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 * Savings Plan with HSA
 * Eligible Expenses
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FREQUENTLY ASKED QUESTIONS

Your Health Savings Account (HSA) coupled with a High Deductible Health Plan
(HDHP) can help you save money on your medical expenses. By choosing the HSA
Plan you can save significantly on your health care premiums.

GENERAL INFORMATION

What is an HSA?

A Health Savings Account (HSA) is an individually owned, tax-advantaged bank
account that allows you to accumulate funds to pay for qualified health care
expenses. To qualify, you must be covered under a qualified high-deductible
health plan (HDHP) as defined by IRS regulations. The State Health Plan Savings
Plan is a high-deductible health plan. You can contribute to your HSA through
pretax payroll deductions.

You can pay for current qualified health care expenses or save the funds for
retirement health care expenses. You are responsible for monitoring your
account, including ensuring distributions are for qualified expenses and
contributions do not exceed limits set by the IRS. You must keep records and
documentation of all health care expenses for which distributions are taken.


What are the advantages of having an HSA?

HSAs offer a triple tax advantage:

 * Contributions are 100 percent tax-deductible for the account holder.
 * Funds grow on a tax-deferred basis, and funds are not taxed if used for an
   eligible expense.
 * Funds can be used tax-free for eligible health care expenses.

How does an HSA work?

As you make contributions to your HSA, you can save the funds or spend the funds
on current health care expenses. Unused funds and interest carry forward,
without limit, from year to year. As the account holder, you own the account and
can keep the account even if you change jobs or stop working.

Who is eligible to have an HSA?

To qualify for an HSA, you must meet the following requirements:

 * You must be covered by the Savings Plan, which is a qualified high-deductible
   health plan (HDHP).
 * You must have no other health coverage, including a spouse’s plan that
   provides benefits covered by your HDHP. You can, however, have accidental,
   disability, dental, vision or long-term care coverage or coverage that
   provides benefits for a specific disease or illness, a fixed amount for
   hospital stays or liability coverage, such as workers’ compensation.
 * You are not enrolled in Medicare.
 * You do not receive health benefits under TRICARE.
 * You have not received Veterans Administration (VA) benefits within the past
   three months.
 * You cannot be claimed as a dependent on someone else’s tax return.

Can I have an HSA and a Medical Spending Account (MSA)?
While you cannot enroll in a traditional MSA, you may enroll in a Limited-use
MSA, which allows you to pay for dental and vision expenses only.
What is a limited-use medical spending account (MSA)?

A Limited-use MSA is a Health Savings Account (HSA)-compatible MSA. The
Limited-use MSA allows you to set aside money pretax to pay for dental and
vision care expenses. If you are enrolled in the Savings Plan, you are eligible
to participate in a Limited-use MSA, which will help maximize your tax savings.
The HSA can be used to pay all types of medical expenses incurred now or in the
future; however, the Limited-use MSA can be used only to pay for current year
dental and vision expenses.
Here's a tip. Plan carefully to preserve the value of both accounts by using
your HSA funds to save and invest for future health care expenses, or large,
unexpected expenses. Use your Limited-use MSA to pay for routine dental and
vision care expenses you incur each year.

I am currently enrolled in the Standard Plan and have a Medical Spending Account
(MSA), but I want to enroll in the Savings Plan for next year and contribute to
an HSA. What do I need to do?
First, you need to enroll in the Savings Plan and an HSA during open enrollment
for the 2025 plan year. Your MSA includes a carryover provision, which means you
can carry over up to $640 of your MSA balance into the 2025 plan year; however,
you cannot contribute to your HSA in the new plan year if you have a balance in
your MSA. Therefore, any carryover funds in your MSA will automatically convert
to a Limited-use MSA if you enroll in an HSA.

ENROLLMENT AND CONTRIBUTIONS

How do I enroll in an HSA through HSA Central?

