Health Savings Account. Guide for Employers

Transcription

1 Health Savings Account Guide for Employers

2 Offering a High Deductible Health Plan with a Health Savings Account HealthNow can help you design a high deductible health plan (HDHP) that qualifies to be used in conjunction with Health Savings Accounts (HSAs). Offering a high deductible health plan in combination with an HSA is a way to obtain more affordable health coverage for your group while encouraging your employees to become more involved in their health care. In a response to the changing needs of employers, HealthNow has arranged to offer HSAs through an administrator. HSA What Is It? An HSA is a tax-exempt trust or custodial account that is used for paying qualified medical expenses. The employee and/or the employer can contribute to the HSA. Flexible, affordable and easy to use, an HSA plan empowers members to take charge of their health, money and future. 2

3 The Concept Is Easy An HSA makes it easier to afford a health insurance plan with a high deductible. Members can cover their deductible (and other expenses) with funds from their HSA. Like a Flexible Spending Account without the use-it-or-lose-it aspect. Like an IRA with no tax paid on distributions to pay for medical expenses. Employer Advantages The employer and/or the employee can fund HSAs. Tax savings contributions made by employers are made with pre-tax dollars which lowers FICA taxes. Encourages your employees to take a more active role in their health care and educates them on the true cost of health care. Employee Advantages Able to invest in mutual funds to support the HSA. Employees retain ownership and can take their HSA with them if they leave your organization or retire. Money stays in the HSA until it is used. HSA balance rolls over from year to year. Employees can make contributions through payroll deductions and get their tax savings now, or they can write a check to their HSA and take the deduction when they file their taxes. Both a health plan and investment vehicle for retirement. Benefits and coverage are not sacrificed. Funds may be withdrawn tax-free to pay qualified medical expenses as defined under IRC 213 (d) (except health insurance premiums). HSAs Are Well Suited for Employers Looking to lower their healthcare premiums. Trying to engage their employees in the cost of health care. Providing more choice to their employees. Concerned with providing an option to allow employees to save for retirement. Product Offerings PPO & POS An HSA must be offered in conjunction with a high deductible health plan (HDHP). HealthNow can help you design a high deductible health plan that qualifies to be offered with an HSA. The type of coverage and benefits that we offer on our HDHPs that qualify to be combined with HSAs are the same as our regular plans. Our plans continue to offer great value and customer service, as well as: No referrals. Out-of-network coverage options. No claim forms when using participating providers. Health Advocate a patient advocacy and healthcare coaching service. Online services. Health education and wellness programs. Prescription drug coverage. 3

4 Funding the Account You and/or your employee can contribute money to the HSA up to the maximum amount determined by the IRS. This information is updated each year. Please see the Health Savings Account Annual Update inserted in this brochure for the current maximum amount. Employer gets tax deduction and the employee pays no tax depending on how the contribution is used. There is no minimum contribution amount for the employer. Employer contributions to an HSA are subject to a comparability rule, unless contributions are made through a cafeteria plan. That means that employer must make comparable contributions to all employees that choose the HDHP. This is tested on the basis of actual contributions. Limits are computed on a monthly basis for an individual that is not eligible for the entire year. Participants who are age 55 or older can make an additional contribution amount of $900 in 2008 and $1,000 in Withdrawals are not taxed as long as they are used to pay for qualified medical expenses. Contributions made by an employer to an HSA account are for the employee to keep. There are no vesting requirements or forfeiture provisions. Unlike Section 125 medical care accounts, HSA plans do not have a use-it-or-lose-it requirement. The account balance rolls over from year to year and may earn interest tax-free. Timing of Contributions Can be made anytime before April 15 of the subsequent year, like an IRA. Can be made in lump sum, periodically or through payroll deduction. If an individual makes the contribution early and later become ineligible to make that amount of contribution, the excess will need to be taken out of the HSA by April 15 of the subsequent year. Investment Options Federal law requires that contributions be deposited with a qualified trustee or custodian. Investment options will vary by administrator. Contact the administrator of your account for more information regarding investment options. Guidelines The employer cannot mandate that employees use a particular bank. To participate in an HSA plan, participants cannot be: covered by a non-high deductible plan that provides coverage for a benefit that is covered by the HDHP (although employees can be enrolled in a separate vision, dental, disability or long-term care plan). enrolled in Medicare. a dependent on another person s tax return. Money in an HSA is tax-free as long as it is used to pay for qualified medical expenses. If a participant uses the money for any other reason, he/she will be required to pay income tax and a 10% tax penalty on that amount (a penalty will not be assessed if the participant is disabled or age 65 or older). It is up to the participant to keep supporting records to show the Internal Revenue Service whether the funds were used to pay qualified medical expenses. 4

