Optional Health Care PlanFall 2013

A Qualified High Deductible Health Care Plan (QHDHCP)

with a Health Savings Account (H S A)

High Deductible Health Plans[HDHCP]

• Basically two types– Regular plan that simply has a higher deductible –

usually means a deductible of $1000 or more –Sometimes fully insured plan will use an HRA to help offset a higher deductible

– A Qualified (signified by a Q) plan has an upfront (before any benefits are paid) deductible and is most often offered in conjunction with an HSA

What is a QHDHCP?• Must follow the guidelines as laid out by the

IRS...to obtain the tax advantages prescribed• Annual Deductible Minimum set by the IRS

– $1,250 Individual and $2,500 family (IRS)

• Solanco Proposal: A $2,000 Individual and $4,000 Family plan design

Qualified High Deductible Health Plan (QHDHP)

• QHDHPs generally have:– First dollar coverage (no deductible) for

preventive care– Higher out-of-pocket (copays &

coinsurance) for non-network services• All covered benefits must apply to the plan

deductible, including prescription drugs

Qualified High-Deductible Health Plan (QHDHP)

• Preventive Care– PPACA guidance provides list of preventive care that QHDHP

may provide as first-dollar coverage before minimum deductible is satisfied:

• Periodic health evaluations (e.g., annual physicals)• Screening services (e.g., mammograms)• Routine pre-natal and well-child care• Child and adult immunizations• Tobacco cessation programs• Obesity weight loss programs

HSA Overview• A Health Savings Account (HSA) is a special account

owned by an individual used to pay for current and future medical expenses

• HSAs are used in conjunction with a Qualified High-Deductible Health Plan (QHDHP)

• Insurance that does not cover first dollar medical expenses (except for preventive care)

• Can be an HMO, PPO or indemnity plan, as long as it meets the requirements

• A QHDHP can be offered by a group as an option along with other type plans OR can be a stand alone offering

What is an H S A?

• An employee owned account• Contributions can come from Employee (EE) or Employer

– Employer Contribution– EE Pre-tax via payroll– EE After tax contribution (out side of payroll)– EE Gifts– EE IRA transfer - 1 one per lifetime tax free– IRS annual maximum ( For 2014)

• $3,300 individual ( 2013 $3,250)• $6,550 Family (2013 $6,450)• $1,000 per year catch-up provisions – age 55 end of tax year.

What is an H S A? (2)• As an employee owned account, funds are

rolled over every year, not taxed on interest earned or when funds are used (i.e. used with in IRS guidelines). Taxed as income with a 20% penalty if funds are used for non-medical expenses

• Contributions can be made generally up to April 15th ( tax return time) for the prior year….IRS rules governing contributions

HSA Contribution Rules

• Contributions to HSA can be made by the employer or the individual, or both.– If made by the employer, it is not taxable to the employee

(excluded from income and wages)– If made by the individual, it is an “above-the-line”

deduction– The maximum amount that can be contributed to an HSA

from all sources• $3,300 (self-only coverage) 2014• $6,550 (family coverage) for 2014 [includes working

spouses if both H S A eligible]

HSA Contribution Rules: Employee Contributions

• Can be made by a salary reduction arrangement through a cafeteria plan (section 125 plan amendment)– Elections to make contributions through a

cafeteria plan can change on a month-by-month basis (unlike salary reduction contributions to an FSA)

– Remember that contributions to the HSA through a cafeteria plan are “pretax” and not subject to individual or employment taxes

Member Portalwww.myhealthequity.com

Prepopulated With Your Claims

View and Pay Claims Online

HSA How ToDoctors Visits

*This card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. The Bancorp Bank; Member FDIC.

No co-pays

HealthAmerica adjusts price based on discounts

Pay doctor from HSA funds, if funds are available. Pay out of pocket if funds aren’t available and reimburse yourself later.

Go to the doctor

Doctor sends insurance carrier the bill

Claim integratedinto member portal3

2

1

Member HSA ExperienceIntegrated Medical Claims

Member goes to Doctor, shows HealthAmerica

card

Doctor sends visit details and coding to HealthAmerica

for claims adjudication

HealthAmerica sends claims to HealthEquity for record keeping and member

portal population

When the member has

claim activity, an EOB from

HealthAmerica is sent for each claim. Claim

information and monthly

statements on HSA funds and

account information is available on HealthEquity

portal.

If deductible has not been met, provider

will bill member for their plan

negotiated portion.

If deductible has been met, plan will pay provider for service. If

member owes coinsurance,

provider will bill member for their portion.daily

daily

Member pays outstanding provider bill using funds

on HSA card or personal

funds through member

portal

daily

HSA How ToPharmacy Prescriptions

Show your HealthAmerica card

Pay with yourHSA card

Insurance carrier applies amount to your deductible—no paperwork needed

*This card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. The Bancorp Bank; Member FDIC.

Go to pharmacy

Pharmacy applies discount

Pharmacy sends claim to insurance carrier

3

2

1

HSA Member ExperiencePharmacy Claims

Member goes to Pharmacy and shows HealthAmerica card

Pharmacy and HSA card send

payment information to Health America

and HealthEquity

for record keeping and

account tracking.

When the member has claim activity, they will receive an EOB from

HealthAmerica for each claim. Claim

information and monthly statements on HRA funds and account information is available

on each member’s HealthEquity portal.

Pharmacy verifies eligibility.

