High Deductible Plans and Health Savings Accounts. General Background & Maryland Health Insurance Plan Experience

High Deductible Plans and Health Savings Accounts General Background & Maryland Health Insurance Plan Experience Agenda „ Background „ Maryland...
Author: Sharleen Horton
1 downloads 0 Views 743KB Size
High Deductible Plans and Health Savings Accounts

General Background & Maryland Health Insurance Plan Experience

Agenda

„

Background

„

Maryland Health Insurance Plan (MHIP) Experience

„

HSA Trends in the Employer Marketplace

„

Questions?

2

Background

HSA Overview

„

A Health Savings Account (HSA) is a tax-favored account owned by an individual used to pay for current and future medical expenses.

„

HSAs are used in conjunction with a “High Deductible Health Plan” (HDHP). – 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 „

HSAs were created in Medicare legislation signed into law by President Bush on December 8, 2003.

4

HSA Eligibility

„

Any individual that: – Is covered by an HDHP – Is not covered by other health insurance – Is not enrolled in Medicare – Can’t be claimed as a dependent on someone else’s tax return †

Children cannot establish their own HSAs

†

Spouses can establish their own HSAs, if eligible

„

No income limits on who may contribute to an HSA

„

No requirement of having earned income to contribute to an HSA

5

Definition of a HDHP

„

Health insurance plan with minimum deductible of (for 2007): – $1,100 (self-only coverage) – $2,200 (family coverage)

„

Annual out-of-pocket (including deductibles and co-pays) cannot exceed (for 2007): – $5,500 (self-only coverage) – $11,000 (family coverage)

„

HDHPs can have: – first dollar coverage for preventive care (copays allowed) – higher out-of-pocket for non-network services

„

All covered benefits must apply to the plan deductible, including prescription drugs 6

Definition of a HDHP

„

If HDHP provides prescription drug benefit, prescription drug expenses must be subject to the annual deductible or the individual may not contribute to an HSA.

„

Preventive care generally does not include any service or benefit intended to treat an existing illness, injury or condition.

„

Certain drugs and medications can be considered preventive care.

„

Safe harbor list of preventive care that HDHP can provide as firstdollar coverage before minimum deductible is satisfied: – Periodic health evaluations (e.g., annual physicals) – Screening services (e.g., mammograms) – Child and adult immunizations – Obesity weight loss programs 7

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

(excluded from income and wages) – If made by the individual, it is an “above-the-line” deduction – Can be made by others on behalf of individual and deducted by the

individual – Beginning in 2007, individuals can make a one-time transfer from

their IRA to an HSA „

For 2007, the maximum amount that can be contributed (and deducted) to an HSA from all sources is: – $2,850 (self-only coverage) – $5,650 (family coverage) 8

HSA Contribution Rules

„

For individuals age 55 and older, additional “catch-up” contributions to HSA allowed – 2007 - $800, 2008 - $900, 2009 - $1,000 – Contributions must stop once an individual is enrolled in any type

of Medicare. „

The total amount of contributions to an HSA are based on the number of months that the individual is covered by an HDHP as of the first day of the month. – 3 months of HDHP coverage with an annual high deductible

amount of $1,200 will mean that the maximum contribution will be 3/12ths of $1,200 or $300. „

“Catch-up” contributions must also be pro-rated for number of months eligible. 9

Maryland Health Insurance Plan Experience

Maryland Health Insurance Plan Experience

„

Enrollment & Demographics

„

Cost Analysis – HSA $2,500 deductible – PPO $1,000 and $500 deductible – EPO – Restricted to Medically Eligible and HIPAA Eligible – Open and closed group experience – Removed $300,000 from HSA medical experience due to $434,000

IP hospital stay

11

Evolution of MHIP HDHP in Maryland

OOP Max Period July04 – June05

July05 – June06

July06 – June07

Deductible $1,200

$1,200

$2,500

End of Year

Inc. Deduct

Premiums

Subscribers

$4,500

Same as $1,000 deductible nonHDHP

88

$2,500

Same as $1,000 deductible nonHDHP

237

$2,500

23% less than $1,000 nonHDHP

845

12

Maryland Health Insurance Plan – Monthly Enrollment Open Group 3,500

3,000

Members

2,500

2,000

1,500

1,000

500

0 Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Month HDHP

$1,000 PPO

$500 PPO

EPO

13

Maryland Health Insurance Plan – Subscriber Income Distribution by Plan 45%

40%

35%

30%

25%

20%

15%

10%

5%

0% Income < $35,000

Notes: Income is self reported

$35,000 < Income < $55,000 HDHP

$55,000 < Income < $75,000

$75,000 < Income

Non HDHP

14

Maryland Health Insurance Plan – Subscriber Demographics Closed Group Plan HDHP $1,000 PPO $500 PPO EPO Total Plan HDHP $1,000 PPO $500 PPO EPO Total Plan HDHP $1,000 PPO $500 PPO EPO Total

Subscribers 242 808 1,256 458 2,764

Total Average Age % Male 52.4 55% 51.8 50% 47.5 43% 44.2 46% 48.6 46%

Mem/Sub 1.37 1.32 1.30 1.20 1.30

Subscribers 153 579 785 325 1,842

Medically Eligible Average Age % Male 51.7 59% 50.6 50% 45.7 44% 42.5 50% 47.2 48%

