Medical Plan Options (Traditional + Flexible Spending vs. High Deductible Health Plan + Health Savings) SUU Human Resources May/June 2016 SUU – HDHP & HSA Presentation
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Differences between Traditional & HDHP TRADITIONAL MEDICAL INSURANCE PLAN
QUALIFIED HIGH DEDUCTIBLE HEALTH PLAN
Deductibles are set by the employer with no minimums or maximums set by IRS regulations. Out-of-pocket maximums, with ACA, are now are set by IRS regulations.
Deductibles and out-of-pocket maximums are set by the employer, but are restricted to IRS & ACA regulations with minimum deductibles and maximum out-ofpocket expenses.
Can include coverage for some services outside of the deductible (prescription, office visits, ER, etc.) but under the out-of-pocket maximum depending on employer-selected plan design.
Can only include coverage for preventative services outside of the deductible. This means all other services (office visits, prescriptions, etc.) are subjected to the deductible before coverage begins.
Plan can have different deductibles for out-of-network services, prescription benefits, etc.
SUU – HDHP & HSA Presentation
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Differences between Traditional & HDHP TRADITIONAL MEDICAL INSURANCE PLAN
QUALIFIED HIGH DEDUCTIBLE HEALTH PLAN
Can utilize pre-tax Flexible Spending Accounts (FSA) for health care expenses. Employees make the contributions and these plans are “Use It or Lose It” in design structure.
Can utilize pre-tax HSA accounts for health care expenses (office visits, Rx, dental, vision, and any qualified medical expense). Both the employer & employee can contribute to this plan and the funds can be rolled over year after year.
Must comply with Health Care Reform issues such as:
Must comply with Health Care Reform issues such as:
Dependent Child coverage to age 26 Preventative visits covered at 100% Limitations on out-of-pocket costs in a plan year Elimination of pre-existing condition clause + plan payment maximums
SUU – QHDHP & HSA Presentation
Dependent Child coverage to age 26 Preventative visits covered at 100% Limitations on out-of-pocket costs in a plan year Elimination of pre-existing condition clause + plan payment maximums 3
Bottom Line Differences TRADITIONAL MEDICAL INSURANCE PLAN These plans are more expensive based on plan design and utilization. Employees pay an increased amount in premium for access to plan discounts sooner rather than later, and insurance pays “immediately” for maintenance items (office co-pays, prescriptions). These plans tend to lack incentives for good health (“If I am paying premiums, I should be utilizing this plan”) and limited ability to save with Flexible Spending “use it or lose it” SUU – QHDHP & HSA Presentation
QUALIFIED HIGH DEDUCTIBLE HEALTH PLAN These plans tend to be less expensive than traditional plans since the annual deductible must be met for almost all services before the plan begins to pay. They encourage use of preventative visits (covered 100% by plan) and allow for “transparency” of costs of actual health care (you discover actual costs). These plans provide a substantial tax reward to individuals, through a Health Savings Account, who take more financial responsibility for their health care by absorbing risk through a high deductible health plan. 4
HDHP/HSA Overview & Eligibility Requirements A Health Savings Account (HSA) is a special account owned by an individual used to pay for current and future medical expenses. These plans are portable and remain with the employee while working and if they leave SUU. HSAs can only be opened by – and contributions can only be made by – someone who has coverage under a Qualified High Deductible Health Plan (HDHP), which: Is a plan that does not cover first dollar medical expenses (except for preventive care). Plans that cover first dollar medical expenses are “traditional” insurance plans, Medicare, or Tricare Deductible levels and Out-of-Pocket Maximums are governed by IRS regulations Can be an HMO, PPO, or indemnity plan, as long as it meets the other requirements
SUU – HDHP & HSA Presentation
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HDHP/HSA Overview & Eligibility Requirements To be eligible for an HSA, an individual has to: Be covered by a Qualified HDHP Not covered by other non-qualified health insurance (“traditional” plans) Not be enrolled in Medicare nor Tricare
NOTE: There are no income limits on who may contribute to an HSA and no requirement of having earned income to contribute to an HSA. However, there are annual contribution limits on how much can be contributed to an HSA.
