high deductible health plan (hdhp) and health savings account (hsa)
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High Deductible Health Plan (HDHP)and
Health Savings Account (HSA)
INFORMATIONAL SESSIONSNOVEMBER 2011
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Agenda
• Introduction of HDHP/HSA
• Overview of the HDHP
• Overview of Health Savings Accounts (HSA)
• Employee Plan Design Comparison/Scenarios
• Questions and Answer Session
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High Deductible Health Plan (HDHP)
• HDHP is a PPO plan administered by United HealthCare (UHC)
• PPO plan provides coverage for in-network and out-of-network services
• UHC provider network is same as for HMO and POS plans
• Calendar year deductible applies to both in-network and out-of-network services
• High deductible required to enable Health Savings Account participation
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Overview of HDHP
In Network
Out of Network
Annual DeductibleIndividual (Employee Only)Family (Employee +1 or more dependents)
$1,500$3,000
$1,500$3,000
Co-Insurance 20% 40%
Coinsurance MaximumIndividualFamily
$1,250$2,500
$2,500$5,000
Annual Out-of-pocket Maximum (Including Deductibles)IndividualFamily
$2,750$5,500
$4,000$8,000
Lifetime Maximum Unlimited Unlimited
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Special Considerations of HDHP
• Co-Insurance applies after deductible is met
• Family deductible applies when you are one or more dependents
• Family deductible must be fully met even if only one person utilizes the plan
• Deductible and co-insurance apply to prescription drugs (NO co-pays)
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Monthly Employee Premiums
Employee OnlyEmployee + One
DependentEmployee + Two
or More Dependents
FT Faculty & Staff Earning Less Than $34,000
$5.47 $19.81 $39.62
FT Faculty & Staff Earning $34,000 or More
$5.98 $21.65 $43.31
PT Faculty & Staff $132.17 $271.00 $400.11
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Why to Choose the HDHP?
• Lower health insurance premiums
• Greater flexibility and control in how your healthcare dollars are spent or saved
• Ability to contribute to a tax-advantaged Health Savings Account (HSA)
• May offer the best value among the available plan choices
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Why to Fund the Health Savings Account?
• Washington University helps fund your account with $400 per year*
• Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free when used to pay for qualified medical expenses
• No “use-it-or-lose-it” requirement; grow your account balance year over year
• The funds and account is yours and goes with you even if you change jobs or insurance coverage
I* Employees with salaries under $115,000 must contribute at least $200/year to their HSA and employees with salaries over $115,000 must contribute $400/year to their HSA in order to receive the University contribution.
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• Contribute on a tax-free basis either through:– Payroll deduction (pre-tax contribution)– Directly to USBank (top-line tax deduction)
• Contribution limits (2012): – Single Coverage - contribute up to $3,100
(less University contribution of $400)– Family Coverage - contribute up to $6,250
(less University contribution of $400)– Catch-Up Contribution: age 55 or older – up
to an additional $1,000
Making Contributions to an HSA
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Using Your HSA Funds
Use your U.S. Bank Payment Card, write a check, or pay online to reimburse healthcare expenses.
• Make sure your expense is eligible
• Save your receipts
•You do not have to submit receipts for reimbursement
• Reimburse yourself now or later
•There is no specified deadline for reimbursement
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Qualified Medical Expenses
• IRS Publication 502* contains a list of all approved qualified medical expenses, including:
• Doctor’s office visits• Prescriptions• Some over-the-counter items*• Hospital visits• Acupuncture• Chiropractor• Eyeglasses and contact lenses• Dental treatment• Eye surgery• Smoking cessation programs• Therapy
* IRS Publication 502 can be found on-line at www.mycdh.usbank.com, under Useful Links & Resources.
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• Enroll in the Health Plan through the employer and elect the U.S. Bank HSA
• Employer processes enrollment file
• Payment card(s) are ordered and mailed
• Employees receive “welcome” notification via email
• Complete online enrollment process
Enrollment Experience
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Managing Your HSA Online
• Online capability to request additional card for spouse and dependents
• Convenient online Bill Pay and direct deposit reimbursement options
• Update dependent information, designate beneficiaries, etc.
• Automated e-mail reminders and notices
• Access to important decision support tools to make informed healthcare decisions from the U.S. Bank Healthcare Toolbox
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“I’m on my way to the doctor. Do I have an adequate balance?”
“I just purchased a prescription at my pharmacy. Will my HSA balance cover the cost?”