5 How It Works Employer and/or employee contributes to the account (may be done in lump sums, in which case contributions are due before April 15). When an individual incurs an expense: The participating provider will submit a claim to HealthNow for processing. If the deductible has not been met, an Explanation of Benefits will be sent to both the provider and member with a balance due from the member. Debit card users can pay with their debit card and the amount is automatically deducted from their HSA, up to the amount available in their HSA. If the HSA is not sufficiently funded to pay the claim, the member is responsible for the balance of the bill. Members without a debit card pay the provider by cash, check or credit card and submit a paper claim to the account administrator. After the deductible is met, a copay or coinsurance may apply. Enhancing Your Plan We also offer additional options to enhance the value of your plan. Debit Card Fast, Accurate & Easy Some of our consumer driven plans give the option of using a debit card. Members can use this card to pay bills at a physician s office, hospital, pharmacy or other provider locations. Funds will be deducted from the member s account automatically. This is a great advantage for members because it automates the payment process and allows members to improve their cash flow. Members can also track their account balance by accessing their account online at eelect - Making enrollment seamless for you and your employees When you offer one of our HDHPs, your group has the option of enrolling using eelect, a web and IVR tool, for automated enrolling in our health plans, any pre-tax healthcare accounts offered and any other benefits your company offers. Advantages for Employers Automated process reduces time, cost, and errors associated with paper enrollment. Provides employees with benefit information 24/7. Messaging capability, calculator and invisible paycheck feature provide valuable information about companysponsored benefits and consumer driven options in particular. Advantages for Employees Built-in calculator helps employees model benefit elections based on options, coverage and cost to fit their needs. Messaging capabilities provide timely and consistent information about benefit options. Employees can easily complete even the most complex benefit selections as eelect, guides them through the process one benefit at a time. 5

6 Sample HealthNow HSA Compatible High Deductible POS Plan Designs SAMPLE POS 1 In-Network Out-of-Network Deductible $1,250 Individual/$2,500 Family Coinsurance 20% 40% on most services DME is at 50% (Does not apply to out-of-pocket max); Home Health is at 25% Out-of-Pocket Max $5,000/$10,000 $10,000/$20,000 (deductible applies to OOP max) Annual Unlimited $100,000 Benefit Max Lifetime Max $1 Million Dependent/Student 19/25 19/25 until age Office Visit $20 copay 40% coinsurance Inpatient Hospital 20% coinsurance 40% coinsurance Laboratory Services 20% coinsurance 40% coinsurance X-rays Vision Exam Covered in full 40% coinsurance 1 exam every 2 years after the deductible The PPO and POS plans detailed in the charts of this booklet are sample plan designs. HealthNow will work with you to create a plan design tailored to your group s healthcare objectives Ambulance 20% coinsurance 20% coinsurance Emergency Room 20% coinsurance 20% coinsurance Urgent Care 20% coinsurance 40% coinsurance Outpatient Surgery 20% coinsurance 40% coinsurance Chiropractic 20% coinsurance 40% coinsurance Prescription Drug Various options available on all plans 6

7 SAMPLE POS 2 SAMPLE POS 3 In-Network Out-of-Network In-Network Out-of-Network $2,500 Individual/$5,000 Family $5,000 Individual/$10,000 Family 20% 40% None 50% on most services DME is at 50% (Does not apply to out-of-pocket max); Home Health is at 25% $5,000/$10,000 $10,000/$20,000 $5,000/$10,000 Unlimited Unlimited $100,000 Unlimited $100,000 $1 Million $1 Million 19/25 19/25 19/25 19/25 $25 copay 40% coinsurance Covered in full 50% coinsurance 20% coinsurance 40% coinsurance Covered in full 50% coinsurance 20% coinsurance 40% coinsurance Covered in full 50% coinsurance Covered in full 40% coinsurance Covered in full 50% coinsurance after the deductible after the deductible 20% coinsurance 20% coinsurance Covered in full 50% coinsurance 20% coinsurance 20% coinsurance Covered in full 50% coinsurance 20% coinsurance 40% coinsurance Covered in full 50% coinsurance 20% coinsurance 40% coinsurance Covered in full 50% coinsurance $40 copay 40% coinsurance Covered in full 50% coinsurance Various options available on all plans Various options available on all plans 7

