Health Savings Accounts

Transcription

1 Health Savings Accounts

2 Health Benefit Administration Health Savings Account (HSA) Commuter Parking & Transit Accounts Health Reimbursement Arrangements (HRA) Flexible Spending Account (FSA) 2

3 Other Services Compliance ERISA Plan Documentation Plan Document Preparation Wrap/Section 125 Form 5500 Filing HIPAA Privacy Policy Section 125 & 105(h) Health & Welfare Actuarial Services Full-time Employee Determinations Pay or Play Analysis IBN & Reserve Calculations COBRA Administration Retiree Billing 3

4 Consumer Driven Health Plan (HDHP) Update CDHPs grew by 289% between 2008 & % of employers who now offer CDHPs are doing as Full Replacement 22% of all Medical Plan membership is in an account based plan 4

5 Employer Strategies For Supplementing CDHPs Flexible Spending Accounts (FSAs) Health Reimbursement Arrangements (HRAs) 5

6 What is a Health Savings Account? Two Components to an HSA: High Deductible Health Insurance Plan (HDHP) Health Savings Account (HSA) HDHP Covers expenses for illness or injury after meeting minimum deductible Advantages lower premiums, protection from large medical bills, covers same eligible expenses and utilizes same provider network. HSA Tax-advantaged account, covers medical expenses before insurance deductible is met Advantages - Helps pay the medical deductible, pre-tax contributions can be made to the account, offers tax-deferred growth & tax-free withdrawals to pay for qualified medical expenses. Control for healthcare expenses, increased tax savings, lower insurance premiums, flexibility & portability and additional savings for retirement! 6

7 Key Benefits to an HSA Use HSA dollars to pay for medical expenses tax-free HSAs are individually owned accounts Pre-tax contributions to account Earn interest Funds are portable & rollover year to year No use it or lose it rule Can build up significantly no balance limit 7

8 HSA Eligibility Must be enrolled in an HSAqualified High Deductible Health Plan (HDHP) Cannot be covered by any other insurance that reimburses health expenses (including a medical FSA) Cannot be enrolled in any part of Medicare or Medicaid Cannot be eligible to be claimed as a dependent on another person s tax return Must be 18 years of age or older 8

9 IRS Guidelines For HSAs HSA Contribution Limits HDHP Minimum Deductible HDHP Out-of-Pocket Max 9

10 Contribution Guidelines Contributions may be made by anyone HSA contributions are not subject to income tax Contributions in excess of the allowable limits must be withdrawn; otherwise incur an excise tax penalty and be claimed as income Eligible individuals aged 55 or older may contribute catch-up contributions of $1, each year until enrolling in Medicare (one catch-up per account). 10

11 Using Money From an HSA Must cover qualified medical expenses Used by account holder, spouse, and any tax dependents Distributions can be taken at any time Save your receipts! 11

12 Non-Medical HSA Distributions Under Age 65: It is possible to withdraw funds, but not advisable. Must pay income taxes plus 20% penalty on the non-medical $ amount. 65+ Years Old: No penalties for non-qualified distributions. Pay only income taxes on those $ amounts withdrawn for non-medical items. 12

13 Qualified Medical Expenses Expense must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision. Some examples are: Ambulance Birth control pills Chiropractic care Diagnostic services Drug addiction Eye exam, glasses, surgery Flu shot Guide dog or other animal Hearing aids Hospital services Immunization Insulin nursing services Orthodontia Physical exam Prescription drugs Psychiatric care Wheelchair 13

14 Expenses That do Not Qualify Cosmetic Surgery Cosmetics Exercise Equipment Hair Transplants Teeth whitening Over the counter drugs 14

15 Why Should an Employer Offer an HSA? HSA compatible health plans cost less Reduce FICA and federal unemployment tax liability Convenience Give your employees a higher benefit 15

16 Common Myths of HSAs 16

17 Myth #1 HDHP/HSAs are only good for healthy people 17

18 HSAs Are Good for Sick People Too! Preventive care is exempt from the deductible Disease management costs are not Catastrophic limits provide real protection Limits apply to all covered benefits, including Rx Limits cannot exceed (for 2014): $6,350 for singles $12,700 for families ACA adopted these limits for all plans for

19 HSA vs. ACA Limits: 2015 Family $13,200 $12,900 Single $6,600 $6,450 ACA HSAs $0 $5,000 $10,000 $15,000 19

20 Myth #2 HDHP/HSAs are only good for young people. 20

21 Age Distribution of People Covered by HSA/HDHPs Annual % Change in Age Distribution of HSA/HDHP Enrollees,

22 Myth #3 HDHP/HSAs are only good for wealthy people. 22

23 HSA Tax Deduction Data Average tax deduction/return = $3,051 < $50, $2,075 $50,000 - $100, $2,410 > $100, $3,936 Percent of Returns, by income group < $50,000 23% $50,000 - $100,000 30% > $100,000 47% Source = IRS Statistics of Income Bulletin (Winter 2014), data from 2012 tax returns 23

