Incorporating High Deductible Health Plans into the Benefit Mix

Transcription

1 Incorporating High Deductible Health Plans into the Benefit Mix K12 Health Care Requirements Workshop Carol Wilmes, Program Manager Association of Washington Cities Employee Benefit Trust

2 What Are Your Benefit Goals? 1. ESSB 5940 Compliance 2. Maintain quality benefits for employees 3. Maintain or reduce premium contributions for the school district 4. Provide benefit options to employees, focusing on affordable out-of-pocket expense (premium contributions AND benefit costs) 5. Provide auxiliary savings mechanisms for future health care costs as a retiree

3 Consider the HDHP Annual Open Enrollment could offer you a choice: 1. PPO plan; or 2. HMO (Group Health or Kaiser) plan; or 3. NEW Option: High Deductible Health Plan with Health Savings Account (or Health Reimbursement Arrangement)

4 High Deductible Health Plan with Health Savings Account Deductibles: Employee $1,500 Employer provides coverage above the deductible Employer or employee deposits money into an employee s account Family $3,000 Out of Pocket Maximum (OPM) Employee: $5,000 Family: $10,000 After deductible is met, benefits pay Health at 80%. Savings Once OPM Account is met, benefits pay at 100% $3,100/year, ee only $6,250/year, family 100% Preventive Care Coverage takes effect when expenses exceed the deductible Rx drugs subject to deductible Used by employees for medical or non-medical expenses; unused amounts roll over yearto-year

5 AWC Plans At a Glance 2012 Monthly Premiums Deductible Co-Insurance Maximum Physicians RBS/ANH HDHP Employee - $ Family - $ $1,500/individual $3,000/family $5,000/individual $10,000/family 80%; preventive care not subject to deductible GHC HDHP Employee - $ Family - $ $1,500/individual $3,000/family $3,750/individual $7,500/family $20 copay, then 90%; preventive care not subject to deductible Hospital 80% 90% for inpatient & outpatient $75 copay for ER then 90% Prescription Drugs 80% in-pharmacy 80% mail order $15/$30 in pharmacy $45/$90 mail order

6 Who Might be Interested in Enrolling? Diverse motives, but here are a few reasons: Close to retirement for supplemental retirement savings account Savings in employee benefit contributions Single Healthy Financial confidence in evaluating the cost/benefit ratio

7 Who Can Have an HSA? Per federal law, any employee can contribute to an HSA if they are: Enrolled in High Deductible Health Plan (HDHP). Not enrolled in other coverage Not enrolled in Medicare Not claims as a dependent on someone else s tax return

8 HSA Contributions Contributions can be made by the employee, the employer or both Total contributions are limited annually Contributions stop when no longer enrolled on a HDHP, or when enrolled in Medicare While contributions can no longer be made, the money can continue to be used for expenses as this is a bank account in the employee s name

9 HSA Contributions HSA Contribution 2012 Maximums Self only coverage: $3,100 Family coverage: $6,250 Maximums indexed annually Additional contribution If age 55 or older, your contribution limit is increased by $1,000 Association of Washington Cities 9

10 HSA Contribution Limitations o FSA or HRA enrollment o An employee covered by a HDHP and health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA o Additional limitations o o LEOFF 1 s (on Regence Plan A) are not eligible to contribute to a HSA Employer HSA contribution made for an employee covering a domestic partner or domestic partner s children in most cases is considered taxable income to the employee Association of Washington Cities 10

11 Using Your HSA o You can use the money to pay for qualified medical expenses permitted under federal tax law o This includes most medical care not covered by insurance, dental and vision care, as well as COBRA, Medicare and other health care coverage if you are 65 or older o You can use the money to pay for medical expenses of yourself, your spouse, or your dependent children even if they are not enrolled on the HDHP o Debit cards are issued for ease in paying for services o Record keeping/documenting qualified expenses is up to the employee Association of Washington Cities 11

12 Tax Advantage o Funds contributed to the account are not subject to federal income tax at the time of deposit o Interest or earnings that accumulate in the account are not subject to federal income tax o Funds taken from the account to pay for qualified medical expenses at any time are not subject to federal income tax Association of Washington Cities 12

13 Penalties o Any amounts used for purposes other than to pay for qualified medical expenses are taxable as income and subject to an additional 20% penalty tax o After turning 65 (or becoming disabled & enrolling on Medicare), the 20% additional tax penalty no longer applies o It is up to the HSA account holder to keep records proving amounts withdrawn were used for qualified medical expenses Association of Washington Cities 13

