EMPLOYER OVERVIEW SimplySelect SM HSA, HRA, and FSA
SIMPLYSELECT The concept of Consumer-Directed Health Plans (CDHP) focuses on encouraging employees to become more involved in and taking more responsibility for their health care decisions, purchases and use of health care services. SimplySelect SM is a suite of CDHPs that include: Health benefits, a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA) or Flexible Spending Account (FSA), online consumer tools, and clinical programs combined into one offering. Preventive services covered at 100%. Tax-advantaged accounts to assist employers and employees in managing their health care finances. With a CDHP, an employer can purchase a High Deductible Health Plan (HDHP) that is compatible with an HSA or an HRA. There are a variety of deductible and coinsurance combinations to choose from, which allows you to select the plan that meets your company s budget and health benefit needs. An employer may also purchase an FSA. Enable informed decisionmaking by providing Members with meaningful and easy-to-use information. Engage consumers with health and wellness programs that emphasize routine preventive care which can lead to healthier behaviors now and in the future. Encourage Members to make informed health care decisions by creating financial incentives, such as portable health care accounts with balance rollover.
HSA OVERVIEW What is SimplySelect HSA? SimplySelect HSA combines an IRS-qualified HDHP with a tax-free HSA. Consider the HSA as your employee s piggy bank that either you or your employees can fund by making pretax contributions. The tax-free HSA funds can be used to pay for qualified health care expenses as defined by Section 213(d) of the Internal Revenue Code. A key feature of an HSA is that employees own the account and it remains with them, even if they change employers. How does SimplySelect HSA work? Tax-free contributions can be made to the HSA up to the IRS maximum contribution limit by the employer and/or the employee. The money can be used to pay for qualified medical expenses or can accumulate to build a savings reserve for future health care expenses. There is no use it or lose it rule! ACS BNY Mellon (ACS) is Capital BlueCross preferred partner for the HSA. Once your employees are established as ACS account holders with an FDIC checking account, they receive a checkbook and a debit card, which can be used to access the HSA funds. ACS provides your employees with online access to an interactive HSA Guide, a comprehensive list of FAQs, as well as detailed investment information. The site also provides calculators to help employees with tax savings modeling, health expense estimation, and maximum contribution calculations. In addition to our preferred HSA trustee, we offer the flexibility for employers to choose any trustee for HSA administration. When employees have a qualified medical expense (e.g., copay or coinsurance) they may pay using either the checkbook or debit card provided. Employees may also elect to pay for the services out of their own pocket and reimburse themselves at a later date, or save, or even invest the funds for future expenses. Advantages of SimplySelect HSA Triple tax advantages: Tax-free contributions to HSA Tax-exempt interest and investment gains Tax-free withdrawals for qualified medical expenses HSAs can be used to pay for qualified medical expenses not typically covered by some health benefit plans, such as eyeglasses, dental care, Lasik surgery, and/or long-term care premiums. HSA funds can be invested to maximize future account growth (balance requirements apply). Employees can use their HSA to pay for anything without penalty after age 65 (only taxes apply). Deductible Capital BlueCross PPO Medical Plan Prescription Drug Plan HDHP Health Savings Account HSA Medical and prescription drug expenses accumulate to the same combined deductible. The PPO medical plan covers medical expenses after the deductible has been met. The prescription drug plan covers drug costs after the deductible has been met. Funds in the HSA can be used to pay for any eligible expenses as defined by Section 213(d).
HRA OVERVIEW What is SimplySelect HRA? SimplySelect HRA combines an HDHP with a Health Reimbursement Arrangement. The HRA is a financial reimbursement program funded entirely by the employer that assists employees and their families with paying for eligible medical expenses. How does SimplySelect HRA work? The employer selects the amount of the deductible that they want to fund for the employee. Employers also have the option to have the employee pay their portion of the deductible first or choose to have the employer funded HRA pay first. Once a Member receives a medical service, the claim is processed. Because Capital BlueCross is the HRA administrator, the HRA is fully integrated. HRA reimbursements for eligible claims are automatically processed and reimbursement is included with the Provider payment. The Member receives one EOB for both the medical and HRA reimbursement. All monies used for HRA reimbursements are tax deductible for the employer. Advantages of SimplySelect HRA The employer has complete control over the amount of money that is available to each employee. The funds are owned by the employer. The HRA is a virtual account that the employer contributes to as claims are incurred, and does not need to be funded in full at the beginning of the year. HRA payments are treated as a business expense rather than salary, and are not subject to FICA and unemployment taxes. HRA Fund The employer sets a specific amount of money aside each year to pay for eligible medical expenses. The HRA can be set up to pay before or after the Member s portion of the deductible is met. Sample HRA Plan Design (HRA $2,000 Deductible Plan) Employee Deductible Member cost-sharing responsibility. Member may be required to pay a portion of the deductible before or after access to HRA funds. $1,000 HRA Fund $1,000 Employee Deductible Capital BlueCross Medical Plan HDHP Underlying medical coverage. Once any applicable deductible is met and HRA funds have been exhausted, the PPO medical plan covers expenses (less applicable copayments).
