CIGNA Choice Fund Health Savings Account

More control over health care decisions

The CIGNA Choice Fund^® Health Savings Account (HSA) gives more. More control over health care decisions. More information and assistance to help make healthy choices. More options and more services.

In addition to health plan coverage, a CIGNA Choice Fund HSA offers:

• A tax-deferred savings account to help pay for covered health care expenses*;
• Control over how health care dollars are spent;
• Freedom to choose doctors;
• Convenient, online information and tools to help decide which doctors and services are desired;
• Programs and services to help you stay well;
• Financial stability through JP Morgan Chase, the administrator of the savings account.

More control. More assistance. More services. More of what you're looking for in a health plan.

* Several states have not enacted legislation to allow pre-tax treatment of HSA contributions or earnings. You should work with your tax advisor to ensure that you are aware of any changes that may occur in these states. For your convenience, we have identified the following states as having these tax issues: Alabama, California, New Hampshire, New Jersey and Wisconsin.

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Contributions & Requirements

Although plan features vary , here are the basic elements of a CIGNA Choice Fund ^® HSA:

1. Set up the account
   As part of enrolling in the CIGNA Choice Fund HSA, you can establish a health savings account with JPMorgan Chase. You, your employer, or both can contribute to your account, up to federal limits on a pretax basis*. You can use the money deposited in the account to pay for qualified health care expenses during the plan year. Any interest or investment earnings on funds in the HSA are tax free*.
2. Medical Plan Coverage
   Preventive Care is generally covered 100% by the medical plan. This means that costs associated with well visits, routine immunizations and routine screenings are paid by the medical plan, no deductible to meet and no coinsurance to pay. (Other covered medical and pharmacy costs are subject to a plan deductible.) A deductible is a fixed amount you are responsible for paying before your medical plan coverage is applied. After you meet your deductible, you pay a percentage of the cost of your covered services (called coinsurance) and your plan covers the rest.
3. Use the account to pay medical bills
   You can use the money in your HSA to pay for qualified health care services (including your deductible and coinsurance) for you and your dependents before other resources are used. You can also use your HSA to pay for qualified medical expenses that may not be covered under your medical plan including, but not limited to over-the-counter medicine, dental expenses and vision expenses.
   You may also choose to pay claims without using your HSA, using the HSA as a savings account to earn interest and prepare for future healthcare expenses for you and your qualified dependents.
   Any unused dollars in your HSA roll over from year to year. Even if you leave the CIGNA Choice Fund HSA, any unused HSA dollars remain yours and are available to pay for qualified healthcare expense in the future for you and your eligible dependents.

*Several states have not enacted legislation to allow pre-tax treatment of HSA contributions or earnings. You should work with your tax advisor to ensure that you are aware of any changes that may occur in these states. For your convenience, we have identified the following states as having these tax issues: Alabama, California, New Hampshire, New Jersey and Wisconsin.

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Health and Wellness Programs

Members of CIGNA HealthCare plans may also have access to valuable Health and Wellness Programs:

• Well Informed — a personalized health improvement program designed to let CIGNA HealthCare members and their doctors know about opportunities to maintain or improve the member's health.
• 24-hour health information — call the CIGNA HealthCare 24-Hour Health Information Line^SM any time to speak with a nurse or listen to our audio library for health-related information.
• Support for chronic conditions — manage your asthma, diabetes, heart condition, low back pain, or chronic obstructive pulmonary disease with help from CIGNA Well Aware for Better Health^®.
• Member discounts — save up to 60% on products and services-from acupuncture to weight management-with our Healthy Rewards^® discount program. Note: not all programs are available in all states.
• Quality transplant care — access care from nationally recognized facilities in the CIGNA LIFESOURCE Transplant Network^®.
• CIGNA HealthCare Healthy Babies^® — give your child a healthy beginning with information and support from the CIGNA HealthCare Healthy Babies^® program.
• CIGNA Healthy Pregnancies, Healthy Babies^SM — the CIGNA Healthy Pregnancies, Healthy Babies^® program offers a full scope of educational and care management services if you are pregnant or considering pregnancy.
• Cancer prevention and education — the Comprehensive Oncology Program^® addresses cancer prevention and education, as well as active management of members diagnosed with cancer.
• High Touch Personal Assistance — with CIGNA Health Advisor^SM, CIGNA Health Advisors proactively identify and reach out to you if you are at risk for significant health issues but are not appropriate candidates for chronic or acute disease or case management programs.
• Lose weight and improve your health — when you enroll in the CIGNA Healthy Steps to Weight Loss^SM, you won't be starting a diet. Instead, this program helps you change your behaviors permanently. You'll learn healthier eating habits and how to incorporate exercise into your schedule – helping you to feel better, look better and improve your overall health.

