Consumer Driven Healthcare Health Savings Accounts and Health - PowerPoint PPT Presentation

Presented By: Marty Hobbs Director of Business Development, 125Company Consumer Driven Healthcare Health Savings Accounts and Health Reimbursement Arrangements 1

Introducing Consumer Driven Healthcare (CDHC) Employer reactions to increases in health care expenses: 1) Cut costs 2) Shift more of the costs to participants 3) Eliminate health benefits altogether The result: higher deductibles, higher co ‐ pays, lower co ‐ insurance amounts, lower employer contributions, lower satisfaction for all parties in the healthcare system 2

Introducing Consumer Driven Healthcare (CDHC) More and more, CDHC is the answer  CDHC is a “movement” that is changing the way healthcare is received across the country  CDHC is an approach to healthcare – not a product  CDHC liberates consumers by offering more choices  CDHC is shifting costs from the employer back to the employee 3

Two Keywords for CDHC Success Integration and Information  Products (high ‐ deductible health plans, Federal mandates, integrated medical and Rx benefits)  Funding (HRAs, HSAs, FSAs, etc.)  Consumer Support Tools (eService tools, Fund Status, Claim Status, Health and Wellness Information, Cost Estimators) 4

CDHC Successes for Insurer, Employer and Participant  Insurers see lower cost sharing, more efficient care and better disease management  Employers can continue to offer benefits while controlling premiums  Participants get greater savings, more funding control and premium reduction 5

What is an HSA? HSA A Health Savings Account (HSA) is a consumer oriented, tax ‐ sheltered savings account designed for medical expenses and is always combined with a high deductible health plan (HDHP). It is a true interest ‐ accruing cash account accessible to the member. The accounts balance rolls over year after year and does not require funding every year. The limits are indexed annually by the IRS . 6

What is an HRA? HRA A health reimbursement arrangement is an employer ‐ funded medical savings account. It allows an employer to set aside a specific pool of money to reimburse each employee’s out ‐ of ‐ pocket medical expenses. These may include deductibles, co ‐ payments, prescriptions, dental services and more. The money is tax free to participants. 7

Who Can Participate? HSA – Determined by IRS and includes any individual covered by an HSA ‐ compatible health plan and not covered by any impermissible plan, not enrolled in Medicare and not claimed as a dependent on another’s tax return. HRA – Determined by employer, but generally full ‐ time employees or retirees. 8

ERISA Requirements HRA – Yes, HRAs are considered “welfare benefit plans,” and must: ‐ have plan documents ‐ file form 5500 annually ‐ furnish summary plan description to participants HSA – No, in general not considered “welfare and benefits plans. 9

Permitted and Impermissible Coverages HSA – Employees cannot participate in an HSA, HRA and FSA in the same month except for: ‐ Limited Purpose FSAs ‐ Post ‐ Deductible Health FSA or HRA HRA – Yes, employees can participate in HRA and FSA at the same time. 10

Funding HSA – Contributions may be from the eligible individual, the employer, a family member, or any other third party person. Contributions are deductible to the extent that they would be deductible to the individual (for 2013: $3,250 for individual and $6,450 for family). HRA – Funded solely by the employer. No limits, and no set times established for funding. 11

Making Withdrawals HSA – Since contributions are not forfeitable, the eligible individual controls when withdrawals are made. Withdrawals for medical expenses are tax ‐ free. However, only the amount in the account at the time can be accessed. HRA – An employer decides when and what expenses are to be reimbursed. In general, the full amount is funded on the first date of the plan year. 12

Qualified Medical Expenses HSA – Qualified medical expenses are defined in Section 213(d) and not reimbursed by any insurance. HRA – Qualified medical expenses are determined by the employer from those identified in section 213(d). They may include co ‐ pays, deductibles, and other expenses not covered by the employer’s medical plan. 13

Withdrawal Restrictions HSA – There are no restrictions, other than the date of service must be after the date the account was established. Withdrawals for non medical expenses are subject to taxes and a penalty. HRA – Since the employer designs the HRA, the employer can impose restrictions including what expenses can be reimbursed, when withdrawals can be made and in what amounts. 14