FSA OVERVIEW What is SimplySelect FSA? SimplySelect FSA is a tax-advantaged account that your employees can use to pay for IRS-qualified medical or dependent care expenses. FSAs are not insurance and are intended to be combined with a health care plan offered by Capital BlueCross. An FSA is a cost effective way to enhance your employee benefits package and lower your Federal Insurance Contributions Act (FICA) taxes. And, with an FSA, all unused employee funds are retained by the employer. How does SimplySelect FSA work? FSAs are funded by payroll contributions pledged by your employees and can be used to offset IRS-qualified medical expenses not covered by your employee health plan, or to offset eligible dependent care expenses. Funds are deducted from an employee s wages before taxes which means less taxable income for your employees. Capital BlueCross offers three types of FSAs for your employees. Health Care FSA funds can be used to pay for qualified medical, dental, and vision expenses (IRS Section 213[d]). Limited-Purpose FSA if you offer your employees a high-deductible health plan that qualifies for contributions to an HSA, we offer a Limited-Purpose FSA for dental and vision expenses ONLY that can be combined with the HSA for additional pretax savings. Dependent Care FSA funds can be used to pay for dependent care expenses of a qualified child(ren) under the age of 13 and/or adult dependent care expenses. Advantages of SimplySelect FSA Cost-effective way to enhance your employee benefit package Lower FICA taxes Easy, confidential administration Optional FSA debit card for IRS-qualified medical expenses Unused employee funds are returned to you Service from a name you can trust We do all the work: Claim substantiation Quarterly reporting Claims eligibility research Health Care Limited-Purpose Dependent Care For qualified medical, dental, and vision expenses (IRS section 213[d]) same as HSA. ONLY for qualified dental and vision expenses. IRS allows employers that offer a qualified HDHP with an HSA, to also offer a Limited-Purpose FSA. Works the same as the Health Care FSA; the difference is that employees can only submit claims for eligible dental and vision expenses. For qualified child(ren) under age 13 and/or adult dependent care expenses Day care Before and after school care Preschool Adult dependent care center
Quick Glance What is the difference? QUICK GLANCE Must be offered with... What are they? What size groups can participate? Who contributes the funds? Who is eligible? Can my employees take the account with them if they leave my company? How does the funding work? HSA HRA FSA Health Savings Accounts are special tax-advantaged savings accounts similar to a traditional IRA but designated specifically to pay for medical expenses. SimplySelect Medical Plan Health Reimbursement Arrangements allow the employer to set aside a fixed dollar amount for the employee to use for eligible expenses. Any Medical Plan Flexible Spending Accounts are tax-advantaged accounts that your employees can use to pay for IRSqualified medical or dependent care expenses. Employer groups of two or more. Employer groups of two or more. Employer groups of two or more. Employer and/or employee. Employer only. Employer and/or employee. Any individual covered under an IRSqualified HDHP who is not enrolled in Medicare and cannot be claimed as a dependent on another s tax return. Yes, the funds are owned by the employee. The HSA must be funded before distributions can be made. An employee who satisfies the eligibility criteria of the employer. Sole proprietors, partners, and 2% shareholders in S corporations cannot participate. No. Funds are not available until a claim is filed. Employers may elect an electronic fund transfer from their account or to pre-fund a buffer account which is replenished as claims are incurred. An employee who satisfies the eligibility criteria of the employer. Sole proprietors, partners, and 2% shareholders in S corporations cannot participate. No. Funds are not available until a claim is filed. With the Health Care or Limited- Purpose FSAs, employees have access to the total pledged amount from the beginning of the plan year. Dependent Care FSA funds are available as contributed by the employee. Do unused funds rollover into next year s account? Yes. Unused funds remain in the employee-owned account and can continue to accumulate year after year. Standard set up does not support rollover amounts. This is an option that is determined by the employer. No. What are the tax implications? Contributions are tax deductible for the employer and can be made pretax by the employee to the account. Withdrawals for qualified expenses are tax free. Reimbursements are tax deductible for the employer. Contributions are tax deductible for the employer and can be made pretax by the employee to the account. Withdrawals for qualified expenses are tax free. Investment earnings are tax free. What does it pay for? HSA funds can be used to pay for IRS-qualified health care expenses as defined by Section 213(d) of the Internal Revenue Code. HRA funds are used to pay for eligible expenses. FSA funds can be used to pay for IRS-qualified health care expenses as defined by Section 213(d) of the Internal Revenue Code and qualified dependent care expenses as defined in Publication 503 of the Internal Revenue Code. Getting started is easy. Contact your Capital BlueCross Account Executive or agent today. For more information, go to www.capbluecross.com.
ACS BNY Mellon HSA Solution ( The HSA Solution SM ) is an independent company whose products and services are not BlueCross products and services. The HSA Solution is solely responsible for these financial services. Health care benefit programs issued or administered by Capital BlueCross and/or its subsidiaries, Capital Advantage Insurance Company and Keystone Health Plan Central. Independent licensees of the Blue Cross and Blue Shield Association. Communications issued by Capital BlueCross in its capacity as administrator of programs and provider relations for all companies. NF-817 (3/2012) 2009 ACS HR Solutions, LLC. All rights reserved.