HSA - FAQs

General Information About HSAs

Managing Your HSA

Tax Savings

How do the tax savings work?

Contributions

Distributions

How are distributions taxed or penalized?

How HSAs Work With Other Accounts

Fees

Investment Option

What is a Health Savings Account?
A Health Savings Account (HSA) is a deposit account created to help meet rising health care costs by allowing individuals and families with High Deductible Health Plans (HDHP) to deposit pre-tax funds* into an account for qualified medical expenses. After age 65, the account owner can also use the funds for non-medical expenses without incurring tax penalties. This account was authorized by the Medicare Reform Act, approved December 2003.

*Deposits made from after-tax income are tax deductible.

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How does it work?
The HSA works in conjunction with a special High Deductible Health Plan (HDHP) to give you comprehensive health insurance coverage at the lowest possible net cost.

If you fund your HSA through payroll deduction, your contribution will be made using pre-tax dollars, which may reduce your income tax liability.

You can use the money in your account to cover the deductibles on your insurance policy and any other qualified medical expenses that you may incur as defined under IRS Code 213(d). Any unused funds are yours to use in the following year. Unlike plans such as the Flexible Spending Account, the money remaining in the account will continue to draw interest as long as there is a balance.

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What type of insurance plan is HSA-eligible?
The policy must be a High Deductible Health Plan(HDHP) with an annual deductible of at least $1,200 for individuals and $2,400 for families. For 2010, your total annual out-of-pocket expenses (money applied to your deductible and your coinsurance for covered charges) must be no more than $5,950 for individuals or $11,900 for families. These amounts are subject to cost-of-living adjustments. If you are unsure whether your health insurance is HSA-eligible, please contact your insurer or tax advisor.

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Who can open an HSA?
Anyone with a High Deductible Health Plan (HDHP) as their primary health insurance plan is eligible to open an HSA. Secondary coverage, such as a spouse's policy, is not permitted when contributing to an HSA.

The only groups not eligible are individuals entitled to Medicare benefits (generally not reached until age 65) or those claimed as a dependent on another person's tax return.

Anyone over the age of 65 who is not enrolled in Medicare can open/contribute to an HSA.

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What is an Archer MSA?
The Archer MSA* is a program established in 1996 by the Health Insurance Portability and Accountability Act (HIPAA) which is very similar to the HSA.

The main differences between these two accounts include:
- Contribution limitations are up to 100% of the maximum set by the IRS for the HSA; MSAs limit those contributions to 75% for families and 65% for individuals.
- HSAs allow both employer and employee to contribute in the same year; MSAs require that only one party contribute during a calendar year.
- At age 65, funds in an HSA can be used for any health insurance premiums, except Medicare supplemental policies. The MSA only allows this while an individual is receiving unemployment or while receiving COBRA continuation benefits.
*MSAs are no longer available.

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What are qualified medical expenses?
HSAs can be used for many types of medical expenses as defined in IRS Code 213 (d), including some that are often excluded on health insurance plans. Some examples of both are:

Qualified medical expenses include:*
- Health insurance plan deductibles, co-payments and co-insurance
- Prescription and over-the-counter drugs
- Dental services, including braces, bridges and crowns
- Vision care, including glasses, contact lenses and lasik eye surgery
- Psychiatric and certain psychological treatments
- Long-term care services
- Medically-related transportation and lodging
Typically HSAs may not be used to pay health insurance premiums, but there are exceptions:
- Any health plan coverage while receiving federal or state unemployment compensation
- COBRA continuation coverage after leaving employment with a company that offers health insurance coverage
- Qualified long-term care insurance
- Medicare premiums and out-of-pocket expenses, including deductibles, co-pays, and coinsurance
- Part A (hospital and inpatient services)
- Part B (physician and outpatient services)
- Part C (Medicare HMO and PPO plans)
- Part D (prescription drugs)
As the account owner, you will be responsible for substantiating that the distribution is for qualified medical expenses and must maintain records sufficient to show it is tax-free.

Please refer to the "Qualified Medical Expenses" in IRS Publication 502 for the complete list or go to http://www.irs.gov/publications/p502/index.html.

Note: An HDHP must already be established before incurring any expenses or they will not qualify.

*Please consult your corporate Human Resource department, Insurance Company, your tax consultant or IRS Publication 502 with any questions regarding these expenses.

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Can I use my HSA to pay my insurance premiums?
No, this is considered a non-medical withdrawal subject to all taxes and penalties.

The exception to this rule would apply if the money being withdrawn were being used to pay for:
- Qualified long-term care insurance.
- Health care insurance, including a major medical plan while you are: a) receiving unemployment compensation or b) entitled to health care continuation programs such as COBRA.
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How will my HSA be set up?
Funds in these accounts will be held in an interest-bearing checking account for you by Columbus Bank and Trust Company. An interest-bearing checking account will be opened in your name.

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Can I open an HSA in one of your branches?
Yes, one of our customer service representatives will be happy to help you open an HSA with Columbus Bank and Trust Company.