24 Types of Accountholders Unengaged: No contributions or withdrawals. Sitting Tight: Carrying a balance, but no contributions or withdrawals. Pass-thru: Low balance; money in, money out using more like a FSA; doesn t understand the savings aspect yet. Spender: Balance decreased. Different from pass-thru in that they spend more money than they are depositing. Perhaps they had a balance at the beginning of the year, now their balance is going down. Again, may not understand savings aspect or have cash flow issues, or just had a bad year. Saver: Balance increases but may not max out contributions; but balance rises over the course of the year. Maximizer: Contributes the maximum amount every year; all about tax deferral. Getting the maximum potential out of their HSA and getting the largest tax deductions and deferrals. Investor: Using investment options. Whether or not they are contributing the max, they are actually investing their funds. These people know they can invest to try to maximize their return for the long-term. *Industry-wide 2/3 of all account holders fall into Pass-thru, Spender, and Saver segments 24

25 HSA Investors Low But Growing Segment 25

26 Employer Strategies 26

27 Employer Strategies HSA funding amount & timing Support education & communication Most employees assume HDHPs offer inferior coverage Premium savings HSA funding can actually lead to a richer plan than before (i.e., higher actuarial value) Bronze HDHP (AV = 62.0%) AV with $500 contribution = 68.0% AV with $1,000 contribution = 73.6% AV with $2,000 contribution = 82.4% 27

28 Employer Nondiscrimination Considerations A Qualified Health Savings Account program must meet: Section 125 Cafeteria Plan nondiscrimination rules or HSA Comparability rules 28

29 Employee Strategies 29

30 Employee Strategies Many people can contribute more than their out-of-pocket risk Take advantage of employer matching contributions, if offered Pay attention to employer incentives that may increase contributions Don t forget to factor in tax savings Making contributions via payroll deduction is best If uncertain how much to contribute, use the look back method Ask questions NEVER assume! 30

31 Employee Strategies Maximizing Your HSA Opportunity Save now - Spend smart - Review your benefits - Maximize your HSA contributions Save for the future - Cover the Medicare gap - Investment opportunity - Bank future benefits 31

32 Employee Strategies HSAs Win vs. IRA & 401k By contributing the maximum amount to your HSA, you are taking advantage of the MOST effective tax savings available to you. IRA/401k savings (Roth or traditional) are taxed at some point. HSAs are not taxed at any point in the savings* or spending process if they are used for qualified medical expenses HSA 401k or IRA 20 Years 30 Years 40 Years *Tax statements refer to federal taxes. A few states treat HSA contributions as taxable. Consult your tax advisor for more details. 32

33 Employee Strategies Bank Future Benefits There is no time limit to reimburse expenses from your account. Paying out-of-pocket allows you to keep money in your HSA and earn interest until you really need it. Upload your receipts to your personal portal for safekeeping. Banking benefits leaves more for you to invest. 33

34 Who is $1 billion asset financial institution Custodial bank partner of Medcom for HSA accounts Fulfills reporting requirements to the IRS Establishes the account and supports Medcom in meeting the needs of accountholders Does not determine if withdrawals are qualified expenses Services We Provide Interest-Bearing Deposit Account Internet & Mobile Banking Access Monthly Paper or E-Statements Investment Feature with Devenir Year End tax Reporting Enrollment Options Welcome Kit Account Funding Options Multiple Disbursement Features 34

35 HSA Banking Information Monthly Account Fee TBD** Monthly Investment Fee $2.50 Debit Card(s) Free Bill Pay Free Checks Free On-line & Mobile Free Paper & E-Statements Free Pay Interest Yes Investment Option Yes Minimum Deposit No To be eligible for the investment feature your HSA must have a $1,000 available balance, and the fee will be waived, if your HSA has a monthly average balance of $3,500. **Monthly account fees are based upon the size of the employer. 35

36 Services Provided by Fully integrated Medcom WealthCare platform with Avidia Bank as Custodian Meets the needs of a nationwide client base Covers plans from under 100 to 15,000 participants All-in-one health payment card providing access to multiple benefit account (HSA, FSA, HRA, Commuter/Parking) Dedicated service team 36

37 HSA Enrollment Employer Medcom Medcom Avidia Bank Bank receives enrollment data, and reviews information within 24 hours. Account is opened If an account cannot be opened immediately, Bank will reach out to the member for necessary verification information. Account Materials are sent to participant 37

38 The WealthCare Portal Online access Individual or Batch Enrollment Multiple funding options View all benefit accounts Plan year, balances, and contribution information Automated card fulfillment Report card lost/stolen Submit claims / add receipts CDH education, calculators and videos Mobile and tablet friendly access Employer co-branded 38

39 HSA on the WealthCare Portal (WCP) Make/Schedule Payments Reimbursements All-in-one portal Investment Portfolio Trade mutual funds offered by Devenir View your investments Setup Asset Allocation models 39

40 Contributions Through WCP Employers can fund through Payroll Provider or file upload Participants can fund with external transfer or by check Schedule one time or future contributions Contributions can be made for the prior year from 1/1-4/15 The system displays the IRS limits vs. contributions received so far 40

41 HSA Mobility Provide convenient access through mobile and tablet applications for Android and ios devices Receive mobile standard and customized alerts 41

42 Open Discussion 42

43 Medcom s Contact Information Michael Bracken President mbracken@medcom.net Christy Dalton Director Fringe Benefits Division cdalton@medcom.net Office (toll free) P.O. Box Jacksonville, FL