Healthy Blue HSASM

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Healthy Blue HSASM Member Program Overview
Healthy Blue HSA is a product of Blue Cross Blue
Shield of Michigan, a nonprofit corporation and
independent licensee of the Blue Cross Blue
Shield Association.
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The Bancorp Bank preferred HSA custodian

• FDIC-insured
• Publicly traded (NASDAQ NM TBBK)
• Highly experienced banking and technology
  management team
• More than 209,000 HSA accounts with 302 million
  in deposits
• One of the top six HSA custodians in the U.S.
• Health care clients provide services to 22
  million members
• Principle member of both Visa and MasterCard

The Bancorp Bank is an FDIC-insured independent
financial institution that holds your HSA.
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Why is The Bancorp Bank different?

• No monthly account maintenance fee
• Dedicated relationship manager for all BCBSM
  client needs
• Competitive interest rates and no hidden charges
  or fees
• Cited as a top 10 industry winner in HSA Web site
  design
• User-friendly banking portal with 24/7 access to
  account information
• Free year-end summary of all HSA activity
• Free online process for depositing funds from
  external bank accounts
• Free online bill payment service available
• Customized training available
• Superior customer service - HSA experts are
  dedicated to your needs
• Tremendous brokerage capabilities for
  self-directed investing of HSA funds

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HSA key features and eligibility

• Key Features of an HSA
• Funds deposited into an HSAare tax-advantaged
  and ownedby the account holder
• Funds may be rolled over yearto year no use-it
  or lose-it rule
• Accounts can accumulatesignificant assets that
  can beused for healthcare tax free
• Funds in the HSA can beinvested
• Funds are portable and remain available through
  job changes

• HSA Eligibility
• Participants must be enrolled in an HSA-qualified
  high deductible health plan
• Cannot be covered by any otherinsurance that
  reimburses for health expenses (unless
  another HSA-qualified HDHP)
• Cannot be enrolled in Medicareor Medicaid
• Cannot be eligible to be claimedas a dependent
  on another persons tax return and must beover
  18 years of age

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More about HSAs
Question HSA HRA FSA
Do the funds belong to the employee? YES NO NO
Can the money be invested and earn interest? YES NO NO
Can the employees use the funds for things other than medical expenses? YES NO NO
Can the employee take the money with them if they switch employers? YES NO NO
Do the funds roll over year-to-year? YES Generally, NO NO
Who can contribute to the account? Employers and/ or individuals (anyone) Employers Employee
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Tax benefits of an HSA

• Reduces federal income taxes by reducing adjusted
  gross income
• Reduces state income taxes (in most states)
• HSA contributions earn interest tax-free and do
  not need to be itemized for taxes

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Contributions

• Contributions are not subject to income tax
• Contributions can be made by
• - Account holders - Employers - Any
  third party
• Contributions in excess of the allowable limits
  must be withdrawn or incur a 6 excise tax
• Individuals 55 or older may contribute catch-up
  contributions until they enroll in Medicare

2010 Maximum Contribution Limits Individual
3050 Family 6150 Annual Catch-up
1000 For individuals 55 and older before
they enroll in Medicare
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Distributions
Distributions

• Money withdrawn from an HSA may be used to pay
  for eligible medical expenses for the account
  holder, spouse, or any dependents.
• Reimbursement can be taken from the HSA for
  expenses from prior years if the HSA was in place
  when the expenses occurred.
• Withdrawals for non-medical expenses are
  possible
• Before retirement age Distribution is
  taxed as income with 20 penalty After
  retirement age Only taxed as income (may
  provide tax advantages)
• Save those receipts! Account holders are
  responsible for ensuring that HSA funds are used
  for qualified expenses and to maintain records.

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Qualified medical expenses

• Qualified Mdical Expenses
• According to the Internal Revenue Service, HSA
  funds can
• be used to pay for
• Most medical care and services, dental services
  and vision care
• Health insurance premiums under COBRA
  continuation coverage or while receiving
  unemployment compensation
• Medicare Part A or Part B premiums
• A qualified long-term care insurance contract

NOTE For a detailed list, visit irs.gov.
Blue Cross Blue Shield of Michigan does not
control this Web site or endorse its general
content.
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Product features

• FDIC-insured account
• No monthly account maintenance fee
• Toll-free 24/7 customer service
• Competitive interest rates paid on all balances
  above 1
• Free Visa debit card, first order of 50 checks
• Free full online account access
• Free online ACH money transfer availability
• Free online bill payment service
• Ability to invest HSA funds through National
  Financial Services

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Opening a health savings account

• 1st Step Member enrolls in a high-deductible
  health plan
• 2nd Step Member elects the health savings
  account and BCBSM sends an electronic
  enrollment file to Bancorp
• 3rd Step Information is validated
  Bancorp immediately reviews information within 24
  hours. The account is opened after
  validation according to Customer
  Identification Procedures outlined in The USA
  Patriot Act.
• 4th Step Your health savings account is
  opened Paper or online enrollment options are
  also available if needed

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Opening a health savings account (continued)

• Within 2 weeks of opening an account, new members
• receive five separate mailings from Bancorps
• Delaware address. The order of items you receive
• may fluctuate
• Welcome kit including User ID(mailed in large
  white envelope)
• Password for online access (Mailed in business
  envelope, or may be sent electronically if
  e-mail is available)
• PIN for debit card cash access(mailed in small
  perforated mailer)
• Checks book of 50(mailed in a blue plastic
  envelope)
• Visa debit card (Mailed in a regular business
  envelope)