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I would like to transfer my existing HSA or Archer Medical Savings Account (MSA) to Columbus Bank and Trust Company. What do I need to do to get started?
Fill out the "Request for Transfer to a Health Savings Account" located in the Forms section of our website and bring it to one of our branches for us to mail to your existing financial institution.

If you need any help, please call our customer service center at 1-877-367-4HSA.

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How do I reimburse myself for qualified medical expenses if I pay a medical bill out of my regular account?
Write a check* from your HSA account to reimburse yourself for the expense. Remember to keep a record of your expenses to prove that the distribution was made for qualified medical expenses.

*Fees may apply.

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I would like to transfer my HSA to another financial institution, what do I need to do?
Go to the new financial institution and complete their "Request for Transfer to a Health Savings Account" form that should be mailed and processed.

If you have any questions please call 1-877-367-4HSA.

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How can I access my account?
A Visa® debit card(s) will be issued to you as soon as the account is set up. You also have the option of signing up for OnLine Access, our Internet banking solution. OnLine Access can be set up as an access-only service at no monthly service charge or you may choose the Bill Pay option for a monthly fee*.

Check access** is also an option on this account if you prefer; call 1-877-367-4HSA to order your customized checks. **

*Please refer to the OnLine Access information on our web page for fee information. **Fees may apply.

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If I already bank with Columbus Bank and Trust Company how can I transfer money from my HSA to my regular account to reimburse myself for out-of-pocket qualified medical expenses?
You can call or visit your local banking office to complete a transfer between accounts. You can also make a transfer for current year* expenses using OnLine Access if your accounts are set up with that service.

* All prior year expenses or contributions must be completed by a banker to insure proper reporting.
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How do I order or reorder checks?
Call 1-877-367-4HSA and one of our customer service representatives will be happy to help you.

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Who do I call for information about my account?
Please call 1-877-367-4HSA if you have questions about your balance or to verify that checks or deposits have posted to your account. Account information is also available through OnLine Access.

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How can I change my beneficiary?
Complete a "Change of Beneficiary" document located in the Forms section of our website. Make a copy for your records and mail the completed document to HSA Operations, P. O. Box 1828, Columbus, Georgia 31902-1828.

If you have any questions or need help completing the form, please call customer service at 1-877-367-4HSA.

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Who do I call if I have a problem with my debit card?
If your card is lost, stolen or damaged please call 1-877-367-4HSA.

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What happens to my HSA in the event of my death?
If your spouse is the beneficiary, then ownership of the account transfers to your spouse. We would close the account and open a new one in his/her name, transferring the balance with no penalty.

If your beneficiary is not your spouse, the HSA will be closed and the balance of the account will be included in the beneficiary's gross income for the year that your death occurred. We will need to re-issue the account in the beneficiary's name and close it for tax reporting purposes.

In either case, the beneficiary would either need to go into one of the branches or call customer service at 1-877-367-4HSA to help take care of all the details.

Please note that a death certificate will be required before any distributions or changes can be made to the account.

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How do the tax savings work?
Your contribution can be made using pre-tax dollars through payroll deduction*.

You will receive a monthly statement listing all deposits and withdrawals and a year-end tax statement. Distributions for qualified medical expenses are tax free.

If you have contributed more than the maximum, there will be a 6% tax penalty. Please click here for more information. Additional penalties also apply to any withdrawals made for non-qualified expenses prior to age 65.**

*If you fund your HSA through payroll deduction, your contribution will be made using pre-tax dollars and you will not be allowed an additional deduction on your federal income tax. If your contribution is made through any other means, you will be allowed a deduction at the end of the year on your federal income taxes.

**Please consult a tax advisor.

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What happens if all of the money contributed is not used?
The HSA works just like an IRA account; any funds left in the account at the end of the calendar year will remain in the account and earn non-taxable interest to supplement medical expenses at any time in the future. The balance will not affect the amount that may be contributed the next calendar year.

When the account owner reaches age 65, he/she can continue to use funds for qualified medical expenses, or withdraw penalty-free any amount for non-qualified medical expenses. The money withdrawn at that time will need to be claimed as taxable income, just like an IRA distribution after age 65.

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How much can be contributed each year to an HSA?
The maximum annual contribution is set by the IRS each year, up to $3,050 for individuals or $6,150 for families in 2010, reduced by any contribution to an Archer MSA. Individuals over 55 will be allowed to make an additional annual "catch-up" contribution of up to $1,000 in 2010.

As of January 1, 2007, HSA account holders can make a one-time, tax-free distribution from their Roth or Traditional IRA for the purpose of making a regular HSA contribution. This provision also applies to roll-overs from a Health Reimbursement Arrangement (HRA) or a Flexible Spending Account (FSA) through 2011. Certain restrictions apply.*

*Please consult a tax advisor.

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Who can contribute to an HSA?
Contributions can be made by you, your family members or your employer; this is true whether you are self-employed or unemployed.*

*Please consult a tax advisor.

