Presentation by Janice Darby, Licensed Agent, Ameris Group Draft

Executive Network Group of Greater Chicago, Inc

September 15, 2005

As reported in the Executive Network Group of Greater Chicago, Inc meeting announcement, Ms. Darby has been involved with the life and health insurance industries since 1995. She specializes in Health Savings Account (HSA) plans, and is currently a managing agent and a million dollar producer for the Health Insurance Professionals, a general health insurance agency. She is a member of the DuPage Chapter of the National Association of Health Insurance Underwriters and a passionate activist for affordable health insurance for all Americans.

At the beginning of the presentation Ms. Darby noted that many Americans do not have health insurance. For the benefit of the attendees she noted that COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage required of employers with 20 or more employees separating employees is very often quite expensive, and the former employee must pay the premiums. Many former employees seek less expensive alternatives.

Lower cost options are available, if diligent search is made for those options. Caution as always is necessary in evaluating proposed plans: questions concerning pre-existing conditions of family members, like diabetes, may reduce available options.

By careful examination of plans with health insurance professionals, one can look at plans carrying high deductibles. You may not need a policy with provisions for doctor visits, because you, and your dependants, may not be visiting doctors. You should also remember that whatever plan you select may carry far higher premiums the second and later years, if you choose to renew them. You should be aware of the fact that high deductible plans are generally less expensive than low deductible plans, as the likelihood of a payment by the health insurance carrier is reduced. Low deductible plans can carry very high premiums.

You can buy separately supplementary plans for accidents and for major illnesses like heart attacks, renal failure and the like, which may be events you are attempting to insure against. With supplementary plans the actual risks are much smaller for the primary carrier and the major plan you buy. Remember the high deductible plan will be the plan you identify when asked for proof of insurance, and you will use that plan for most coverage issues. That high deductible plan should carry a reduced premium compared to a low deductible plan.

You need to be an educated consumer. Ms. Darby noted she had saved clients substantial amounts by using high deductible plans with supplementary plans, and a major benefit can be the Health Savings Accounts, which are the subject of the following presentation.

The HEALTH SAVINGS ACCOUNT

1. What is an Health Savings Account (HSA)?

Briefly, this presentation will outline for you the following topics:

a. The Advantages of an HSA

b. Who is eligible for an HSA

c. Which insurance qualifies for an HSA

d. Tax Treatment of HSAs

2. Health Savings Accounts-how they work with following tax considerations.

a. HSA’s consist of Money put into an account which is used to pay for medical expenses

b. No income tax is paid on the money put in

c. No income tax is paid on the money taken out

d. No income tax is paid on the interest earned

These HSAs are “Better than an IRA”

3. More about How an HSA Works-Health plan, and deposits and withdrawals.

a. You choose a qualified Health Plan

b. You Open an HSA account and deposit $ amount you select

c. You Withdraw $ amounts to pay for qualified expenses

More detail about How an HSA account works-Trust considerations.

d. The HSA is a trust account

e. The trustee can be a bank, insurance company or other entity approved by the IRS

f. The HSA owner will deal with the trustee for HSA deposits or withdrawals

g. The insurance company and trustee can be one and the same

4. Advantages of an HSA -personal choices.

a. The individual owns the account and decides:

b. How much to contribute

c. Whether or not to contribute at all

d. Whether to use the account to pay medical expenses and/or whether to save the account for future use

e. Where to open the account

f. Which insurance to purchase

5. Advantages of an HSA - Portability

a. The HSA is completely portable regardless of:

b. Which employer you work for

c. Whether or not you’re employed

d. What state you move to

e. Age or marital status changes

f. Future medical coverage

6. Advantages of an HSA

a. Unspent balances remain in the account (no “use it or lose it” rule)

b. Premiums are lower than traditional health insurance

7. HSA Eligibility

Four (4) Basic Rules:

a. Must be covered by a High Deductible Health Plan (HDHP)

b. You can’t be claimed as a dependent on another person’s tax return

c. You can’t open or contribute to an HSA if eligible for Medicare

d. You must not be covered by a non-HDHP unless it’s a permitted type of coverage

