20 of 39 Before You Go How You Pay for Care Special Programs and Services Learn More Your HSA in Action: How It Works Let’s look at several examples to see the HSA Plan in action. DEVON ASKS: How does the HSA plan work when I go to the doctor for a physical and take a maintenance medication? • D evon has Associate coverage. The HSA Plan covers preventive care (like annual physicals) at 100% and has an in-network deductible of $2,000. • T he cost of his routine physical exam and other preventive care is 100% covered since he uses a doctor in the network. • D evon’s doctor has prescribed a medication in the Brand Preferred tier that Devon takes on an ongoing basis. Each calendar year, he is responsible for paying for his prescriptions and other in-network qualified medical care until he has paid $2,000—the amount of his deductible. • A fter that, he is responsible for paying 20% (min $30, max $90) of the cost until he reaches his plan’s out-of-pocket maximum of $6,000. * Plan covers preventive care 100%. The plan’s negotiated rates with Devon’s doctor apply. Devon Opened an HSA • C ompared with the Kaiser plan he participated in last year, Devon saves almost $60 in premiums from his weekly paycheck by participating in the HSA Plan. He reasons that the money he is saving on premiums would be better off in an HSA, so he contributes $60 from each paycheck for a total of $3,120 into his HSA for the year. • H is federal tax savings from his pre-tax HSA contributions are almost $750 (assuming he is in the 24% federal tax bracket). Plus, he saves 7.65% on Social Security and Medicare (FICA) taxes.* • E ven if he uses the money in his HSA to reimburse himself for the entire $720, he has still saved almost $750 in federal taxes alone, AND at year-end, he has $1,880 left in his HSA as a basis for future savings or to help pay for medical expenses the following year. * Please see www.irs.gov or Bankrate to determine your federal tax bracket. Then, go to an online HSA Savings Calculator to determine how much you can save. Potential savings on state personal income tax can be difficult to determine. State tax brackets vary greatly, and some states have chosen to tax HSA contributions. Talk to your financial advisor or consult your state department of revenue for more information. Expense Charge What the Plan Pays What Devon Pays Annual physical exam $345 $295* $0 Medication total calendar year $720 $0 $720 TOTALS $1,065 $295 $720
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