8 Sample HealthNow HSA Compatible High Deductible PPO Plan Designs SAMPLE PPO 1 SAMPLE PPO 2 In-Network Out-of-Network In-Network Out-of-Network Deductible $1,100 Single/ $2,000 Single/ $1,100 Single/ $2,000 Single/ $2,200 Family $4,000 Family $2,200 Family $4,000 Family Please note that preventive services and prescription drug benefits are not subject to the in-network deductible. Coinsurance 20% on most services 40% on most services None 30% on most services Out-of-Pocket $5,000 Individual/ None $5,000 Individual/ None Maximum $10,000 Family $10,000 Family Annual Benefit Unlimited $500,000 Unlimited None Maximum Lifetime Maximum Unlimited Unlimited Dependent/Student 19/25 19/25 19/25 19/25 until age Office Visit Copay $25 copay 40% coinsurance $20 copay 30% coinsurance Chiropractic $25 copay 40% coinsurance $20 copay 30% coinsurance Ambulance 20% coinsurance 40% coinsurance $50 copay 30% coinsurance Emergency Room $50 copay $50 copay $50 copay 30% coinsurance Urgent Care $25 copay $25 copay $25 copay $25 copay Inpatient Hospital 20% coinsurance 40% coinsurance Covered in full 30% coinsurance Outpatient Surgery 20% coinsurance 40% coinsurance $75 copay 30% coinsurance Laboratory Services 20% coinsurance 40% coinsurance $20 copay 30% coinsurance & X-rays Durable Medical 20% coinsurance 50% coinsurance Covered in full 50% coinsurance Equipment Vision Care $25 copay Not covered $20 copay Not covered 1exam every 2 years Prescription Drugs Various options available on all plans. Various options available on all plans. The PPO and POS plans detailed in the charts of this booklet are sample plan designs. HealthNow will work with you to create a plan design tailored to your group s healthcare objectives. 8

9 Getting Started If you are interested in learning more about how our HDHPs combined with an HSA can work for your company and your employees, please call your HealthNow representative or our Marketing Services Unit at , or you can contact your health insurance broker. You may also find out more about these plans by visiting our web site (click on Employers). FREE Online Tools for Members HDHP plans give your employees more incentive to take charge of their health. That is why we provide them with useful tools and information on our web site to help them get the most value from their HealthNow plan. Links to Account Administrator Web Sites Employees can click on a link to the web site for their HSA administrator to view information regarding their account. eservices Health plan customer service 24/7, including PCP changes, ordering an ID card, claims status and more. Get Health Information and resources on the health topics that matter most, including interactive tools and health topics from A to Z. Frequently Asked Questions Q: As an employer who do I call with questions about the HSA? A: For questions about your insurance product, call your HealthNow account representative at For questions about your HSA, contact your HSA administrator. Q: Our group currently offers HealthNow coverage, when can we offer an HDHP with an HSA? A: You can choose to offer a qualifying HDHP with an HSA on your renewal date. Q: Who will bill me for the HDHP and HSA? A: HealthNow will bill you for your insurance premiums and any administration fees for your accounts on one consolidated bill. Your administrator will bill you for the funds for the accounts. Q: Do I have to contribute to the HSA? A: No. Employers are not required to contribute to the HSA. Q: Do my employees have to open and/or contribute to an HSA? A: No. Your employees are not required to open an HSA. 9

