Health Savings Account?

Transcription

1 A new approach to Your Health Benefits I S N T I T T I M E F O R A Health Savings Account?

2 HSAs are complex arrangements subject to various IRS rules and regulations, which are not all explained in this brochure. Please read the Important Notice at the end of this brochure for important information.

3 Introducing Health Savings Accounts Welcome! Your employer has chosen to offer a Health Savings Account with an HSA-compatible High Deductible Health Plan as part of your benefits package. ConnectiCare offers employers and their employees the opportunity to select First HSA, our preferred HSA administrator, to administer your HSA account. Please note that you may choose any qualified HSA administrator for your plan. HSAs give you greater say in how your health care dollars are spent and can also make health plan premiums more affordable. What is an HSA and how does it work? Health Savings Accounts (HSAs) are tax-exempt savings plans that are combined with a High- Deductible Health Plan (HDHP) to help reduce your health plan premium costs. Funds in the account can be used to pay for qualified health care expenses including those applied to your health plan deductible. HSA funds may also be used to pay for other things such as copayments, coinsurance or other qualified medical expenses not covered by the health plan. Health Savings Accounts work in concert with HDHPs and have a number of unique features including the following: You own the account. It is a personal savings account that earns tax-free interest. The account is funded by you or your employer. You may place pre-tax money into your account to meet your deductible. Your employer may also choose to fund a portion of the dollars. Contributions to the fund may now exceed the plan deductible. The maximum annual amount you are allowed to contribute in 2007 is $2,850 for self-only coverage and $5,650 for family coverage (subject to maximum amounts set by the IRS). The maximum contribution amounts for 2008 are $2,900 for self-only coverage and $5,800 for family coverage. There are tax benefits. When you deposit money into the account through payroll deduction, it is on a pre-tax basis providing you with greater earning and spending power. Employer contributions to the account are non-taxable for you. You can pay for a variety of medical expenses. You can use HSA funds to pay for qualified medical expenses including those applied to the health plan deductible as well as for over-thecounter drugs, eyeglasses, prescription drugs and other medical supplies. You can carryover your funds. Unused dollars can be saved and carried over year after year. In doing so, these dollars are invested and earn tax-deferred interest. You can take it with you. Because this is your own personal account, you can take the dollars you ve earned with you when you change employers. 1

4 Advantages of ConnectiCare s High-Deductible Health Plans High-Deductible Health Plans combine member responsibility for health care decisions with quality benefits coverage. When you combine the savings account aspect of HSAs with the proven quality of ConnectiCare s benefit plans you have a combination of tools to help you understand the value of your health care coverage. High- Deductible Health Plans provide you with access to a range of benefits including: Coverage for medical services including prescription drugs Medical and prescription drug expenses that are subject to the deductible, copay or coinsurance (if applicable) First dollar coverage for a broad list of preventive services, please review your benefit summary for more information In-network services from ConnectiCare s participating providers located throughout all of Connecticut, most of Berkshire and all of Franklin, Hampden and Hampshire counties in Massachusetts, and Orange, Putnam, Rockland and Westchester counties in New York More than 85 hospitals and 22,500 health care providers to choose from Access to nationally-recognized, award-winning Health Management programs including Birth Expectations, Breathe, DiabetiCare and HeartCare Healthy Alternatives a series of available programs designed to improve your health through a variety of resources including health club membership, weight management programs, nutritional counseling, acupuncture, massage therapy and more Having a ConnectiCare HDHP also means you can rely on the outstanding health plan service and quality that ConnectiCare is known for. ConnectiCare earned the highest score for customer service and claims processing of any health plan in Connecticut, according to the 2006 Consumer Assessment of Healthcare Providers and Systems (CAHPS). ConnectiCare has also maintained four-star excellent accreditation status from the National Committee for Quality Assurance (NCQA) since the category was established in Save with negotiated rates If your HSA is used with a ConnectiCare HSAcompatible High-Deductible Health Plan, you can enjoy savings on most covered services due to ConnectiCare s negotiated participating provider and prescription drug rates. This means that your HSA funds can go further with ConnectiCare. ConnectiCare s negotiated rates are generally better than those for PPO and fee-for-service plans. Participating providers must accept the ConnectiCare contracted rate as payment in full. You cannot be billed for any balance. Please see Important Notice, on the inside back cover, for more information. Information is power Because your HSA gives you more control over how your health care dollars are spent, it s important to be as informed as possible about your health care decisions. To help you make these decisions we offer a variety of powerful, useful tools on our Web site. With these tools you ll be able to navigate through and more clearly manage the many choices you have when considering your personal health care needs. 2