14 Sample Employer Contributions - Bellingham Bellingham Employer Contributions Association of Washington Cities 14

15 Sample Employer Contributions - Aberdeen COST COMPARISON - HealthFirst Plan vs. HealthFirst High Deductible Plan w/ HSA AWC HealthFirst Plans 2012 HealthFirst Mo. Premium 2012 HealthFirst Employee Contributions 2012 HDHP Mo. Premium 2012 HDHP Employee Contributions Total Annual Employee Premium Savings Employee only $ $ $ - - Employee + spouse $ 1, $ $ $ $ Employee + 1 child $ $ $ $ $ Employee + 2 or more children $ 1, $ $ $ $ Employee, spouse + 1 child $ 1, $ $ $ $ 1, Employee, spouse + 2 or more children $ 1, $ $ $ $ 1, Proposed 2012 Contribution to HealthFirst HDHP HSA Per Employee HSA Maximum IRS Allowable Annual Contribution Proposed City HSA Annual Contribution EE $ 3,100 2,400 Employee + spouse $ 6,250 4,800 Employee + 1 child $ 6,250 4,800 Employee + 2 or more children $ 6,250 4,800 Employee, spouse + 1 child $ 6,250 4,800 Employee, spouse + 2 or more children $ 6,250 4,800

16 Sample Employer Contributions - Ilwaco COST COMPARISON HealthFirst-500 Plan vs. HealthFirst High Deductible Plan w/ HSA AWC HealthFirst Plans 2012 HF-500 Mo. Premium 2012 HF-500 Employee Contributions 2012 HDHP Mo. Premium 2012 HDHP Employee Contributions Total Annual Employee Premium Savings Employee only $ $ $ $ - - Employee + spouse $ 1, $ $ $ $ 2, Employee + 1 child $ $ $ $ $ 1, Employee + 2 or more children $ $ $ $ $ 1, Employee, spouse + 1 child $ 1, $ $ $ $ 3, Employee, spouse + 2 or more children $ 1, $ $ $ $ 4, Proposed 2012 Contribution to HealthFirst HDHP HSA Per Employee HSA Maximum IRS Allowable Annual Contribution Proposed City HSA Annual Contribution EE $ 3,100 1,500 Employee + spouse $ 6,250 1,500 Employee + 1 child $ 6,250 1,500 Employee + 2 or more children $ 6,250 1,500 Employee, spouse + 1 child $ 6,250 1,500 Employee, spouse + 2 or more children $ 6,250 1,500

17 Claims Scenarios EXAMPLE I (Insuring Employee +_Spouse + 1 Child) Illustration: An employee and her husband gave birth to a newborn baby boy in February. The birthing costs and follow-up well child care visits and immunizations at 3, 6 and 9 months are illustrated below. Billed Amount Deductible/ Copay/Out of Pocket Regence Pays Patient Responsibility HF Doctor Prenatal & delivery $1,370 $10 $1,360 $10 Hospital Newborn $1,700 $150 + $155 $1,395 $305 Hospital Vaginal Birth $4,850 $150 + $470 $4,230 $620 1 st Well Care Visit $250 $0 $250 $0 2 nd Well Care Visit & Shots $400 $0 $400 $0 3 rd Well Care Visit & Shots $400 $0 $400 $0 TOTAL $935 HDHP Doctor Prenatal & delivery $1,370 $1,370 $0 $1,370 Hospital Newborn $1,700 $1,630 + $14 $56 $1,644 Hospital Vaginal Birth $4,850 $970 $3,880 $970 1st Well Care Visit $250 $0 $250 $0 2nd Well Care Visit & Shots $400 $0 $400 $0 3rd Well Care Visit & Shots $400 $0 $400 $0 TOTAL $3,984

18 Claims Scenarios EXAMPLE II OUTPATIENT HOSPITAL (Insuring Employee + Spouse + 2 Children) Illustration: It s football season, and in the opening game an employee s son breaks his arm prompting a visit to the emergency room. Later that year, the employee s spouse has gallstones and requires emergency gallbladder surgery. Billed Amount Deductible/ Copay/Out of Regence Pays Patient Responsibility Pocket HF Child ER Hospital & X-ray $600 $75 + $52.50 $ $ Attending ER Physician $425 $0 $425 $0 Spouse Outpatient Hospital $2,500 $250 $2,250 $250 Attending surgeon & $1,500 $0 $1,500 $0 anesthesiologist TOTAL $ HDHP Child ER Hospital & X-ray $600 $600 $0 $600 Attending ER Physician $425 $425 $0 $425 Spouse Outpatient Hospital $2,500 $1,975 + $105 $420 $2,080 Attending surgeon & $1,500 $300 $1,200 $300 anesthesiologist TOTAL $3,405