Documentation HSA – Substantiation Documentation is not required to be reimbursed, but records should be kept for 7 years in the event of an IRS audit. HRA – Substantiation Documentation (normally an Explanation of Benefits) and third ‐ party claims adjudication are required. 15

Forfeiture HRA – Yes, in general unused funds are forfeited at the end of the plan year. Employer have control over the design feature and can offer things such as a spend ‐ down feature or rollover options. HSA – No, once contributions are made to the HSA trust or custodial account, the funds remain with the employee and are not forfeited. 16

COBRA HRA – Yes, since HRAs are considered group health plans, they are subject to COBRA’s requirements. Employers can “bundle” or “unbundle” HRAs for COBRA purposes. HSA – No, HSAs are not subject to COBRA. 17

Nondiscrimination Testing HSA – If only employee contributions are contained in the HSA, there are no nondiscrimination rules. If employers make contributions, nondiscrimination rules do apply. HRA – Yes, there are always nondiscrimination tests for HRAs. 18

Why an employer might want to offer an HSA  HDHPs have lower premiums  Employees will understand the true cost of healthcare when spending their own money  Employees can take an HSA with them when they leave  HSAs are less costly because there’s no claim substantiation required. 19

Why an employer might not want to offer an HSA  HDHPs are too radical a design for their employees  Employees may not have funds to contribute to an HSA  Employees may spend HSA funds on non ‐ qualified expenses  The employer may want more control over plan administration  Can be a great recruitment tool, but is a poor retention tool 20

Why an employer might want to offer an HRA  Employer has complete control in deciding what expenses to reimburse, over what period of time, etc.  Employees perceive as great benefit  Works with FSAs for maximum employee savings  Great recruitment and retention tool 21

Why an employer might not want to offer an HRA  ERISA requirements apply  Nondiscrimination testing will apply  Claims substantiation is required  Possible funding issues  COBRA applies as well 22

Presented By: Marty Hobbs Director of Business Development, 125Company Questions? 23

Marty Hobbs marty@125company.com (240) 688 ‐ 0821 Full Suite of Services:  FSA and Dependent Care (FSA & DCAP)  Compliance Services  Limited FSA  Direct Billing and Retiree Billing  Health Reimbursement Account options (HRA) “Fully Customizable Plans”  VEBA Trust ‐‐‐ Wrap Documents ‐‐‐  Health Savings Accounts (HSA) ERISA compliance online platform  Tuition Assistance  Transportation (Mass Transit, Parking,  Adoption Assistance Vanpooling, Bicycle)  POP Plans ‐‐ Custom and Up ‐ to–Date legal language  Cobra Administration ‐‐ State Continuation 24

Marty Hobbs marty@125company.com (240) 688 ‐ 0821 125Company Services include:  125Educational Webinar Series available online 24/7. Please visit www.125Company.com  State of the art technology with Secured Custom Messaging, Personalized Employer/Participant Portals and SaaS Secured Technology .  Live Toll Free Customer Service Phone Support.  Plan Document ‐ SPD ‐ Adoption Agreement ‐ POP Document and IRC Compliance Services  E ‐ Signature Plan Document Cloud Delivery ‐‐ Secure and Accessible ‐‐ 24/7 – 365 days  Plan Updates and latest IRC Amendments – Cloud Delivery and Retrievable 24/7 – 365 days  Non ‐ Discrimination Testing ‐ On Demand available upon request, throughout the Plan Year!  125Mobile Apps – Our newest technology at Apple ‐ ITunes and Android Marketplace  125Desktop Upload – Use your internet browser to upload your claim form and valid receipt  125Company Benefit Card ‐ Form 5500 (as required) – Full Educational Services  Online Claim Submission ‐ Employer/Participant and their Dependent Online Account Review  Pay Your Provider Direct ‐ Co ‐ Pays and auto Reimbursement 25