When you enroll in the Savings Plan and elect to make contributions to an HSA,
PEBA will notify HSA Central to setup a bank account for you. You will receive a
welcome email with directions to activate your account. You will receive your
HSA Central debit card within 7 to 10 business days. Be sure to log in to your
account online to accept the account's terms and conditions and call to activate
your debit card to fully access your new HSA.

How do I add a beneficiary to my account?

To designate a beneficiary, log in to the HSA Central Consumer Portal, select
Accounts, then Profile Summary and Add Beneficiary. It's important to review
your beneficiary designations periodically to ensure they are up to date.

How do I make contributions to my HSA?
You may contribute to your HSA via pretax payroll contributions through your
employer or you may make post-tax deposits to your HSA by contributing funds
from your account at another bank. You can add your bank account to your health
savings account to easily add funds to your HSA any time. You'll receive the
post-tax benefits when you file your annual taxes.
Can I change my contribution amount during the year?
Yes. You can change your contribution to your HSA at any time, but no more than
once a month. To change your pretax payroll deduction amount, contact your
employer.
Are there limits to how much I can contribute to my HSA?
The IRS establishes annual contribution limits for individuals and families
based on their level of health insurance coverage. The IRS also includes special
rules that allow individuals ages 55 to 65 to make catch-up contributions.
Anyone can make contributions to an HSA of an eligible individual. Excess
contributions, if not withdrawn in a timely manner, may be assessed an excise
tax of 6 percent.

2024 Limit Self-only coverage $4,150 Family coverage $8,300 Catch-up
contribution (ages 55-65) $1,000

What is a catch-up contribution?
Individuals between ages 55 and 65 can contribute an additional $1,000 per
calendar year. A married couple may make two HSA catch-up contributions, so long
as both spouses are at least age 55 and a separate HSA is established in the
name of each spouse.
Who can contribute to my HSA?
Anyone can contribute funds to your HSA. For example, family members or any
other person may make contributions on behalf of an eligible individual.
Can I contribute funds from my Individual Retirement Arrangement (IRA) to my
HSA?
You can make a one-time contribution from an IRA to your HSA, subject to the
maximum annual contribution limits and provided it is a direct IRA to HSA
transfer.
If I have another HSA already, can I transfer those HSA funds into my new HSA?
Yes. You can transfer amounts from your other HSA(s) by completing the HSA
Central Transfer Request Form. While there are no transfer fees from HSA
Central, you should check with other bank custodians for details about their
fees. There is no limit to the amount of HSA funds you can transfer to HSA
Central from other HSA(s) because HSA-to-HSA transfers do not count toward the
IRS annual contribution limit.
What happens if I exceed the annual contribution limit?
You must report the excess amount as gross income on your income tax return, and
an excise tax of 6 percent will apply. You can withdraw excess contributions by
contacting HSA Central, and the 6 percent excise tax will no longer apply.
Can I have a joint HSA with my spouse?
No. An HSA is individually owned; however, you can add your spouse's information
to your account, which allows them to obtain an HSA Central debit card.
Is there a deadline for contributions made to an HSA?
Yes. Annual contributions should be made by your tax filing deadline. For most
individuals, this date is April 15 of the following year.
Can I invest my HSA funds?
Yes. You can invest your funds once your account balance reaches $1,000. You
have a variety of investments from which to choose, or you can self-direct funds
with a registered representative by contacting the bank custodian, Central Bank.
Investments are not guaranteed and may lose value, including the loss of
principal. Investment products and services are not a deposit, not FDIC insured,
not insured by any federal government agency, not guaranteed and may go down in
value.
What happens to my HSA if I am no longer covered by the Savings Plan?
You can no longer make contributions to your HSA; however, your HSA funds are
available to you to use to pay for qualified health care expenses.

DISTRIBUTIONS FROM YOUR HSA

Can I use tax-free HSA funds to reimburse myself for IRS-qualified health care
expenses?

Yes. As long as the qualified health care expense occurred after you opened the
HSA, you can pay for the expense or reimburse yourself with HSA funds. Keep
copies of your itemized receipts and insurance plan explanation of benefits
(EOBs) to verify your funds were used for qualified health care expenses, not
paid for by another source or taken as an itemized deduction for a prior tax
year.