19 Claims Scenarios EXAMPLE III INPATIENT HOSPITAL (Insuring Employee + Spouse) Illustration: Employee has a heart attack and requires open heart surgery. Inpatient hospital surgery followed by outpatient cardiac rehabilitation. Billed Amount Deductible/ Copay/Out of Pocket Regence Pays HF Hospital $50,000 $150 + $1,000 $48,850 $1,150 Surgeon/Anesthesiologist $15,000 $0 $15,000 $0 Patient Responsibility Follow-up weekly cardiac $ 3,000 $0 $3,000 $0 Rehabilitation visits TOTAL $1,150 HDHP Hospital $50,000 $3, ,000 $40,000 $10,000 Surgeon/Anesthesiologist $15,000 $0 $15,000 $0 Follow-up weekly cardiac $ 3,000 $0 $3,000 $0 Rehabilitation visits TOTAL $10,000

20 Claims Scenarios EAMPLE IIIa INPATIENT HOSPITAL (Insuring Employee Only) Illustration: Employee has a heart attack and requires open heart surgery. Inpatient hospital surgery followed by outpatient cardiac rehabilitation. Billed Amount Deductible/ Copay/Out of Pocket Regence Pays HF Hospital $50,000 $150 + $1,000 $48,850 $1,150 Surgeon/Anesthesiologist $15,000 $0 $15,000 $0 Patient Responsibility Follow-up weekly cardiac $ 3,000 $0 $3,000 $0 Rehabilitation visits TOTAL $1,150 HDHP Hospital $50,000 $1, ,500 $45,000 $5,000 Surgeon/Anesthesiologist $15,000 $0 $15,000 $0 Follow-up weekly cardiac $ 3,000 $0 $3,000 $0 Rehabilitation visits TOTAL $5,000

21 Claims Scenarios EXAMPLE IV WELL ADULT CARE (Insuring Employee + Spouse) Illustration: Employee sees physician for routine check-up and, due to age, the doctor prescribes a routine physical examination billed as preventive care. Spouse also visits the doctor for annual gynecological exam. Billed Amount Deductible/ Copay/Out of Pocket Regence Pays HF Employee - Physician $600 $0 $600 $0 Spouse - Physician & PAP $200 $0 $200 $0 Smear labwork TOTAL $0 HDHP Employee - Physician $600 $0 $400 $0 Spouse - Physician & PAP $200 $0 $160 $0 Smear labwork TOTAL $0 Patient Responsibility

22 Claims Scenarios EXAMPLE V MULTIPLE OFFICE VISITS (Insuring Full Family) Illustration: Shortly after the first of the year, the employee visits the doctor for flu symptoms and is prescribed an antibiotic. Several months later, the employee's spouse visits the doctor for bronchitis and a follow-up antibiotic. Later that year, the employee visits the doctor again for his annual check of high blood pressure. The spouse also needs to visit the doctor to check her thyroid medication. Billed Amount Deductible/ Copay/Out of Pocket Regence Pays HF Employee 1 ST Office Visit $100 $10 $90 $10 Rx Brandname Preferred $60 $15 $45 $15 Spouse 1 ST Office Visit $100 $10 $90 $10 Rx Generic $30 $4 $26 $4 Employee 2 ND Office Visit $250 $10 $240 $10 Spouse 2 ND Office Visit $250 $10 $240 $10 TOTAL $59 HDHP Employee 1 ST Office Visit $100 $100 $0 $100 Rx Brandname Preferred $60 $60 $0 $60 Spouse 1 ST Office Visit $100 $100 $0 $100 Rx Generic $30 $30 $0 $30 Employee 2 ND Office Visit $250 $250 $0 $250 Spouse 2 ND Office Visit $250 $250 $0 $250 TOTAL $790 Patient Responsibility

23 Resources. U.S. Department of the Treasury HSA Info center/faqs/taxes/pages/health-savings- Accounts.aspx IRS Publication Qualified Medical Expenses IRS Publication 502, Medical & Dental Expenses Association of Washington Cities 23

24 Questions. Carol Wilmes Program Manager AWC Employee Benefit Trust or (360) Association of Washington Cities 24