Consumer Driven Health Plans Pennsylvania College of Technology March, 2016
Health Care Cost Acceleration Employers nationwide are struggling to cope with the sharp, upward trend of health care costs; driven by factors including an overall rise in certain conditions which increase utilization, medical inflation and technological advancements in procedures and prescription drugs. Recently delayed to 2020, provisions of the Affordable Care Act will require payment of an excise tax on the value of benefits exceeding established thresholds, known as the Cadillac Tax. Plans that foster consumerism among membership through the application of deductibles have been proven to decelerate the current cost trend. To control costs and prepare for the coming Cadillac Tax, many employers are replacing zerodeductible health plans with either a high-deductible PPO or a Qualified Consumer Driven Health Plan. *The illustrations presented are a high level comparison of benefits and costs and is an attempt to present coverage features. The summaries are not a contract and does not include all of the benefits that are included nor does it outline the exclusions and limitations. You must refer to the Insurance Company proposal and policies themselves for true definitions of coverage, exclusions, and limitations. 2
Consumer Driven Health Plan (CDHP) What is it? Consumer Driven Health Plan High Deductible PPO (QHDHP) Savings Account Protects you from large Medical Expenses Helps pay for Deductible Tax-Deductible Deposits Tax-Deferred Growth Tax-Free Use for Medical Care 3
High Deductible PPO (QHDHP) Utilizes the same Provider Network and covers the same services as low deductible PPO Plans, such as C and E. Provides deep, negotiated discounts for services performed in-network (allowable amounts). Requires an established deductible to be satisfied prior to paying benefits, in accordance with 2016 IRS minimums ($1,300 individual/$2,600 family). Deductible satisfied through medical, prescription drug or combination of both. Deploys the use of coinsurance (percentage) on medical benefits and copays (flat rate) for prescription drug as mechanisms to provide benefits to Members after the deductible is met. Covers out-of-network services, but at a significantly lower benefit level. Offers protection from catastrophic medical event through relatively low out-of-pocket maximums. 4
QHDHP Benefit Summary Benefits Network QHDHP-1 Out-of-Network Individual Deductible $1,300 $2,500 Family Deductible $2,600 $5,000 Coinsurance (Medical) 10% Primary Care/Emergency PCP Visit 10% Specialist Visit 10% Emergency Care 10% Urgent Care 10% Radiology MRI, Advanced Imaging 10% Diagnostic (Lab, X-ray) 10% Preventive Services Annual Preventive Exam No charge Preventive Mammogram No charge Childhood Immunizations No charge Prescription Drug Deductible Subject to Medical Deductible Retail Mail Order Out-of-Network Generic $10 $20 Not Covered Brand Formulary $25 $62.50 Not Covered Brand Non-Formulary $50 $150 Not Covered Annual Out-of-Pocket Maximums Out-of-Pocket: Individual* $2,000 $4,000 Out-of-Pocket: Family* $4,000 $8,000 Utilizing Blue Cross network providers greatly reduces deductible liability for the Member, while providing double the out-ofpocket protection Coinsurance (10%) refers to the Member liability portion of the network allowable amount for medical services, after the deductible has been satisfied. Preventive services continue to be covered at 100% in-network No separate Prescription Drug Deductible Mail Order offers significant savings (up to 33%) and convenience for maintenance medications 1 For individual policies, the insured must meet the entire individual deductible and out-of-pocket maximum. For policies which cover the insured and one or more dependents, the entire family deductible must be met first, then any Medical coinsurance or Rx copayments would apply to the family out-of-pocket maximum. 5
What About That Deductible? 6
What About That Deductible? Employer Contribution Plan Year Individual Plans Family Plans 2016/2017 $950 $1,900 2017/2018 $650 $1,300 The College will fund at least 50% of the Plan deductible in the next two Plan years. 7