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If I exceed my annual maximum contribution amount can I do anything to correct the mistake and avoid a tax penalty?
Yes, you will receive a reminder to review your contributions in your October statement. If you find that you have exceeded your limit for the calendar year, you will need to fill out a "Health Savings Account Distribution" form located in the Forms section of our website; there is a Correction of Excess Contribution box that will need to be checked under Distribution Reason. Make a copy for your records and mail the form to HSA Operations, P. O. Box 1828, Columbus, Georgia 31902-1828.

You must withdraw the excess by writing a check from the account by the due date, including extensions, of your tax return along with any income earned on the withdrawn contributions. The earnings will need to be included in "other income" on your tax return for the year you withdraw the contributions and earnings. Do not claim a deduction on your Form 1040 for the amount of the withdrawn contributions.

If you have any questions about this process, please call 1-877-367-4HSA and one of our customer service representatives will be happy to assist you.

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What is the deadline for making contributions for the year?
All regular or catch-up contributions can be made anytime during the tax year up to and including your federal income return due date on April 15th of the following year. Extensions are not included in this time period.

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How much can I contribute to an HSA if I'm not covered by an HDHP all year?

Until December 31, 2006, your maximum contribution would have been pro-rated based on the amount of time in the calendar year you were covered by the HDHP. As of January 1, 2007, HSA account holders can contribute the maximum allowable annual contribution; regardless of their HDHP enrollment date, as long as they are covered under an HDHP for at least 12 consecutive months.*

*Please consult a tax advisor.

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How are distributions taxed or penalized?
Any distribution from your HSA for qualified medical expenses for you, your spouse or dependents are not taxable.

All other distributions are taxable and subject to an additional 10% tax on the amount withdrawn. Exceptions to this rule include:
- Distributions made after your death or disability*.
- Distributions made after age 65 for any reason**.
Please note that distributions for qualified medical expenses must be incurred only after your HSA has been established.

*This applies only if you are disabled before age 65. The custodian or trustee may request a copy of a certificate from your physician that you meet the definition of disability under IRC Section 72(m)(7).
**Distributions made after age 65 for anything other than qualifies medical expenses must be claimed as income.

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Can I have an HSA if I already have a Flexible Spending Account (FSA)?
As a general rule you cannot have both, but there are circumstances that allow the combination of aspects of an FSA with an HSA*. You will need to consult a tax advisor for the specifics on this situation.

*Please consult your tax advisor.

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Can I have an HSA and an IRA or other qualified retirement plan?
Yes. An HSA does operate under some of the same rules that apply to traditional IRAs, but it is not an IRA. An HSA is simply a savings account plan for medical expenses; it does not have any effect on your ability to contribute to any type of retirement plan.

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What are the fees and services associated with my account?
Our HSA is structured so you don't have to pay a great deal to benefit from the tax savings the account offers.

Services offered with this account at no charge to you:
- Up to two (2) Visa Debit Cards
- OnLine Access, Access Only Internet Service
- Monthly and Year-End Tax Statements
Please consult your bank representative for fees associated with your HSA Account.

Please note that other banking fees listed in our Miscellaneous Fee Schedule that you received (or will receive) at account opening may also apply.

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Are the fees associated with my account tax deductible?
Account fees are not tax deductible. They will not be counted as a taxable distribution.

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Can I have the investment option account through Synovus Securities, Inc. without opening a regular HSA with the bank?
No, you must establish an HSA with Columbus Bank and Trust Company first. A brokerage account will be established for your mutual fund investments in addition to your regular HSA; it will not be set up to handle any debits or checks that are written for your qualified medical expenses.

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When will the annual fee be charged to my investment account?
$25 will be debited from your account in October of each year. You will receive a reminder from Synovus Securities, Inc. prior to the date the fee is charged.

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Will I need to order new checks or get a new debit card when I add the investment option?
No, your account number will not change; you can use the same debit card and checks. You will be assigned a brokerage account number but it will only be needed for investment transactions.

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Will I get two statements?
No, you will receive a combined statement that contains the activity in your deposit account held by the bank and the brokerage account with Synovus Securities, Inc.

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Who will handle any mutual fund investment transactions?
Synovus Securities, Inc. will handle all transactions pertaining to your investment option account. The toll-free number is (877) 367-4HSA option 7.

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Where can I get more information about Fidelity Investment® mutual funds offered with the HSA investment option?
A prospectus for each fund and fund fact sheets will be provided in the enrollment package. You can also access that information by visiting the Fidelity Investments® web page at www.fidelityinvestments.com.

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How can I add the investment option to my Columbus Bank and Trust Company HSA?
Call our toll-free customer service line at (877) 367-4HSA and choose option 6 to request an enrollment package. You cannot open this account or obtain an enrollment package in our branches at this time.

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How much do I need to have in my account to add the investment option to my HSA?
The minimum balance required is $3,500 or more.

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Is there a minimum investment to get started?
Yes, the minimum initial investment for each fund is $2,500 which would come from the existing balance in your HSA. All subsequent investments must be $100 or more. You must make the initial investment at account opening.

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Investment products and services provided by Synovus are offered through Synovus Securities, Inc, Synovus Trust Company, N.A., GLOBALT, Inc. and Creative Financial Group. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.