If out of pocket max is not met, member can pay using HSA

card or out of pocket.

immediate

daily

daily

Member Services

HealthEquity Member Services is available everyday, 24/7/265 at

866.855.4066Building Health SavingsSM through

Live Service 24/7/365Personalized Savings Strategies

Account Integration

HSA Accounts• No “use it or lose it” rules like Flexible Spending Arrangements

(FSAs)– All amounts in the HSA are fully vested– Unspent balances in accounts remain in the account until spent and

carry over year-to-year– Encourages account holders to spend their funds more effectively on

their medical care– Encourages account holders to shop for the best value for their health

care dollars

• Accounts can grow through investment earnings, just like an IRA– Same investment options and investment limitations as IRAs

H S A: Board and Employee Contribution Mix and Shares

Coverage Tier

District H S A Contribution

Minimum Employee premium

share

Total Minimum

H S A

Entry Year

Single 1,600$ 500$ 2,100$ Family 3,200$ 1,000$ 4,200$

Single 1,500$ 500$ 2,000$ Family 3,000$ 1,000$ 4,000$

Single 1,250$ 500$ 1,750$ Family 2,500$ 1,000$ 3,500$

Proposed District and Employee Contribution to Optional H S A QHDHCP

Year One

Year Two

Year Three

Dist + EE OptionalIRS Annual

Max: All sources

IRS:+55 catch-up

IRS Max w/+55 Catch-

up

Single yr 1 2,100$ 1,200$ 3,300$ 1,000$ 4,300$ 50.00$ 41.67$

Family yr 1 4,200$ 2,350$ 6,550$ 1,000$ 7,550$ 97.92$ 41.67$

Maximum for 2014

Per Pay examples:

Per Pay examples:

Eligibility & Funding• For January 1, 2014:

– Full-time active staff currently enrolled in the District Health Care ( e.g. LTS’s not eligible)

– Retirees eligible • Presently have a $1,200 deductible plan option & now the Q

plan

• Eligible employees hired (start date) after April 1 of each year not eligible for QHDHCP until following January (via Fall enrollment)

• Year one : 100% board share in January• Successive years 65% in January and 35% in

September

Show me the money.....• Year one: 100% of Board Contribution made in

January – 2014 “Class” January 2014 = $1,600 or $3,200

• Successive years: 65% in January --& 35% in September– 2013 Single Class : Jan 2014 = $975 & Sept 2014 = $525– 2013 Family Class: Jan 2014 = $1,950 & Sept 2014 = $1,050

• Employee Payroll Contributions – After Each Payroll [No less than Monthly]

• E-mail notifications----In and out.

Timelines / Schedule• October Presentations• PPO 60 day PPACA notice and Summary of

Benefit & Coverage (SBC’s)issuance• November 5; Central Office; meeting and

employee education program• November 15 Enrollment deadline

– Set up Accounts; Payroll deduction set-up: both mandatory and optional; Funding alignment; WEB site set-up and on-line tools

• New ID Cards---January 1st start

For January 1, 2014

• Choose the ‘Q ‘plan with H S A (Options on H S A $ amounts, No FSA)

• Stay with H S A Plan.....Leave H S A Plan• Stay with the current PPO plan (FSA option, no H S A)• Spousal Rule certifications – Everyone; H S A context

– Surcharge is $1,523.18 for 2014 – [E + 1 Rate of $13,847.16 x 11%]

• Dual Coverage issues impact H S A selections ( i.e. you are “covered” by your spouses plan too)

PPO HDHCP200/600 2000/4000

Premium share: Annual Annual

Single 513.84 513.84

E+1 969.36 969.36

Family 1598.88 1598.88

Employer contributions:Health Equity

BankYear One Example:

Single 0 1600Family 0 3200

Returned premium Share: Total Bank Cash:Single 0 500 2,100 Family 0 1000 4,200

Deductibles Deductible less H S A Cash

Deductible; single -200 -2000Difference in Paid Premium share -500 0

-700 -2000 100

Deductible: Family -600 -4000

Difference in Paid Familiy Premium share -1000 0

-1600 -4000 200

Co-pays??

Withheld and paid from section 125

payroll deductions as

per CBA.

Premium shares:

2013-14 (Eff. Jan. 1, 2014)

Participating

ProviderParticipating

Provider

Deductible

Individual $100 $200

Family $300 $600

Co-Pays

Offi ce Visit (PCP) $25.00 $30.00

Offi ce Visit (Specialist) $35.00 $40.00

Urgent Care Center $25.00 $30.00

Chiropractic $15.00 $20.00Mental Health - Outpatient $25.00 $30.00

Current PPO Plan

2013-14 (Eff. Jan. 1, 2014)

Participating

ProviderParticipating

Provider

Deductible

Individual $2,000 $2,000

Family $4,000 $4,000

Co-Pays (after deductible)Office Visit (Primary or other practitioner) $15.00 $15.00

Office Visit (Specialist) $25.00 $25.00

Urgent Care Center $25.00 $25.00

Chiropractic $15.00 $15.00Mental Health - Outpatient $25.00 $25.00

QHDHP

Per Pay Amount12 month (24 pays)

10 month (19 pays)

COBRA Monthly Rate

Annual Premium

Share Employee $21.41 $27.05 $713.77 $513.84

Employee + 1 $40.39 $51.02 $1,153.93 $969.36

Employee + Family $66.62 $84.15 $1,665.47 $1,598.88Annual

Spousal Surcharge - eff. Jan. 1, 2014 $8,565.2411% of employee + 1 COBRA rate $13,847.16$13,847.16 x 11% = $1,523.18 / 26 pays = $58.58 per pay $19,985.64

Health Care Premium 2013-14 Information