Mem/Sub 1.26 1.28 1.27 1.16 1.25

Subscribers 89 229 471 133 922

HIPAA Eligible Average Age % Male 53.6 48% 54.8 49% 50.5 41% 48.5 38% 51.6 43%

Mem/Sub 1.56 1.42 1.36 1.29 1.39

15

Maryland Health Insurance Plan – PMPY Cost Open Group

PMPY Cost Plan

Members

Medical

Rx

Total

469

$8,255

$951

$9,206

$1,000 PPO

1,187

$6,606

$1,236

$7,842

$500 PPO

1,701

$5,091

$1,664

$6,755

670

$8,491

$2,263

$10,753

HDHP

293

$6,420

$840

$7,260

$1,000 PPO

544

$4,452

$1,249

$5,701

1,058

$5,176

$2,087

$7,263

301

$7,783

$2,619

$10,401

Medically Eligible HDHP

EPO HIPAA Eligible

$500 PPO EPO

Notes: Per Member Per Year data on an estimated incurred basis No pre-existing exclusion for MHIP during data period

16

Maryland Health Insurance Plan – PMPY Cost Closed Group

PMPY Cost Plan

Members

Medical

Rx

Total

HDHP

193

$9,029

$1,132

$10,161

$1,000 PPO

739

$5,936

$945

$6,881

$500 PPO

996

$4,814

$1,011

$5,825

EPO

378

$6,844

$1,973

$8,818

HDHP

139

$6,184

$899

$7,083

$1,000 PPO

325

$3,368

$599

$3,966

$500 PPO

641

$4,652

$1,359

$6,012

EPO

172

$5,698

$1,759

$7,458

Medically Eligible

HIPAA Eligible

Notes: Per Member Per Year data on an estimated incurred basis Rx average assumed to be same as open group No pre-existing exclusion for MHIP during data period

17

Maryland Health Insurance Plan – Inpatient Utilization Statistics Closed Group

Avg. Admits

Avg. Days

Avg. Days

Members

Per 1,000

Per 1,000

Per Admit

HDHP

193

129.5

1,145.1

8.8

$1,000 PPO

739

101.5

462.8

4.6

$500 PPO

996

115.5

482.9

4.2

EPO

378

137.6

645.5

4.7

HDHP

139

122.3

482.0

3.9

$1,000 PPO

325

86.2

424.6

4.9

$500 PPO

641

98.3

418.1

4.3

EPO

172

145.3

790.7

5.4

70.0

260.0

3.7

Plan Medically Eligible

HIPAA Eligible

Pop. Avg. Notes: Utilization statistic on an immature incurred basis No pre-existing exclusion for MHIP during data period

18

Maryland Health Insurance Plan – Member Out of Pocket (OOP) Expenses Closed Group

Member

Member

Tax

Total

Copays

Premiums

Savings

Member OOP

HDHP

$1,636

$1,773

($327)

$3,082

$1,000 PPO

$1,330

$3,198

$0

$4,529

$500 PPO

$1,192

$3,394

$0

$4,585

EPO

$1,291

$5,234

$0

$6,525

HDHP

$1,748

$1,773

($350)

$3,172

$1,000 PPO

$1,239

$3,198

$0

$4,437

$500 PPO

$1,313

$3,394

$0

$4,706

EPO

$1,307

$5,234

$0

$6,541

Plan Medically Eligible

HIPAA Eligible

Notes: Per Member Per Year data on an estimated incurred basis Rx copays estimated to equal 18% of total Rx cost for non HDHP Rx copays estimated as difference between $500 PPO and HDHP paid Assumed 20% tax rate

19

Maryland Health Insurance Plan – Conclusions and Observations „

HSA plans: – Have higher members in upper income brackets – Have a slighlty older population – Attract more male subscribers – Attract members with higher risk profiles

„

Pros and Cons of High Risk Pools offering HSA plans – Pros †

Consistent with general trend of medical consumerism

†

Affords members tax advantaged savings

– Cons †

Exposes High Risk Pool to anti-selection

†

Lower member OOP expenses increase overall loss ratio 20

HSA Trends in the Employer Marketplace

Survey results suggest CDHP growth will accelerate among smaller employers Percent of employers offering/likely to offer CDHP, by employer size

EMPLOYER SIZE

2005

2006

Very likely to offer in 2007

10-49 employees

2%

5%

13%

50-199

1%

7%

17%

200-499

5%

7%

13%

500-999

4%

6%

10%

1,000-4,999

4%

12%

15%

5,000-9,999

10%

18%

21%

10,000-19,999

19%

21%

22%

20,000 or more

22%

37%

39%

Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans

22

HSA-based CDHPs quickly overtaking HRAbased plans

Offer CDHP in 2006

Very likely to offer CDHP in 2007

HSAbased CDHP

HRAbased CDHP

HSAbased CDHP

HRAbased CDHP

Small employers

4%

2%

10%

8%

Large employers

6%

6%

10%

9%

Jumbo employers

22%

21%

30%

28%

Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans

23

Assistance required by employees enrolling in HSAbased CDHP, compared to other medical plans Large CDHP sponsors

Don't know 6%

Much more assistance 31%

Less assistance 5% About the same amount 17%

More assistance 40% Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans

24

Questions?

Suggest Documents