10 Q: Are HSAs subject to COBRA? A: HSAs are not subject to COBRA continuation rules. Q: What is a qualified medical expense? A: Qualified medical expenses are services that are typically covered by a healthcare plan, such as office visits, emergency room services and hospitalization. Qualified medical expenses also include prescription drugs and many over-thecounter drugs, vision expenses including eyeglasses and contact lenses, medical plan deductibles and copays, as well as non-cosmetic dental expenses. The covered items are defined by IRS code 213(d) and are listed in IRS Publication 502. A list of examples is available at the end of this brochure. Q: Can an employee withdraw HSA funds for an expense that is not a qualified medical expense? A: Yes, but the employee will be required to include the amount in his/her gross income and if the employee is less than age 65, he/she will pay an additional 10% excise tax on the withdrawal. Q. What happens if an employee enrolled in a high deductible health plan and an HSA leaves employment? A. If the employee joins another employer that also offers a high deductible health plan, the employee can continue to contribute to their HSA. In addition, they can leave their HSA with their current administrator or they can choose to roll it over to a new administrator. If the employee's new employer does not offer a high deductible health plan, the employee can no longer make contributions to the HSA. However, the employee can still withdraw funds from the HSA or leave the money in their HSA to earn interest. Q. Can I roll over funds in an FSA or HRA to my employee's HSA? A. Yes, a one-time rollover from an FSA or HRA to an HSA is possible through Please discuss details with your HSA administrator. Q. Is the maximum allowable contribution to an HSA limited by how many months in a calendar year the employee is enrolled in a HDHP? A. No. The entire allowable contribution for the year can be made, even if an employee enrolls in the HDHP in December. Q. Can my employees be enrolled in an FSA and still be eligible for an HSA? A. It depends on whether the employee is enrolled in a general or limited FSA. If an employee is enrolled in a general FSA that provides reimbursement for all medical expenses, the employee would be ineligible for an HSA. If the employee is enrolled in a limited FSA that only provides coverage for vision and/or dental, the employee would still qualify for an HSA. FSA Grace Period - An employee who enrolls in an HDHP while still covered under the grace period of an FSA will still qualify for an HSA if the balance in their FSA is zero, or if the yearend balance in the FSA is transferred directly to the HSA. Q. Can my employee roll over funds from their IRA to their HSA? A. Yes. A one-time rollover from an IRA to an HSA can be made without being subject to a tax or penalty. The transfer amount is limited to the maximum HSA contribution for that year. For detailed assistance it is suggested that the employee contact their tax advisor and HSA administrator. 10

11 Qualified Expenses Here s a partial list of benefits and services that can be paid from an HSA. Abdominal supports Acupuncture Alcoholism treatment Ambulance Anesthetist Arch supports Artificial limbs Autoette (when used for relief of sickness/disability) Blood tests Blood transfusions Braces Cardiographs Chiropractor Contact lenses Crutches Dental treatment Dental x-rays Dentures Dermatologist Diagnostic fees Drug addiction therapy Drugs (prescription) Eyeglasses Fees paid to health institute prescribed by a doctor FICA and FUTA tax paid for medical care service Fluoridation unit Guide dog Gum treatment Gynecologist Healing services Hearing aids and batteries Hospital bills Hydrotherapy Insulin treatments Lab tests Laser eye surgery Lead paint removal Metabolism tests Neurologist Nursing (including board and meals) Obstetrician Operating room costs Ophthalmologist Optician Optometrist Oral surgery Organ transplant (including donor s expenses) Orthopedic shoes Orthopedist Osteopath Over-the-counter drugs (except for vitamins and supplements) Oxygen and oxygen equipment Pediatrician Physician Physiotherapist Podiatrist Postnatal treatments Practical nurse for medical services Prenatal care Prescription medicines Psychiatrist Psychoanalyst Psychologist Psychotherapy Radium therapy Registered nurse Special school costs for the handicapped Spinal fluid test Splints Sterilization Stop-smoking aids Surgeon Telephone or TV equipment to assist the hard-of-hearing Therapy equipment Transportation expenses (relative to health care) Ultraviolet ray treatment Vaccines Wheelchair X-rays Disallowed expenses: Here s a partial list of benefits and services that cannot be paid with funds from an HSA. Advance payment for services to be received next year Athletic club membership Automobile insurance premium allocable to medical coverage Boarding school fees Bottled water Commuting expenses of a disabled person Cosmetic surgery and procedures Cosmetics, hygiene products and similar items Diaper service Domestic help Funeral, cremation or burial expenses Health programs offered by resort hotels, health clubs, and gyms Illegal operations and treatments Illegally procured drugs Maternity clothes Premiums for life insurance, income protection, disability, loss of limbs, sight or similar benefits Scientology counseling Social activities Special food or beverages Specially designed car for the handicapped other than an autoette or special equipment Supplements (unless used to treat a specific medical condition) Swimming pool Travel for general health improvement Tuition and travel expenses for a child with special needs at a particular school Vitamins (unless used to treat a specific medical condition) Weight loss programs If funds in the HSA are used for non-qualified expenses (or any others not listed in IRS Publication 502), the amount must be included in the employee's gross income for income tax purposes and will be subject to a 10% excise tax penalty (the excise tax penalty does not apply for individuals who are disabled or age 65 or older). 11

12 Although HealthNow New York is working with an administrator to make HSAs available, HealthNow is not responsible for the qualification of the account as an HSA under the Internal Revenue Code. HealthNow makes no representation regarding the investment options made available by the administrators. In facilitating the relationship with the administrators, HealthNow is not acting in a fiduciary capacity under ERISA or otherwise. HealthNow makes no representation regarding the availability of the eelect enrollment system or the transmission of enrollment data to third parties through eelect. HN