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Employer Advantages

Frequently Asked Questions about a Health Savings Account (HSA)

HSA Bank Account Contributions (Deposits)

• Who is eligible to make HSA contributions?
• How do I roll my MSA or HSA from another bank into my HSA with JPMorgan Chase?
• Can I make deposits outside my payroll deductions?
• How can I make unscheduled deposits into my HSA?
• How much can I contribute to an HSA and how do I figure this out?
• Can I contribute the annual maximum if I enroll in the HDHP plan mid-year?
• Can I transfer funds from an IRA to an HSA?
• Can I transfer funds from an FSA or HRA to an HSA?
• Who may make contributions to an HSA on behalf of an eligible individual?
• Is the account insured?

HSA Bank Account Interest and Earnings

• Is this a money market account?
• How is the interest rate calculated?
• What investment options are available?

Using your HSA

• Can I make autodrafts/withdrawals for known medical payments?
• Do I have to access to my fund dollars within a certain time period after I receive services?
• What kind of records do I need to retain when I use the HSA?

HSA Bank Account Fees

• What HSA fees and/or penalties am I responsible for?

Closing your HSA

• How can I close my account?
• What happens if I no longer have a High Deductible Health Plan (HDHP)?
• Can I close my account at any time or do I need to keep it open for a period of time?
• What happens if I terminate my employment with my current employer?

General

• What is the tax treatment of an HSA? What tax requirements exist for members?
• How can I track my HSA account balance and activity?
• What are the expense guidelines and listings of covered and not covered items?
• How can I roll my account balance into another HSA?

Who is eligible to make HSA contributions?

To be an eligible individual and qualify for an HSA, you must be.

• Covered under a high deductible health plan (HDHP) as defined by the Federal Government,
• Have no other health coverage except what is permitted under Other health coverage, defined below.
• Not enrolled in Medicare.
• Not claimed as a dependent on someone else's tax return.

Other health coverage. You generally cannot have any other health coverage that is not an HDHP. You can have additional insurance that provides benefits only for the following items.

• Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property.
• A specific disease or illness.
• A fixed amount per day (or other period) of hospitalization.
• Accidents, Long Term Care, Disability, Vision and Dental Care.

How do I roll my MSA or HSA from another bank into my HSA with JPMorgan Chase?
You can access a rollover form from myCIGNA.com or by calling Customer Service at the number on the back of your debit card to transfer funds from a Health Savings Account ( HSA) or Medical Savings Account (MSA) held at another institution. After completing the form, you must send it to your current MSA/HSA custodian; the form will serve as your instructions to transfer the HSA/MSA funds into your new account.

Can I make deposits outside my payroll deductions?
You can make post federal tax contributions to the HSA. There are two options available to support the deposit of post tax HSA contributions:

• Check - You can send HSA deposits, as a check, to a JPMorgan lock box along with an HSA Deposit Slip. You will receive deposit slips with your HSA debit card.
• EFT - You can arrange for an electronic funds transfer from a personal account to the HSA account. EFT forms are available on-line through myCIGNA.com.

How can I make unscheduled deposits into my HSA?
You can make post federal tax contributions to the HSA. There are two options available to support the deposit of post tax HSA contributions:

• Check - You can send HSA deposits, as a check, to a JPMorgan lock box along with an HSA Deposit Slip. You will receive deposit slips with your HSA debit card.
• EFT - You can arrange for an electronic funds transfer from a personal account to the HSA account. EFT forms are available on-line through myCIGNA.com.

How much can I contribute to an HSA and how do I figure this out?
Your maximum total annual contribution (including any contributions your employer may make as well as your contributions through payroll deductions or one-time contributions) is established by the IRS. For 2009 you are limited to up to $3,000 for individuals and $5,950 for families. For 2008 you are limited to up to $2,900 for individuals and $5,800 for families. You are responsible for tracking your contributions to make sure they do not exceed these limits. Limits for future years will be set by the IRS.

If you are enrolled in an HSA qualified medical plan for only part of the plan year please consult your tax advisor for you maximum allowable HSA contribution amount.