SUU – HDHP & HSA Presentation
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IRS Minimums & Maximums on HDHP A Qualified High Deductible Health Plan is a health insurance plan with minimum annual deductibles of: $1,300 for single coverage $2,600 for family coverage
- These amounts may be indexed annually for inflation - The above figures are for calendar years 2016 - 2017 calendar year figures projected to go up by $50/$100
It also requires an annual out-of-pocket maximum (including deductibles and co-pays) that cannot exceed: $6,450 for single coverage $12,900 for family coverage
- These amounts may be indexed annually for inflation - The above figures are for calendar year 2016 - 2017 calendar year figures are projected to go up by $100/$200
SUU – HDHP & HSA Presentation
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HDHP Overview These plans will have 100% coverage for preventive care services, as required by health care reform, without being subjected to the deductible. These services include annual physicals, annual vision & hearing exams, screening services, routine pre-natal and well-child care, covered immunizations, etc. HDHPs can also have higher out-of-pocket (co-pays & coinsurance) for outof-network services.
All covered benefits (outside of preventative care services) must be applied to the plan deductible, including prescription drugs. That said, only the plan’s allowed amount (e.g. discount negotiated by insurance company) will apply towards the plan deductible. SUU – HDHP & HSA Presentation
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How does an HSA save me money? Contributions to an HSA can be made by the employer, the employee, or both.
If made by the employer, they are not taxable to the employee (excluded from income/wages) If made by the employee, it is a pre-tax deduction from both income + FICA taxes.
HSA funds are withdrawn tax-free if used for qualified medical expenses for the employee, spouse, and any tax dependent of the individual. Also, HSA funds can be invested like an IRA or placed in a bank account with a debit card, etc. In other words, the funds in an HSA can accrue interest which also is tax-free when an employee withdraws the money for qualified medical expenses. Triple tax benefit!!!
SUU – HDHP & HSA Presentation
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How does an HSA save me money? The maximum amount that can be contributed annually to an HSA from all sources (employee, employer, etc.) is: $3,350 for single coverage in calendar year 2016; $3,350 projected in calendar year 2017 (no change)
$6,650 for family coverage in calendar year 2016;
$6,750 projected in calendar year 2017 ($100 increase)
These amounts are typically be indexed annually Employee contributions are pre-tax and employer contributions are not counted as income/wages to the employee. There is an annual “Catch-up” contribution of $1,000 extra allowed for those individuals age 55 and over. It’s important to note that FSAs are limited to $2,550 in 2016 and can only be changed/updated at open enrollment.
Employees can voluntarily contribute to their HSA through payroll deduction. Employees at SUU are also allowed to change their voluntary contribution every pay period if desired. SUU – HDHP & HSA Presentation
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How can an HDHP + HSA save SUU money? Medical inflation will continue to increase over time, even with a high deductible health plan. However, research indicates that employers with HDHP + HSA plans tend to dramatically reduce the 10-12% average annual medical inflation due to the following:
Employees will utilize the medical insurance only when necessary since the initial costs are very high (prior to meeting the plan deductible). A decrease in medical claims will reduce the annual renewal rates. Employees will ask more questions when they do utilize the medical insurance. They will ask doctors, nurses, and other medical staff about costs of procedures, alternative solutions, etc. since it will be their money paying for the procedures. This is a more consumer-driven approach that curbs utilization over a longer period of time. Employees are incentivized to have healthier habits (to not utilize the plan) due to the amount of savings they can accumulate through a Health Savings Account – money they can use in the future when they really need it.
SUU – HDHP & HSA Presentation
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What can I use my HSA for? Qualified Medical Expenses, which include:
Most medical care that is subject to your deductible (co-pays, co-insurance, doctor visits, inpatient or outpatient procedures, hospitalization, etc.) Prescription Drugs Over-the-counter drugs if you have a prescription for them Insulin (with or without a prescription) Dental expenses Hearing aids and other medical equipment Vision expenses Select insurance premiums, which include: • COBRA, qualified long-term care insurance, health insurance after you turn 65 except for a Medicare supplemental policy.
SUU – HDHP & HSA Presentation
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What can’t I use my HSA for? Ineligible Medical Expenses include:
Insurance premiums (other than the ones listed under the qualified medical expenses) Over-the counter drugs (unless a prescription is retained from a physician or the drug is insulin) Cosmetic surgery Expenses covered by another insurance plan General health items such as tissues, toiletries, hand sanitizer, etc.
