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Solanco School District Optional Health Care Plan Fall 2012. A Qualified High Deductible Health Care Plan (QHDHCP) with a Health Savings Account (H S A). What’s in this for......?. ....ME!!??. ....The District!!??. Big picture - Designed to be cost neutral - PowerPoint PPT Presentation
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Solanco School DistrictOptional Health Care PlanFall 2012
A Qualified High Deductible Health Care Plan (QHDHCP)
with a Health Savings Account (H S A)
What’s in this for......?
....ME!!??
Opportunity to grow a savings account for medical costs
A good fit for many employees
Plan (Multi- year / Multi-need) for future medical expenses...covered and not covered by plan
Extend coverage for potential costs incurred by other family members
....The District!!?? Big picture - Designed to
be cost neutral
Individual picture – Adverse selection risk
Self-Insured program
A good fit to Health Care Market Direction and Health Care Decision
Consumer Directed choice and options – [no choice on choice!!!]
Side Bar – Health Care as we Know it....PPACA....and as it will be.
Newsweek announces elimination of “print” mode...technology evolved over the past 25 years...and still is...
The Health Care Industry – 75 years - Was told to evolve now! It’s a little messy...
Exchanges - Accessible AND Affordable –W-2’s 2012
How will this Change the whole Health Insurance delivery model?
Shift to Consumerism and Empowerment and Choice “Sell” to employers and HR, CEO and CFO Folks
“Sell” to Jane sitting at her kitchen table with her i-Pad
High Deductible Health Plans
Come in two types
A Health Care plan that simply has a higher deductible – usually means a deductible of $1000 or more –
A Qualified (signified by the letter ‘Q’) plan has an upfront (before any benefits are paid) deductible and is most often offered in conjunction with an HSA
What is a “Q”HDHCP?
Must follow guidelines as laid out by the IRS...[required to obtain the tax advantages prescribed]
Annual Deductible Minimum set by the IRS
$1,200 Individual and $2,400 family (IRS)
Solanco Plan Will be 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 - ExamplesPPACA 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? (1)
An employee owned bank 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 ( 2013)
$3,250 individual
$6,450 Family
$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 within 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 (currently excluded from income and wages)
If made by the individual (or in lieu thereof), it is an “above-the-line” deduction
The maximum amount that can be contributed to an HSA from all sources
$3,250 (self-only coverage) 2013
$6,450 (family coverage) for 2013 [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 – flexible spending account)
Remember that contributions to the HSA through a cafeteria plan are “pretax” and not subject to individual or employment taxes
HSA Accounts
No “use it or lose it” rules like Flexible Spending Arrangements (FSAs) All Dollar 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
HSA Accounts
HSA trustee must report all distributions annually to the individual (Form 1099 SA).
Trustee not required to determine whether distributions are used for medical purposes; the individual does that.
Individual will report on annual tax return amount of distribution used for qualified medical expenses.
Account holders must file Form 8889 as part of their annual tax return.
HSA Distributions Distribution is tax-free if taken for “qualified
medical expenses”. Qualified medical expense must be incurred on
or after the HSA was established.
Tax-free distributions can be taken for qualified medical expenses of:
Person covered by the high deductible
Spouse of the individual (even if not covered by the HDHP)
Any dependent of the individual (even if not covered by the HDHP)
Qualified Medical Expenses
Expenses paid by the account beneficiary for his or her spouse or dependents for medical care as determined by section 213 (d) of the IRS code. (See IRS publication 502;
www.irs.gov)Expenses must not be covered by
insurance or otherwise
H S A Account Access –Features (1)
Participants have access to payment features for claim review and selection of reimbursement options
Pay the vendor, pay themselves, divide payments and save funds in the account ( i.e. just write a check)
Pay on-line, pay at the provider office
VISA Health Account Card
H S A Account Access –Features (2)
Account management on-line
Real time balance
On-line payments can be made directly to a provider
Schedule payment in advance
Electronic Fund Transfer (EFT’s) can be utilized
Access to history of claims and spending
H S A Account Access –Features (3)
FDIC- Insured
No setup or activity fees
Investment options…(to be determined)…generally with no transaction fees (Health Equity H S A Bank)
Monthly account statements and annual tax statements
Employee Q Plan Eligibility
Active Full Time Staff ( i.e. own a position and currently have Health Care Benefits)
LTS and Retirees ( Current Retirees) not eligible
Employees Hired Before April 1 of each Calendar year
Employee / Board Contribution
Note: Minimum Employee Contribution (on the next slide) is a “diversion” of current employee premium share dollars
Meaning, these funds are “ALREADY” being deducted from an employees paycheck.
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$
6,450.00$ 2013
District and Employee Contribution to Optional H S A QHDHCP
Year One
Year Two
Year Three
H S A : IRS Maxiumum Annual Total
Show me the money.....
Year one: 100% of Board Contribution made in January
Successive years: 65% in January --& 35% in September
Employee Payroll Contributions – After Each Payroll [No less than Monthly]
Funding Stream Example (year one Board share shown)
HSA Account
District (Yr One Numbers)
Employee (PYRL deduction; employee
Premium share)
Sub-Total
Employee Additional
PYRL deduction (employee
dollars)
Other: Direct contribution;
donations; IRA (1
Lifetime transfer)
Total HSAAnnual
IRS Maximum
Single 1,600$ 500$ 2,100$ 1,125$ -$ 3,225$ 3,250$ Family 3,200$ 1,000$ 4,200$ 725$ 1,500$ 6,425$ 6,450$
HSA Funding Streams
December 7, 2012 Decision: For January 1, 2013
Choose the ‘Q ‘plan with H S A (Options on H S A $ amounts, No FSA)
Stay with the current PPO plan (FSA option, no H S A)
Spousal Rule certifications – Everyone; H S A context (Surcharge is $1,463.96 for 2013)
Dual Coverage issues impact H S A selections ( i.e. you are “covered” by your spouses plan too)