Individuals 55 and older who are covered by an HDHP can make additional maximum catch-up contributions each year until they enroll in Medicare. The additional "catch-up" contributions to HSA allowed are as follows:

2007 – $800
2008 – $900
2009 and after – $1,000

Please consult your tax advisor for further information.

Who may make contributions to an HSA on behalf of an eligible individual?
Contributions to an individual HSA account can be made by an employer, employee or a third party (parent, grandparent, etc) on your behalf.

Is the account insured?
The cash account offered through JPMorgan Chase is an FDIC insured account. The investment account is not federally insured.

Can I contribute the annual maximum if I enroll in the HDHP plan mid-year?

Effective in taxable years beginning January 1, 2007, an individual can contribute the maximum calendar-year amount to their HSA even if they were enrolled in the plan mid-year. This allows an individual to make the maximum contribution and take the full calendar year federal tax deduction if they are enrolled in the plan for only part of the year.

There are specific requirements for HDHP enrollment to avoid negative tax implications from making the maximum allowable contribution. The individual must be enrolled in the plan through 12/31 of the calendar year and maintain continuous HDHP enrollment for a 12-month period. The 12 month period begins in the last month of the taxable year that the individual became an eligible individual (regardless of exactly when during that year they were enrolled in the HDHP plan) and ends on the last day of the following 12th month.

Please consult your tax advisor for further information.

Can I transfer funds from an IRA to an HSA?

Under previous HSA law, there was no allowance for individuals to transfer funds from an IRA to an HSA.

Effective in taxable years beginning January 1, 2007, a one-time transfer from an IRA to an HSA during a lifetime is permitted. In order to qualify as an federal allowable HSA contribution:

• The transfer must occur trustee to trustee (the dollars must be sent to another bank, not to the individual account holder)
• The transfer does count toward the annual maximum HSA contribution.
• The transfer from an IRA to an HSA can occur anytime after January 1, 2007. Currently there is no expiration date.

There are specific requirements for HDHP enrollment to avoid negative federal tax implications from making and IRA transfer to HSA. You must maintain continuous HDHP enrollment for a 12-month period. The 12 month period begins in the month of the transfer.

You should consult your tax advisor for further information on the federal and state allowances for an IRA to HSA transfer.

Can I transfer funds from an FSA or HRA to an HSA?

It is an employer option to offer a one-time transfer of the lesser of: (a) an HRA and/or FSA balance as of September 21, 2006; or (b) the HRA and/or FSA balance on the date of distribution, from each type of account to an HSA.

This only applies to participants who had a Health Care FSA or HRA on September 21, 2006. It does not apply to HRAs or FSAs established after that date. FSA rollover to HSA is not available unless the FSA plan has the extended claim period. The amount does not count toward the taxable year maximum HSA contribution.

You should contact you employer to determine if you are eligible for an HRA or FSA transfer to an HSA

There are specific requirements for how money is moved from an HRA and FSA to an HSA and there are HDHP enrollment requirements to avoid negative tax implications from the transfer.

You should consult their tax advisor for further information on the federal and state allowances for an FSA or HRA to HSA transfer.

Is this a money market account?
Your CIGNA Choice Fund HSA is neither a money market account nor a regular checking account. It is an interest-bearing health savings account that can be used to cover qualified or non-qualified expenses. It has a debit card and checkbook that can be used to access the HSA account balance.

How is the interest rate calculated?
Your HSA will earn interest based on the balance you maintain in your account. The interest rate is based on short term and long term rates with a weighting toward long term. It is calculated daily and applied monthly and changes based on market conditions.

What investment options are available?
For most Choice Fund HSA plans, if you have at least $2,000 in your HSA cash account you have the ability to select from different investment options.

Can I make autodrafts/withdrawals for known medical payments?
No. However, you may use one of the three withdrawal methods to access your HSA account funds: Debit Card, Checkbook, or Automatic Claims Forwarding.

Do I have to access to my fund dollars within a certain time period after I receive services?
No, there are no time limits to access funds.

What kind of records do I need to retain when I use the HSA?
For any HSA funds used, you are required to keep records of qualified medical expenses and any non-qualified expenses to report appropriate information on your tax return. Non-qualified expenses are subject to income tax and penalties. Please consult your tax advisor for assistance.

CIGNA HealthCare and JPMorgan Chase do not track withdrawals for Qualified versus Non-Qualified Expenses.