5 Member self-service tools In the Managing Your Account and the Cost of Care sections of our Web site we provide a variety of tools that outline each member s personal health plan basics. These include: Medical and pharmacy claim history. You can view up to 18 months of claims history including claim totals, deductibles, coinsurance where applicable and other relevant information. Health Care Financial Summary. This is a summary for subscribers of our High-Deductible Health Plans (HDHPs) which are compatible with Health Savings Accounts (HSAs). It s especially important for HSA account holders to keep track of their health care spending because they can use these tax-exempt accounts for qualified medical expenses. Find a Doctor, our online provider directory provides frequent updates of our provider data, a Quick Search feature, and more information about your doctor. We have also incorporated the ability to search for doctors by county, city, ZIP code, name, network affiliation and distance. You can also create a customized, printable directory. The ability to obtain physician profiles. PlanCompare & CostCompare upgrades now allow you to do more Choosing the right health benefit plan is important but it can sometimes be a daunting task. That s why ConnectiCare has contracted with WebMD, to provide a decision support tool that can help you sort through an array of benefit and price comparisons. Features allow for personalized input providing a more accurate analysis of your total costs including the ability to: Provide your paycheck frequency to help calculate your annual premium deductions; Enter the employee-contribution amount to gain a more accurate assessment of your total costs-share; and Enter the employee s and/or the employer s annual HSA contribution, if applicable. Personal Health Manager WebMD s Personal Health Manager provides members with online information, resources and tools to help maintain their health. Members can use it to: Complete a Health Risk Assessment; Create an electronic Personal Health Record; View WebMD s Treatment Cost Estimator to determine costs for hundreds of common procedures and tests; Receive targeted wellness information; Set up reminders about appointments and screenings; and more. Subimo Healthcare Advisor and PharmaAdvisor These tools are for anyone facing an important health care decision or for those needing to learn how to manage a particular condition. This combined suite of tools is available to ConnectiCare members at no charge and offers a number of references including a Decision Guide to help you address and act on key health-related decisions. Viewing benefit summaries online. Members can check their benefit summaries for copayment information, deductible, coinsurance and related information whenever they need it. Staying Healthy. With this tool members can stay in control of their health with a variety of features including: Managing Your Health, My Health Resources, and Health Trackers. 3

6 Case studies in savings The following illustrations show how an individual and a family, rolling over unused funds, might use a typical HSA over a three-year period. Keep in mind that interest may be added to and administration fees may be deducted from the HSA account. All cost information below is for example purposes only and does not necessarily reflect actual charges, your plan or account rules or the arrangement your employer will offer you. The illustrations are based on hypothetical health plans. Case study 1 Mary has a $1,500 High-Deductible Health Plan and an HSA plan that she contributes $1,000 to annually. Her employer contributes $500 to the HSA for a total annual contribution of $1,500. YEAR 1 $1,500 HSA contribution -$300 Medical expenses applied to the deductible and paid from the HSA $1,200 HSA balance to be rolled over into year 2. YEAR 2 $1,200 HSA rollover from year 1 +$1,500 Contribution for year 2 $2,700 HSA balance for year 2 -$1,500 Medical expenses applied to the deductible and paid from the HSA -$225 Prescription coinsurance amount paid from HSA -$105 PCP/Specialist office visit copays paid from the HSA $870 HSA balance -$700 Medical expenses not covered by plan but paid from the HSA $170 HSA balance to be rolled over into year 3 YEAR 3 $170 HSA rollover from year 2 +$1,500 Contribution for year 3 $1,670 HSA balance for year 3 In year 1, Mary sees her physician in his office several times for a minor medical problem and has $300 applied to the deductible. She uses $300 from her HSA leaving a balance of $1,200 in unused HSA funds that will be rolled over into year 2. In year 2, the $1,200 rollover is combined with the $1,500 total contributions for an HSA balance of $2,700. During the year Mary has an inpatient hospital stay for an elective surgical procedure, for which $1,500 is applied to her deductible. Also, she has $225 in prescription coinsurance costs for drugs she gets from her local pharmacy following her hospital stay. In addition, Mary sees a physician on three occasions during the year. She has two visits with her PCP and she pays a $30 copayment each time. Her physician refers her to a specialist for further treatment and she pays a $45 copayment. Therefore her total office visit copayments are $105. Mary also incurs $700 in medical costs for over-the counter medications and contact lenses, which are not covered by her health plan but are considered qualified HSA expenses, and she chooses to use her HSA funds to pay for these items. The $1,500 applied to her deductible for her hospital stay, $225 in prescription coinsurance costs, $105 in office visit copayments, and $700 in other non-covered but HSA qualified expenses are reimbursed from her HSA leaving a balance of $170 to be rolled over to year 3. In year 3, the year 2 rollover of $170 is added to the year 3 annual contribution of $1,500 for an HSA balance of $1,670. 4