Health Savings Accounts (HSA) Tax-Preferred account for payment of qualified medical expenses, works in tandem with Qualified High-Deductible Health Plans. Can be used to pay for qualified medical expenses of Subscriber, Spouse and any Dependents. Both Employers and Employees can make pre-tax contributions, as either lump sum or through payroll deduction. All funds, including employer contributions are owned by the employee and are portable; even upon termination. Expenses are paid through debit card or via member reimbursement of pre-tax funds. Unused funds rollover year after year and can provide security against catastrophic losses. Contributions gain interest and can be invested after an account balance threshold is reached. IRS HSA Contribution limits for 2016: $3,350 for individuals, $6,750 for family and additional $1,000 for subscribers over the age of 55. 8
Eligible Expenses For a full listing of all eligible medical expenses visit http://www.irs.gov/publications/p502/index.html 213(d) Medical Expenses (Medical, Dental, Vision & Preventive) COBRA premiums QLTC premiums (Qualified Long Term Care) Health premiums while receiving unemployment benefits If Medicare eligible due to age, health insurance premiums are eligible, except medical supplement policies (Medi-gap). Ineligible Expenses If you choose to use your HSA funds for a non-qualified expense, you may be subject to a 20% penalty. Certain exceptions may apply at age 65, upon disability, or death. 9
A Tale of Two Cards The Plan ID card identifies you as a member of the QHDHP-1 Plan. This card should be presented each time you visit a provider or fill a prescription. The HSA Debit Card should only be used after a claim has been processed through the Plan, to pay for any out-of-pocket expenses. 10
Using your HSA Card for Providers Member goes to provider and, presents new ID card (Highmark). Generally, member will not pay anything at office visit. Provider processes claim and sends to Highmark. If the deductible has not been satisfied, the provider is notified and a bill*is sent to the member. Member utilizes HSA funds to pay provider via Discovery Website or with HSA Debit Card. *The provider bill should reflect all member liability including deductible and/or coinsurance responsibility when deductible has been met. Invoices will reflect discounted amounts negotiated by Highmark. 11
Using your HSA Card at Pharmacy Member goes to pharmacy to fill a prescription and presents new ID card (Highmark). Pharmacy processes claim and has instant access to member deductible information. If the deductible has not been satisfied, the member is responsible for discounted cost of Rx*. Member utilizes HSA funds to pay pharmacy with the HSA Debit Card. *Once the deductible is satisfied, the member may also use HSA funds to pay any Rx copayment responsibility with the HSA Debit Card. 12
Sample HSA Payroll Contributions Based on 26 Pay Periods Amounts in BLUE are the maximum Employee contributions to an HSA for 2016. Both Employer and Employee contributions count towards the annual maximums allowed by the IRS: Employee Only: $2,400 Family (Employee + 1): $4,850 Amounts in GOLD are the levels needed to fully fund your HSA account to cover 2016 Out-of-Pocket expenses. Employee Only: $1,050 Family (Employee + 1): $2,100 If you turn age 55 during the benefit period, the IRS says you can catch-up on your contributions. They allow an additional $1,000 to be contributed annually. Annual Contribution Bi-Weekly Contribution $4,850 $186.54 $2,500 $96.15 $2,100 $80.77 $1,750 $67.31 $1,500 $57.69 $2,400 $92.31 $1,250 $48.08 $1,050 $40.38 $1,000 $38.46 $500 $19.23 $250 $9.62 Remember your contributions are deposited tax-free! 13
QHDHP + HSA.How will it work? 2016/17 Employer HSA Contribution QHDHP Deductibles In-Network Out-of-Network Employee Only $1,300 $2,500 Family (Employee + 1) $2,600 $5,000 Coinsurance (Medical) 10% Copays (Rx) Retail: $10/$25/$50 Mail: $20/$62.50/$150 Not Covered Out-of-Pocket Max Employee Only $2,000 $4,000 Family (Employee + 1) $4,000 $8,000 Responsibility Deductible Employee Employer Employee Only $350 1 $950 Family (Employee + 1) $700 1 $1,900 Coinsurance Employee Employer 10% 1 $0 Out-of-Pocket Max. Employee Employer Employee Only up to an additional $700 1 $0 Family (Employee + 1) up to an additional $1,400 1 $0 1 Based on use of In-Network providers. The Out-of-Pocket maximum helps protect you from significant medical expenses. In most cases, once you reach the Out-of-Pocket maximum, your health plan will cover 100% of eligible expenses. Out-of-Pocket maximum now includes your deductible, coinsurance for Medical and copayments for Prescription Drug expenses. Once you have met your deductible, you are responsible for 10% 1 of your medical costs and any Rx copayments up to a total of: $2,000 1 for Employee Only coverage or $4,000 1 for Family coverage. It is important to utilize In-Network providers to help mitigate your total exposure. If you use any Out-of-Network providers, you will be responsible for the additional costs. 14