8. Permitted Types of Insurance Coverage

a. Accident

b. Critical Illness

c. Dental

d. Disability

e. Hospital Indemnity

f. Long Term Care

g. Vision

h. Auto

i. Homeowners

j. Workers Compensation

9. Requirements of a High Deductible Health Plan (HDHP)

a. Annual deductible of at least $1,000 single and $2,000 family

b. Max OOP (out of pocket) of $5,000 single and $10,000 family

c. These amounts will be indexed for inflation using the Consumer Price Index (CPI)

d. Family will always be twice the single amount

10. Requirements of an High Deductible Health Plan (HDHP)

a. No first dollar benefits allowed except preventive care

b. This includes routine exams, pre-natal and well-child care, immunizations, tobacco cessation, obesity weight-loss and screening tests

c. Over 50 screening tests are listed as specifically approved

d. The IRS, not State Law, determines what qualifies as Preventive Care

11. HSA Contributions

a. Maximum HSA contribution for 2005 is 100% of the deductible up to:

$2,650 for single coverage

$5,250 for family coverage

b. Contributions must be made by APRIL 15th (similar to IRA)

12. HSA Contributions-Enrollment

a. Enrolling clients

b. Enrolling clients’ maximum contribution depends on their effective date

c. The annual contribution limit is calculated month by month

d. Eligibility is based on the first of the month

e. Monthly limit is 1/12 of the annual maximum

13. HSA Withdrawals

a. Withdrawals for qualified medical expenses of the person covered by the HDHP are tax-free

b. Withdrawals for qualified medical expenses of a spouse or dependent are tax-free even if they are not covered by the HDHP

c. Distributions can be received at any time

d. Withdrawals for qualified medical expenses of the person covered by the HDHP are tax-free

e. Withdrawals for qualified medical expenses of a spouse or dependent are tax-free even if they are not covered by the HDHP

f. Distributions can be received at any time – even when no longer covered by as HDHP

14. HSA Withdrawals

a. If withdrawal is not used for qualified medical expenses, the amount is taxed plus 10% penalty

b. The additional 10% waived if HSA owner is age 65 or disabled (defined by IRS)

c. The HSA owner should keep all receipts to verify that withdrawals were for qualified medical expenses.

15. HSA Withdrawals

a. If the withdrawal is deposited into another HSA (a “rollover”) there is no penalty and no tax paid if completed within 60 days

b. Rollovers from an MSA are permitted

c. Rollovers from an IRA are not permitted

d. Only one rollover per year is allowed

16. Health Insurance Premiums

a. Certain health insurance can be paid from an HSA

b. COBRA coverage

c. Qualified Long Term Care insurance

d. ANY health plan while unemployed

e. If Medicare-eligible ANY health insurance EXCEPT a Medicare supplement policy

17. Estate Treatment of an HSA

a. Upon death of an HSA owner, the account transfers to the named beneficiary or according to the HSA trust document

b. If a spouse is the recipient, he/she becomes the owner and no taxes are paid

c. If the HSA is received by someone other than the spouse – the value of the account is taxable to the recipient

18. MORE INFORMATION

The US Treasury Department has added information about HSAs to its website:

www.treas.gov

There is also a voice mailbox for questions from consumer

(202) 622-4HSA&‍ And an e-mail address:

HSAInfo@do.treas.gov

Janice Darby

Licensed Agent,

Ameris Group

600 Enterprise Drive

Suite 200

Oak Brook, Illinois 60523

Phone (630) 202-2276

Fax: (708) 335-3527

E-mail; amerisgroup_IL@yahoo.com

Index:

THE HSA

1. Health Savings Accounts

2. How an HSA Works

3. How an HSA account works

4. Advantages of an HSA

5. Advantages of an HSA

6. Advantages of an HSA

7. HSA Eligibility

8. Permitted Types of Coverage

9. Requirements of a HDHP

10. Requirements of an HDHP

11.HSA Contributions

12. HSA Contributions

13. HSA Withdrawals

14. HSA Withdrawals

15. HSA Withdrawals

16. Health Insurance Premiums

17. Estate Treatment of an HSA

18. MORE INFORMATION