7 Case study 2 The next illustration is a family plan. Bob, his wife Jane, and their two children have a $5,000 High-Deductible Health Plan and contribute $2,000 annually to their HSA. Bob s employer has elected to contribute $2,000, for a total annual contribution of $4,000. YEAR 1 $4,000 HSA contribution -$1,000 Medical expenses applied to the deductible and paid from the HSA $3,000 HSA balance to be rolled over into year 2. In year 1, the children see their pediatricians for annual exams and the health plan covers the expense at 100% with no deductible. In addition, the family has $1,000 in expenses for an emergency room visit and other physician visits applied to the deductible. The HSA is used to reimburse Bob and Jane for the $1,000 in emergency room expenses, but not the other physician visits applied to the deductible, leaving an HSA balance of $3,000 to be rolled over into year 2. YEAR 2 $3,000 HSA rollover from year 1 +$4,000 Contribution for year 2 $7,000 HSA balance for year 2 -$5,000 Medical expenses applied to the deductible and paid from the HSA -$225 Prescription coinsurance amount paid by HSA $1,775 HSA balance -$1,000 Medical expenses not covered by plan but paid from HSA $775 HSA balance to be rolled over into year 3 In year 2, the $3,000 in rollover funds is combined with the $4,000 annual total contribution for an HSA balance of $7,000. Jane is hospitalized for an elective surgical procedure and the family incurs $5,000 in medical expenses applied to the deductible. In addition, the family has prescriptions that result in coinsurance costs of $225. The family also incurs $1,000 in other medical expenses not covered by the health plan but considered qualified HSA expenses including eyeglasses, over-the-counter medications, and acupuncture treatment. Bob and Jane use the HSA account for reimbursement of the $5,000 deductible, $225 in prescription coinsurance, and $1,000 in other medical expenses from the HSA, leaving $775 to be rolled over into year 3. YEAR 3 $775 HSA rollover from year 2 +$4,000 Contribution for year 3 $4,775 HSA balance for year 3 In year 3, the year 2 rollover of $775 is added to the annual contribution of $4,000 for a total beginning HSA balance of $4,775. 5

8 Administration of your HSA ConnectiCare offers employers and their employees the opportunity to select First HSA our preferred HSA administrator to manage, administer and service your HSA accounts. First HSA is one of the nation s leading authorities on Health Savings Account administration. First HSA has actively worked with members of Congress on federal legislation and was instrumental in the development of today s HSA account rules. First HSA provides technical and customer service and support including: Assistance in opening your account Setting up fund deposits Regular account status reports Monthly administrative fees currently waived (subject to future change) Access to updated account information via the First HSA Web site, Toll-free customer service telephone support at An integrated investment option Competitive interest rates Consumer tools such as the Medical Cost Tool and the Prescription Pricing Tool If you need assistance If you need assistance with administration or reimbursement of your HSA funds, or have a question about your HSA account, please contact First HSA at (610) or toll-free at For questions about your health plan benefits, please contact ConnectiCare Member Services at