Claims Examples Typical Procedures and Costs Procedure Allowable Amount 1 Deductible 2 Coinsurance Notes MRI-Knee $1,972 $1,972 $0 Alternate local provider price $514 Tonsillectomy $4,120 $2,600 $152 Childbirth-No Complications $8,462 $2,600 $586 Spinal Fusion Surgery $68,442 $2,600 $1,400 Meets OOP Maximum 1 Prices sourced through BCBS WNY Cost Advisor Tool for Williamsport, PA; All reported prices refer to Hospital as the treating facility 2 Assumes Family Deductible 15
QHDHP + HSA Member Considerations 1) Is the employee covered by any other non-high deductible health plan or Full Purpose Medical FSA? Federal guidelines prohibit employees from contributing to a Health Savings Account if they are covered by Medicare, TriCare, CHIP, Full Purpose Medical FSA, or a spouse s non-cdhp insurance plan. Note: Once covered by Medicare, you may no longer contribute to the HSA. At the age of 65, you may withdrawal HSA funds and use it as you choose. It is counted as income and taxed as such. There is no penalty for withdrawal. 2) If an employee is ineligible for the HSA due to other coverage restrictions, can they still receive an employer contribution towards qualified medical expenses? Yes, employer contributions can be provided through a Health Reimbursement Account (HRA), however employees cannot make contributions to an HRA. 3) Is the employee participating in a Medical Flexible Spending Account? Employees cannot participate in an HSA and be eligible for benefits of a Full Purpose Medical FSA, even if eligibility is through a spouse s benefit package. Members may participate in a limited purpose FSA, which only reimburses dental, vision and preventive expenses. 4) Employees should evaluate expected health expenditures for the year. Healthier individuals may choose to fund the HSA equal to the deductible or less, while higher utilizers may choose to fund the HSA to the full out-of-pocket maximum. 5) How much available income do employees have to fund the HSA? Employees should contribute monthly to their HSA to ensure that they can offset Out-of-Pocket costs. If available funds are limited, members may incur some debt if faced with any unexpected medical expenses. 16
Frequently Asked Questions Q. If my spouse is enrolled in Medicare, can I still contribute to an HSA? A. Yes, as long as YOU are NOT enrolled in Medicare, you can contribute to an HSA. You may use the money to pay the cost of qualified medical expenses for you and your spouse. Q. Can I use my HSA funds for someone else s expenses, even if they aren t on my health plan? A. Yes, you may withdraw funds to pay for the qualified medical expenses of yourself, your spouse or a dependent as long as they are claimed on your tax return. Remember, if your spouse enrolls in a Medical Flexible Spending Account (FSA) through their own employer, you will not be eligible to contribute to an HSA. Q. Do I pay for the full doctor s office visit when I go to the doctor? A. Generally, No. If you use an in-network provider, you should not pay your doctor at the point-of-service. Your doctor will submit the claim to Highmark and you will receive an explanation of benefits (EOB) showing how much you are responsible for paying. Remember, when you use in-network doctors, you are only responsible to pay the discounted amount as determined by your insurance benefit. Q. When I withdraw funds from my HSA, what information do I need to keep? A. Save all receipts and records of withdrawals for tax verification, in the event of an audit. If you use your funds for non-health related expenses, you must report those withdrawals accordingly. You not your employer are responsible for maintaining all records associated with your HSA. 17
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