IRS Publication 502 covers all qualifying and non-qualifying items. Search www.irs.gov or the link (with page numbers) can be found on the SUU HR Benefits webpage http://suu.edu/ad/hr/benefits.html. SUU – HDHP & HSA Presentation
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HDHP + HSA Design for SUU TRADITIONAL MEDICAL PLAN (2016-2017)
HIGH DEDUCTIBLE HEALTH PLAN (2016-2017)
MEDICAL DEDUCTIBLE $500 individual $1,000 family
PLAN DEDUCTIBLE $1,500 single $3,000 family
OUT-OF-POCKET MAX $3,500 individual $7,000 family
OUT-OF-POCKET MAX $3,000 single $6,000 family
These figures are mutually inclusive which means the total out-of-pocket expenses for all items is either $3,500 or $7,000 SUU – HDHP & HSA Presentation
IRS Guideline 1,300 2,600 IRS Guideline 6,450 12,900
These figures are mutually inclusive which means the total out-of-pocket expenses for all items is either $3,000 or $6,000 14
HDHP + HSA Design for SUU TRADITIONAL MEDICAL PLAN (2016-2017)
HIGH DEDUCTIBLE HEALTH PLAN (2016-2017)
CO-PAYMENTS (non-deductible) $35 Primary Care Physician $45 Secondary Care Physician $300 Emergency Room 20% Lab + Professional Services
CO-PAYMENTS (after deductible)
$10 Generic Prescriptions 30% Preferred-Brand Prescription (capped at $250 per script) 50% Non-Preferred-Brand Prescription (capped at $350 per script) Specialty drug tiers
$10 Generic Prescription 30% Preferred-Brand Prescription (capped at $250 per script) 50% Non-Preferred-Brand Prescription (capped at $350 per script) Specialty drug tiers
SUU – HDHP & HSA Presentation
$35 Primary Care Physician $45 Secondary Care Physician 80%/20% for other procedures
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What does this mean in terms of employee premiums (FY17)? Under the traditional plan, individual coverage will have the following costs:
Under the HDHP, single coverage will have the following costs:
Employee pays $55.00 per pay period ($1,320.00 annually)
Employee pays $22.00 per pay period ($528.00 annually)
- 22% premium share – collected by SUU to pay claims/admin costs to EMI Health
Employer pays $194.00 per pay period ($4,656.00 annually)
- 78% premium share – used to pay claims/admin costs to EMI Health
Employees could still contribute up to $2,550 of their own funds to an FSA per plan fiscal year, but those funds must be used during the current plan year. SUU – HDHP & HSA Presentation
- 10% premium share – all goes into the employee’s HSA
Employer pays $195.50 per pay period ($4,692.00 annually) - Pay period premium – used to pay claims/admin costs to EMI Health
HSA accounts allow maximum contributions of $3,350 in 2016 & 2017 calendar years between employer and employee contributions for single coverage.
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What does this mean in terms of employee premiums (FY17)? Under the traditional plan, two party coverage: Employee pays $125.00 per pay period
($3,000.00 annually) - 22% premium share – collected by SUU to pay claims/admin costs to EMI Health
Under the HDHP, family coverage:
Employee pays $63.00 per pay period ($1,512.00 annually)
Employer pays $437.00 per pay period
- 10% premium share – all goes into the employee’s HSA
Under the traditional plan, family coverage: Employee pays $180.00 per pay period
Employer pays $567.00 per pay period ($13,608.00 annually)
($10,488.00 annually) - 78% premium share – used to pay claims/admin costs to EMI Health
($4,320.00 annually) - 22% premium share – collected by SUU to pay claims/admin costs to EMI Health
Employer pays $627.50 per pay period
($15,060.00 annually) - 78% premium share – used to pay claims/admin costs to EMI Health
Employees could still contribute up to $2,550 of their own funds to an FSA pear year, but it has to be used during the plan year. SUU – HDHP & HSA Presentation
- Pay period premium – collected by SUU to pay claims/admin costs to EMI Health
HSA accounts allow maximum contributions of $6,650 in 2016 & $6,750 in 2017 between employer and employee contributions for family coverage. 17
Scenarios of Utilization for FY2017 Scenario #1: Single Coverage (all in-network) Type of Service
Negotiated Rate of Service
Traditional
HDHP
Two (2) Primary Care Doctor’s Office Visits ($100 each)
$200
$70
$200
Secondary Care Doctor’s Office Visit ($100 was labs)
$250
$65
$250