New technologies: U.S. Bank Healthcare Mobile
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• Access investment account information such as balance and fund performance
• Manage your investment account online (i.e. buy and sell funds)
HSA Investment Experience
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Accountholder Support
• HSA Consumer Services Representatives available Monday through Friday,
7:00 a.m. to 7:00 p.m. (CST) – 877-470-1771
• Monthly statements available online or mailed to your residence
• Annual IRS reports are provided
• Interactive Voice Response (IVR), 24/7 – 877-470-1771
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Scenario #1: Single Employee (Income >$34,000) – Generally Healthy
Premium/Procedure UHC
Choice HMO
UHC
Choice Plus POS
UHC HDHP BC Excel BC Choice
Annual Physical ($280)$0 $0 $0 $0 $0
Office Visit – Illness
($90) $25 $25 $90 $90 $90
Antibiotic – Generic
($10) $10 $10 $10 $10 $10
Out-of-Pocket Cost
($380) $35 $35 $100 $100 $100
Premium Contribution$468.84 $775.20 $71.76 $1,097.76 $244.56
HSA Contribution($400)
Potential Tax Savings* (HSA) @ 28% Rate ($756)
Total Annual Cost$503.84 $810.20 ($984.24) $1.197.76 $344.56
* Tax savings will vary based on your current FSA contribution and medical plan election.
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Scenario #2: Employee Plus Spouse (income >$34,000) – Have 1st Baby in July
Premium/Procedure UHC Choice HMO
UHCChoice Plus
POS
UHC HDHP BC Excel BC Choice
Pre-Natal Care – 6 OB visits ($740)
$40 $40 $740 $548 $740
Office Visit – Illness($90)
$25 $25 $90 $18 $26
Normal Delivery($6,000)
$300 $300 $2,936 $1,200 $1,200
Out-of-Pocket Cost($6,830)
$365 $365 $3,766 $1,766 $1,966
Premium Contribution $3,137.04 $4,802.28 $389.76 $5,556.54 $1,164.36
HSA Contribution ($400)
Potential Tax Savings* (HSA) @ 28% Rate
($1,638)
Total Annual Cost $3,194.54 $4,877.60 $2,117.76 $7,322.54 $3,130.36
* Tax savings will vary based on your current FSA contribution and medical plan election.
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Scenario #3: Employee Plus Spouse (income >$34,000) – Elective Surgery for Family Member
Premium/Procedure UHC Choice HMO
UHCChoice Plus
POS
UHC HDHP BC Excel BC Choice
Annual Physical($280)
$0 $0 $0 $0 $0
Office Visits (1 PCP, 2 specialists) - ($330)
$105 $105 $330 $330 $330
MRI – Knee ($750) $150 $150 $750 $286 $486
Elective Knee Surgery ($7,000 charge)
$150 $150 $2,936 $1,384 $1,400
Rehabilitation ($1,560 – 18 visits)
$720 $720 $312 $0 $312
Out-of-Pocket Cost($9,920)
$1,125 $1,125 $4,328 $2,000 $2,528
Premium Contribution $2,615.52 $3,846.72 $259.80 $4,474.68 $781.68
HSA Contribution ($400)
Potential Tax Savings* (HSA) @ 28% Rate
($1,638)
Total Annual Cost $3,740.52 $4,971.72 $2,549.80 $6,474.68 $3,309.68
* Tax savings will vary based on your current FSA contribution and medical plan election.
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Scenario #4: Employee Plus Family with Two Children – One child has a sports injury, the other child has asthmaPremium/Procedure UHC
Choice HMOUHC
Choice Plus POS
UHC HDHP BC Excel BC Choice
Child 1* - Emergency Room Visit, Treatment for Broken Leg, and Physical Therapy ($7,200)
$630 $630 $3,840 $1,840 $2,040
Child 2 - Emergency Room Visit, 1 Night in the Hospital, 4 office visits, and Asthma Medications($5,800/$1,700 Rx)
$400 + $540 (Rx)
$940 $1,250 $1,560 + $540 (Rx)
$1,760 +$540 (Rx)
Employee – Routine Physical ($250)
$0 $0 $0 $0 $0
Spouse – Well Woman Exam ($230) and 2 office visits for illness ($180)
$0 + $50 $0 + $50 $36 $410 $410
Out-of-Pocket Cost ($15,360) $1,620 $1,620 $5,126 $4,350 $4,750
Premium Contribution $3,658.56 $5,757.84 $519.72 $6,638.40 $1,547.04
HSA Contribution ($400)
Potential Tax Savings** (HSA) @ 28% Rate
($1,638)
Total Annual Cost $5,278.56 $7,377.84 $3,608.72 $10,988.40 $6,297.04* 4 specialist visits, 8 physical therapy sessions** Tax savings will vary based on your current FSA contribution and medical plan election.
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Closing Thoughts and Considerations
• If you plan to fully-fund the HSA, the HDHP option should be a good choice for most employees
• Be aware that the plan works differently than the HMO and POS plans• First dollar deductible before any coverage, including Rx
(except preventive care)• True out-of-pocket maximum (no copays and Rx counts
towards maximum)• Research the full cost of your routine medical care and
prescriptions • Information can be found on the health plan websites and
Medco.comI
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Questions?
I
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