA contributions for the
  testing period (measure on a calendar year)
• Does not apply to contributions made through a
  cafeteria plan (pre-tax salary deferrals)
• Can differentiate between single and family
  coverage
• Can differentiate between tiers of family
  coverage (e.g., employee spouse, employee
  spouse 1 child, etc.)
• Can differentiate between current full-time
  employees, current part-time employees, and
  former employees
• Can differentiate between union and non-union and
  between different sets of union employees

67
How are HSAs Funded?

• Contributions by an employer of an eligible
  individual (Cond)
• Can differentiate between employees who take
  employers HDHP and those who do not
• Can integrate contributions with wellness
  programs
• Contributions are comparable if, for each month
  in a calendar year, the contributions are either
• The same amount or
• The same percentage of the deductible under the
  HDHP
• Can differentiate as noted above, but
  contributions with respect to self2 may not be
  less than contribution for self1 and
  contribution for self3 cannot be less than
  contribution for self2
• Contributions may be made on a pay-as-you-go
  method (e.g., per payroll) or on a look-back
  method (e.g., a the end of the year)
• Matching contributions will not meet the
  comparability requirements unless done through a
  cafeteria plan

68
What are Contribution Limits for HSAs?

• Maximum monthly amount is 1/12 of the annual
  contribution limit for HSAs
• Annual limits (no limits for rollovers)
• For single coverage, 3,050 (for 2010)
• For family coverage, 6,150 (for 2010)
• Additional catch-up contributions for eligible
  individual age 55 to 65 (1,000 in 2010)
• Limits apply to all contributions regardless of
  source

69
What are Contribution Limits for HSAs?

• Special rules for married people
• If either spouse has family coverage, both are
  treated as having it
• If each has family coverage, then contribution
  limit is based on lower deductible of the two and
  limit is split between the spouses, unless they
  agree otherwise
• Both spouses can make the catch-up contributions
• Excess contributions are taxable plus 6 penalty
  tax if not distributed by tax deadline
• If returned, then only earnings on excess are
  taxed (with no penalty tax)

70
What are the Tax Effects for Contributions?

• Contributions for a taxable year may be made
  during the year up to tax filing deadline and
  appreciate tax-free while in the HSA
• Pre-funding issues
• Wait-and-see approach
• Contributions are deductible by the eligible
  individual in determining gross income
  (above-the-line deduction)
• Employer contributions are deductible by
  employer excludable from employees income not
  subject to withholding for FICA, FUTA, and RRA

71
What Rules Apply to Distributions?

• Distributions may be taken any time (even if not
  currently an eligible individual)
• Distributions for qualified medical expenses of
  eligible individual, spouse, and dependents are
  excludible from income
• Distributions for any other purpose are subject
  to regular tax plus a 10 penalty tax
• Distributions made after death, disability, or
  attaining age 65 are not subject to 10 penalty
  tax
• Employers not required to substantiate expenses

72
What are Qualified Medical Expenses?

• Medical expenses defined in IRC Section 213(d)
• Many out-of-pocket medical care costs
• Prescription drug costs and over-the-counter
  drugs
• Consult IRS Publication 502

• Certain insurance premiums
• Long-term care insurance
• COBRA premiums
• Health insurance while on unemployment
• Over age 65 also any health insurance other
  than a Medicare supplemental policy

73
How Can Accounts be Transferred?

• Upon divorce
• Spouse can become account holder
• Transfer is not a taxable event
• After death
• If spouse is HSA death beneficiary, then spouse
  becomes account beneficiary, and death is not a
  taxable event
• If death beneficiary is non-spouse, HSA no longer
  exists and beneficiary gets taxed on HSAs fair
  market value

74
Other Miscellaneous Issues

• HSAs are not generally ERISA plans
• BUT, underlying HDHP is likely an ERISA plan
• HSAs are not subject to COBRA
• HSAs are not considered when conducting Medicare
  Part D creditable coverage analyses

75
Eligibility
76
Funding
77
Expense Flexibility
78
Portability
79
Annual Rollovers
80
Contribution Limits
81
Tax Effects
82
Death and Divorce
83
Thank you.
Christopher S. Sears Ice Miller LLP [phone]
christopher.sears_at_icemiller.com