Annual Preventative/Routine Exam
$300
$0
$0
Four (4) prescriptions per month: • 2 generic medications (average $25 each) • 1 preferred-brand medications ($200 each) • 1 Tier-1 Specialty medication ($1,000 each)
$600 $2,400 $12,000
$240 $660 $1,650
$135 $720 $1,695
Inpatient Hospitalization - Emergency Surgery (May)
$25,000
$815
$0
Secondary Care Doctor’s Office Visit (post-surgery)
$250
$0
$0
Total Out-of-Pocket Expenses based on plan design ($41,000 total)
$3,500
$3,000
Premiums Paid to Insurance Company OR contribution to HSA
$1,320
$528
HSA Funds Available for use ($200 rollover from FY14)
$0
($728)
Remaining Balance in HSA that is rolled to next plan year
$0
$0
Actual Out-of-Pocket Expenses (including Premiums)
$4,820
$2,800
SUU – HDHP & HSA Presentation
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Scenarios of Utilization for FY2017
Scenario #2: Two-Party Coverage (all in-network) – single parent + one child Type of Service
Negotiated Rate for Service
Traditional
HDHP
Five Pediatrician Office Visits ($200 each, $50 of which was lab work)
$1,000
$225
$1,000
Primary Care Doctor’s Office Visit ($100 each)
$100
$45
$100
Annual Preventative/Routine Exam
$300
$0
$0
Well-Child Visit
$250
$0
$0
Instacare Facility Visit ($100 was labs)
$300
$65
$300
Four (4) generic prescriptions during the year for Antiboitics ($4 each on pharmacy’s list). Called TeleMedicine doctor twice for Rx order ($30 each time; doesn’t count towards deductible on either plan)
$76
$76
$76
Total Out-of-Pocket Expenses based on plan design ($2,026 total)
$411
$1,476
Premiums Paid to Insurance Company OR contribution to HSA
$3,000
$1,512
HSA Funds available for use ($288 rolled over from FY15)
$0
($1,800)
Remaining Balance in HSA that is rolled to next plan year
$0
$324
Actual Out-of-Pocket Expenses (including Premiums)
$3,411
SUU – HDHP & HSA Presentation
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Scenarios of Utilization for FY2017
Scenario #3: Two-Party Coverage (all in-network) – married couple; no kids on plan Type of Service
Negotiated Rate for Service
Traditional
HDHP
Two Annual Preventative Exams ($300 each)
$600
$0
$0
Total Knee Replacement for Husband - November
$24,000
$4,000
$5,820
Ten Physical Therapy + Follow-up Visits – Dec/Jan
$1,500
$450
$0
3-day Pneumonia Hospital Visit for Wife - February
$9,000
$2,135
$0
Three Monthly Generic Medications ($15 each)
$540
$170
$180
Four Secondary Dr. Office Visits ($300 each; $100 lab work)
$1,600
$210
$0
Two (2) Primary Care Office Visits ($100 each)
$200
$35
$0
Total Out-of-Pocket Expenses based on plan design ($37,440 total)
$7,000
$6,000
Premiums Paid to Insurance Company OR contribution to HSA
$3,000
$1,512
HSA Funds used during the current plan year (new – no rollover)
$0
($1,512)
Remaining Balance in HSA that is rolled to next plan year
$0
$0
Actual Out-of-Pocket Expenses (including Premiums)
$10,000
$6,000
SUU – HDHP & HSA Presentation
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Scenarios of Utilization for FY2017 Scenario #4: Family Coverage (all in-network) Type of Service
Negotiated Traditional Rate for Service
HDHP
Primary Care Doctor’s Office Visit
$100
$35
$100
Two Annual Preventative Exams ($300 each)
$600
$0
$0
Two Well-Child Visits ($250 each)
$500
$0
$0
Four generic prescriptions during the year for antibiotics and child supplements ($10 each)
$40
$40
$40
Total Out-of-Pocket Expenses based on plan design ($1,240 total)
$75
$140
Premiums Paid to Insurance Company OR contribution to HSA
$4,320
$1,512
HSA Funds available for use ($1,500 rolled over from FY14)
$0
($3,012)
Remaining Balance in HSA that is rolled to next plan year
$0
$2,872
Actual Out-of-Pocket Expenses (including Premiums)
$4,395
SUU – HDHP & HSA Presentation
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Scenarios of Utilization for FY2017 Scenario #5: Family Coverage (all in-network) Type of Service
Negotiated Rate for Service
Traditional
HDHP
Eight Pediatrician Office Visits ($200 each; $50 of which was lab work)
$1,600
$360
$1,600
Four Primary Care Dr’s Office Visits ($100 each)
$400
$140
$400
Three Annual Preventative Exams ($300 each)
$900
$0
$0
Three prescriptions per month: • 2 generic medications (average of $20 each) • 1 preferred-brand medications ($200 each)
$480 $2,400
$240 $720
$360 $1,500