Qualified expenses are defined by the IRS as amounts paid for the diagnosis,
cure, mitigation, treatment or prevention of disease or for the purpose of
affecting a structure or function of the body, as well as for transportation
primarily for and essential to such care. Qualified expenses generally do not
include insurance premiums, but do include premiums for long-term care
insurance, COBRA coverage, health care coverage while receiving unemployment
compensation, or Medicare and other health care coverage if you were age 65 or
older (other than premiums for a Medigap policy, such as the Medicare
Supplemental Plan).

See IRS Publication 502 and IRS Publication 969 for more information.

Can I use my HSA funds to pay medical expenses for my spouse or children?
Yes. You can use HSA funds to pay for qualified health care expenses for
yourself, your spouse or dependent even if they are covered under another health
plan. Generally, people qualify as your dependent(s) if you claim them as an
exemption on your federal income tax return. Be sure to consult a qualified tax
advisor for further information about your personal situation.
What types of expenses are eligible to be paid from my HSA?

HSA funds can be spent on current year expenses or saved for future expenses to
pay for qualified medical, dental, vision and prescription drug expenses as
defined in IRS Publication 502. Funds used for non-health care expenses are
subject to income tax and, if you are younger than age 65, are subject to a 20
percent IRS penalty.

For a list of qualifying expenses, visit www.irs.gov.

How can I take distributions from my HSA or pay for qualified health care
expenses?
When you open an HSA, you will receive some exclusive features designed to make
paying and tracking your qualified expenses seamless and user-friendly. You will
receive a MasterCard® debit card that you can use for payments and the
opportunity to use free online Bill Pay. For ease of use, you can add your HSA
Central debit card to your digital wallets, including Apple Pay, Samsung Pay and
Google Pay. You will also have access to your account statement online.
What should I do if I have overpaid my health-care provider, and the health-care
provider refunds the overpaid amount to me?
Contact HSA Central at 833.571.0503 for assistance in returning the funds to
ensure it is not reported as a current year contribution. If a provider makes a
check payable to you for a refund, you can mail the check to HSA Central with a
Contribution Form, which is available on the HSA Central consumer portal. Select
"Mistaken Distribution" on the form to ensure the refund is coded properly.
What happens if I use my HSA funds to pay for something other than a qualified
health care expense?
HSA funds used for something other than qualified health care expenses are
considered part of your gross income and are subject to applicable income tax
and a 20 percent tax penalty. Funds used after an account holder’s death or
disability or after age 65 are not subject to the 20 percent penalty.
Do I need to report information about my HSA on my personal income tax return?

Yes. Individual account holders must file IRS Form 8889 with their annual tax
return to report contributions and distributions from the account. HSA Central,
will provide two tax forms:

 * Form 5498-SA to report the contributions and rollovers made during the
   previous calendar year; and
 * Form 1099-SA to report the total amount of distributions from the HSA.

Can I designate beneficiaries for my HSA?
Yes. If you designate your spouse as the beneficiary, the account will be
treated as your spouse’s HSA after death. If your spouse is not the beneficiary,
the account stops being treated as an HSA, and the fair market value of the HSA
becomes taxable to the beneficiary in the year in which you die. If your estate
is the beneficiary, the value is included on your final income tax return. You
can also designate a trust as the primary or contingent beneficiary.

MORE INFORMATION

Visit the HSA Central website at hsa.centralbank.net or call 833.571.0503. Log
in and access your account for:

 * Statements and activity;
 * Bill Pay services;
 * Setting up recurring provider payments; and
 * Online investments.

RESOURCE CENTER

Head over to our resource center for additional information.

Learn More

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HELPFUL TIPS:

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To open your HSA, you will want the following information available to make your
enrollment process quick and easy:

 1. Your driver’s license, address, Social Security number and birth date;
 2. The name, address, Social Security number and birth date of all
    beneficiaries. Beneficiaries may be added/changed any time after account
    opening.

Proceed