You will receive a 1099 form which shows the total distributions from your HSA account to assist with year-end tax preparation.

What HSA fees and/or penalties am I responsible for?
You may be responsible for monthly and transaction HSA fees. Any fees that you are responsible for are identified in the Disclosure Statement of your CIGNA Choice Fund Health Savings Account (HSA), Powered by Chase Enrollment Package.

How can I close my account?
If you are enrolled in the Choice Fund HSA and want to close your JPM Chase HSA bank account, the account closing process requires written instructions from you, the account holder, designating where the balance of funds in your HSA should be transferred. Send the completed form to Chase HSA Operations, P.O. Box 2616, Secaucus, NJ 07094.

Once our card services specialists receive your instructions, they will close the account. A check will be cut and mailed to you or your designated recipient after eleven days to allow for any possible remaining transactions to post to your account. Please allow 7-10 days for this to arrive through the mail. Also note if the HSA funds are not deposited into another health savings account, tax penalties will occur. You should consult your tax advisor for details.

If you leave the Choice Fund HSA, JPM Chase HSA bank account will initiate the account closing .

What happens if I no longer am enrolled in a qualified HSA medical plan (High Deductible Health Plan or HDHP)?
According to IRS guidelines, you are eligible to have an HSA bank account and continue to access the HSA funds to pay for qualified healthcare expenses for you and your eligible dependents. If you are no longer covered by a qualified HSA medical plan you are not, however, eligible to make or receive additional contributions to your HSA account.

Can I close my account at any time or do I need to keep it open for a period of time?
You can close your account at any time and rollover funds into another HSA. You may withdraw funds but since tax penalties may apply, you should consult your tax advisor for further information.

What happens if I terminate my employment with my current employer?
If you terminate from your employer's health plan, several changes to your HSA will take place. Chase will set up a new account, transfer your HSA balances into this new account, and issue you a new card. This new card (and information included with it) will provide you with a new toll-free customer service number.

You will continue to have access to your HSA balance, and can continue to maintain your HSA under this new structure. If you establish coverage under a different employer plan that also features an HSA, you can request that your HSA balances been rolled over into the newly-established HSA. Request the form by calling Customer Service at the number on the back of your debit card.

What is the tax treatment of an HSA? What tax requirements exist for members?
Your personal contributions, up to the allowable maximum, offer you an "above-the-line" federal tax deduction. An "above-the-line" deduction allows you to reduce your taxable income by the amount you contribute to your HSA. You do not have to itemize your deductions to benefit. Contributions can also be made to your HSA by others (e.g., relatives). However, you receive the benefit of the tax deduction.

Interest and investment earnings on your HSA are tax-deferred and qualified distributions are not subject to federal income taxes. Upon death, disability, age 65 or Medicare entitlement, funds can be withdrawn for non-medical reasons without a federal tax penalty, but the distributions will be subject to income taxes.

Several states have not enacted legislation to allow pre-tax treatment of HSA contributions or earnings. You should work with your tax advisor to ensure that you are aware of any changes that may occur in these states. For your convenience, we have identified the following states as having these tax issues: Alabama, California, New Hampshire, New Jersey and Wisconsin

If you exceed your allowable annual contribution, you may be subject to income tax and tax penalties on the excess contribution and associated earnings.

All required forms are sent annually to the IRS and to you to assist with year-end tax preparation. Consult with your tax advisor to review your specific circumstances.

How can I track my account balance and activity?
You can track your HSA cash account and investment account through myCIGNA.com. myCIGNA.com enables consumers to:

• Instantly track and review medical claims and other health account information;
• Access a consolidated, interactive snapshot of your benefits plan;
• Perform on-line transactions such as ordering medications;
• Access on-line information about participating physicians via our Web-linked provider directory;
• Receive personalized investment and health news;
• Research health and wellness information; and
• Use tools and other resources to help make informed health care decisions.

What are the expense guidelines and listings of covered and not covered items?
Go to our Eligible and Ineligible Expenses page for a listing.

How can I roll my account balance into another HSA?
The account closing process requires written instructions from you, the account holder, designating where the balance of funds in your HSA should be transferred. You should ask your new HSA custodian for details of how a custodian-to-custodian transfer can be completed.

After our card services specialists receive your instructions, they will close the account. A check will be cut and mailed to you or the new custodian after eleven days to allow for any possible remaining transactions to post to your account. Please allow 7-10 days for this to arrive through the mail.

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