Two Instacare Facility Visits ($300 each; $80 of which was lab work)
$600
$122
$120
Two (2) Emergency Room Visits ($2,500 each)
$5,000
$600
$1,000
Total Out-of-Pocket Expenses based on plan design ($11,380 total)
$2,182
$4,980
Premiums Paid to Insurance Company OR contribution to HSA
$4,320
$1,512
HSA Funds used during the current plan year ($0 rolled over)
$0
($1,512)
Remaining Balance in HSA that is rolled to next plan year
$0
$0
Actual Out-of-Pocket Expenses (including Premiums)
$6,502
$4,980
SUU – HDHP & HSA Presentation
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Scenarios of Utilization for FY2017 Scenario #6: Family Coverage (all in-network) Type of Service
Negotiated Rate for Service
Traditional
HDHP
Two Annual Preventative Exams ($300 each)
$600
$0
$0
Inpatient Hospitalization (Maternity) - November
$4,250
$1,250
$3,250
Dr’s services in conjunction with Maternity
$3,500
$550
$700
Inpatient Hospitalization (Newborn)
$2,250
$850
$450
Monthly Generic Medication ($5 each)
$600
$60
$60
Four Well-Baby Preventative Visits ($250 each)
$1,000
$0
$0
Two Primary Care Dr’s Office Visits ($100 each)
$200
$70
$70
Total Out-of-Pocket Expenses based on plan design ($12,400 total)
$2,780
$4,530
Premiums Paid to Insurance Company OR contribution to HSA
$4,320
$1,512
HSA Funds used during the current plan year (new – no rollover)
$0
($1,512)
Remaining Balance in HSA that is rolled to next plan year
$0
$0
Actual Out-of-Pocket Expenses (including Premiums)
$7,100
$4,530
SUU – HDHP & HSA Presentation
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MORE INFORMATION!
HDHP + HSA WEBPAGE (SUU.EDU/AD/HR/HSA)
Links to cost scenarios outlined in this presentation Links to a variety of helpful Tango Health best practices, frequently asked questions, training videos, Tango’s blog about current events, HSA updates, filing taxes with HSAs, etc.
SUU – HDHP & HSA Presentation
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MORE INFORMATION!
HR EMPLOYEE BENEFITS WEBPAGE (SUU.EDU/AD/HR/BENEFITS.HTML)
Plan Summary Documents for both Traditional & High Deductible Health Plans Member Handbook of Covered Benefits Summary of Benefits & Coverage (plus glossary) How to retrieve your claims (medical, dental vision, and prescription) Wellness Newsletter Tango Health links (same found on HDHP+HSA webpage) SUU – HDHP & HSA Presentation
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A Benefit connected to either Medical Plan Employee Assistance Program (EAP)
Available to any employee, spouse, or child enrolled in the University’s medical plan(s) AND anyone who lives in the household of an insured University employee. (aging parent, sibling, relative, roommate, etc.) Provides free confidential services with a certified counselor for a variety of topics and/or conditions:
Anxiety, Depression, Stress management Addiction issues (drugs & alcohol) Caring for an Aging Parent Financial/Legal Counseling Crisis Management Situations Management Counseling for Supervisors Campus Trainings
Company Code: SUU Monthly Feature – different topic each month with webinar Webinar Archive Information on Work/Life Balance, a variety of services (adoption, child care, education, older adults, pets, etc.)
The Life Connection Website (www.behavioralhealthcareoptions.com)
Call 800-280-3782 to get connected to a counselor SUU – HDHP & HSA Presentation
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A Benefit connected to either Medical Plan EMI Health Telemed Program
Available to any employee, spouse, or child enrolled in the University’s medical plan(s). Allows you to access a doctor 24 hours per day, 7 days a week and 365 days a year with nationwide coverage. Call a toll-free number, consult with a doctor, and the doctor can call in a prescription if necessary…all in less than a hour in most cases. Used for common conditions (pink eye, ear infections, sore throat, rashes, etc.) $30 co-pay per time you use it Does not apply to your deductible Does not apply to out-of-pocket max Can use HSA or FSA money to pay
SUU – HDHP & HSA Presentation
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Questions?
A link is available with FAQs and a place to ask any additional questions @ http://suu.edu/ad/hr/hsa SUU – HDHP & HSA Presentation
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