NOTE After opening an account, keep an eye out
for new materials in the mail. For security
reasons, account-related materials are mailed in
generic envelopes simply noted with a return
address of 409 Silverside Drive, Suite 105
Wilmington, DE 19809
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Welcome kit materials

• Welcome kit includes
• Welcome letter
• Signature Card
• FAQs
• List of eligible medical expenses
• How to log in
• Making deposits
• Online tools overview
• Business reply envelope
• Deposit slip

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Rollover process

• The Health Savings Account
• Transfer/Rollover form may be
• completed to request any of the
• following
• Trustee-to-Trustee transfer
• (electronic transfer of another HSA balanceinto
  the Healthy Blue HSA)
• Direct MSA to HSA rollover
• (electronically processed)
• MSA rollover(processed via check deposit)
• HSA rollover
• (processed via check deposit)

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Trustee-to-Trustee transfers

• If you already hold an HSA, you can easily
  request to roll the balance into the Healthy Blue
  HSA.
• The rollover form needs to be completed, signed
  and mailed directly to the address specified on
  the form (original documentation is required for
  this request).
• Within 48 hours of receipt, Bancorp will send a
  request to pull the money from your previous HSA
  custodian.
• It takes an average 6-8 weeks for banks to
  complete these requests. You may not be able to
  access the funds being transferred during that
  time.

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Trustee-to-Trustee transfers (continued)

• While waiting for the transfer to take place,
  money may be deposited into the new Healthy Blue
  HSA to use tax-advantaged funds for any medical
  expenses that arise.
• You can also pay for expenses out of pocket and
  reimburse yourself after the rollover is
  complete.
• These rollovers are considered direct from one
  custodian to another, so the distribution will
  not be taxed.
• The rollover amount will not count toward your
  maximum HSA contribution for the current tax year.

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Debit card usage

• The new Healthy Blue HSA Visa debit card must be
  activated prior to first use.
• Activation is completed simply by calling
  1-866-435-1360 or by using the card at an
  automated teller machine (ATM).
• The card may be used to pay medical service
  providers or at an ATM to reimburse yourself
  for any medical expenses paid out of pocket.
• The merchant category code determines
  authorization of purchases. As long as a
  merchant offers medically oriented services
  or supplies, you can use your Healthy Blue
  HSA debit card.

Savings opportunity!
The Bancorp Bank will reimburse up to 10.00 per
month for other banks automated teller fees!
Members can simply mail in their ATM receipts
(showing a withdrawal or deposit into their HSA).
They can send to Bancorps Delaware address with
a note requesting a credit into their Healthy
Blue HSA.
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New account funding options

• Employees may deposit money into their HSA using
  any of the following
• methods
• Direct deposit through payroll deduction
• E-Money Mover
• Check or money order
• Credit card
• E-transfers
• Wire
• ATM

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Online tools HealthyBlueHSA.com
Pull up the Healthy Blue HSA Web site for all the
information you need about your new Health
Savings Account
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Online tools (continued)

• Statements
• Funding, deposits and transfers
• Real-time account balances
• Check images
• Online calculators
• Free online bill payment

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Online tools (continued)

• Customer resources tab / Calculators
• These tools are available to help consumers
  better plan for future
• health care spending needs
• Health savings account contribution calculator
• HSA versus traditional health plan calculator
• HSA savings calculator
• HSA goal calculator

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Banking portal
View account balance, review activity, transfer
funds and pay bills online
Log into account
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• Investment platform offered via National
  Financial Services, a wholly owned subsidiary of
  Fidelity Investments
• Brokerage account may be opened after the HSA
  balance exceeds 2,500 and the member completes
  the investment application form found at
  healthybluehsa.com
• Employee will receive user ID and PIN via email
  to access the investment account once the
  investment application is submitted
• Anyone who chooses to open a brokerage account
  must retain a minimum balance of 1,000 in their
  corresponding health savings account.
• There are no opening or maintenance fees, and the
  investment account is completely self-directed.
  The members brokerage account and HSA are
  electronically linked - All trades clear
  automatically through the HSA - Sales
  shares are deposited back into the HSA

Investment services overview
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Investment services overview (continued)

• MyStreetscape portal
• Access investment account
• Place trades (equities and mutual
  funds)
• Find stock quotes
• Retrieve reports and track portfolio
• Research equities
• Chart stock options

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HSA resources Web sites, information and
value-adds to help with managing a health savings
account
Save your receipts online for your HSA-qualified
medical expenses. Receipts can be scanned and
stored into HSA tracker in case the originals
fade. Sign up to access the HSA Tracker site
and to begin itemizing and documenting
health-related purchases in one location.
Reports can be pulled to see a summary of all the
items you have stored.
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Statements and tax forms

• Statements - Issued monthly with account
  activity or quarterly if no customer activity-
  E-statements are available by customer choice
• Free year-end summary - Issued to every
  account holder each January
• Annual tax documentation
• IRS Form 1099-SA Detailing distributions
  sent to customer and IRS by Jan. 31IRS Form
  5498-SA Detailing contributions sent to
  customer and IRS by May 31 of following year

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Additional resources

• Customer Service
• Questions? Need assistance?
• Call the number on the back of your Blues ID card
  
• Visit HealthyBlueHSA.com for account access and
  information
• E-mail healthybluehsa_at_thebancorp.com for specific
  HSA account information
• For more information on HSAs or qualified medical
  expenses
• U.S. Treasury ustreas.gov/offices/public-affairs/
  has
• Contact the IRS at [phone] or visit
  irs.gov

Blue Cross Blue Shield of Michigan does not
control this Web site or endorse its general
content.