9 HSA Questions and Answers 1.What is an HSA? A Health Savings Account (HSA) is a taxfavored savings account established to pay for qualified medical expenses. HSA account holders enroll in a qualifying High-Deductible Health Plan (HDHP) and contribute pre-tax funds to the HSA that can be used to cover qualified medical expenses including those subject to the health plan deductible. Unused dollars earn tax-deferred interest and can be rolled over from year to year. 2.Who is eligible to open an HSA? Individuals covered by a qualified HDHP can open an HSA, subject to IRS rules and restrictions. 3. Who is ineligible to open an HSA account? Individuals covered by another health plan, such as someone covered by a spouse s plan for primary coverage, and those individuals covered by Medicare and Medicaid. Other IRS rules and restrictions may apply. 4. Who contributes money to an HSA account? Typically, the employee contributes funds to the HSA. The employer may also make contributions. 5. How much can be contributed to the account? The annual maximum contribution amount is subject to limits set by the IRS. The 2007 contribution levels are set at a maximum of $2,850 for an individual and $5,650 under qualifying circumstances for a family covered by a HDHP. The maximum contribution amounts for 2008 are $2,900 for self-only coverage and $5,800 for family coverage. 6. What can HSA funds be used for? HSAs were established to provide funding for qualified medical expenses. However, funds can be withdrawn for any purpose but distributions for non-eligible expenses are taxable and subject to a 10% penalty by the IRS. 7. Typically what services are covered by the health plan? Your benefit summary offers a comprehensive list of covered services. For questions about your health plan benefits, please contact ConnectiCare Member Services at For HSA plan administration questions, please contact First HSA at

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11 Important Notice: There are instances where your total out-of-pocket health plan costs may be higher with an HSA than with a traditional HMO plan. When you meet the deductible under your health plan, the health plan will pay for all remaining covered medical expenses, except that you are still responsible for any applicable coinsurance for prescription drug expenses. There may be some rare circumstances in which the fee that is contracted between ConnectiCare and its providers can be higher than the billed rate. In these instances (less than 1% of all cases) a member will be required to pay the higher amount for these covered services even though the billed rate may be lower. This payment arrangement must be met to allow for the tax-qualified status of his/her high-deductible health plan. ConnectiCare s HSA-compatible high deductible health plans (Plans) are intended to be appropriate for use with HSA accounts. The Plans have been designed to conform with Federal Internal Revenue Service (IRS) guidelines on such plans. However, the IRS has made no determination that the Plans are qualified. Whether or not an HSA used with these Plans will provide a ConnectiCare member with a tax advantage depends on a number of circumstances, including the member s personal coverage situation, contributions to and withdrawals from the HSA account, other coverage a member or spouse may have, and changes to or interpretations of IRS rules. Members should consult with a qualified tax advisor in determining whether and how this option may provide them with a tax benefit. ConnectiCare cannot guarantee that tax benefits will accrue to anyone covered under the Plans. ConnectiCare provides only health plan coverage and administration. First HSA provides HSA accounts and administration. The accounts are separate from ConnectiCare health plans. ConnectiCare is not responsible for the administration of any HSA accounts or other financial accounts used in connection with its health coverage products. First HSA may charge you a fee for the set-up or administration of your HSA account. This brochure is only a general overview of some HSA and consumer driven health plan information. It is not intended to provide tax or legal advice of any kind, and neither the accuracy nor completeness of any information is guaranteed. Consult a qualified tax or legal professional with any tax or legal questions you may have. This is a brief summary of benefits and is not a guarantee of coverage. Refer to the appropriate ConnectiCare Membership Agreement/Certificate of Coverage for more detailed information, exclusions and limitations. The Membership Agreement/Certificate of Coverage will prevail for all benefits, conditions, limitations and exclusions.

12 175 Scott Swamp Road, Farmington, CT Coverage is provided by and services are administered as follows: In Connecticut: Group HMO and POS coverage, and Individual HMO is underwritten by ConnectiCare, Inc.; Individual POS is underwritten by ConnectiCare Insurance Company, Inc. In Massachusetts: Group HMO and POS coverage is underwritten by ConnectiCare of Massachusetts, Inc. In New York: HMO and POS is underwritten by ConnectiCare of New York, Inc. FlexPOS, PPO coverage, ASO/Self-funded services, and Dental products are administered or underwritten by ConnectiCare Insurance Company, Inc. Voluntary products are distributed by Producer Partners, Inc., and coverage is underwritten by Boston Mutual Insurance Company. HSAEE 0707