QHDHP overview • New 2013 Plan Design • Deductibles increasing: $1,500 to $2,500 for Single Coverage and $3,000 to $5,000 for Dependent coverage • Deductible accumulates separately
Plan design continued: • 100% coinsurance for in-network medical and prescription expenses after deductible is met • Plan C Premiums are lower than A and B
HSA overview • The State contribution has increased: • $900 to $1,500 for single • $1,350 to $2,250 for family • State contribution will be pre-funded on the first pay date of the year (State employees only) • Employer contribution will be pro rated for members with a Health Care FSA balance • Health Care FSA balances must be spent down by December 31st. Otherwise, employer and employee contributions will be delayed until after the end of the FSA Grace Period. • Overall annual contributions maximums: • $3,100 to $3,250 for Single coverage • $6,250 to $6,450 for Dependent coverage
Benefits of an HSA • Contributions are pre tax • Interest earned is tax free • Distributions are also tax free for eligible expenses (medical, Rx, dental, vision) • Unused balance rolls over from year to year • Funds are owned by the member and are portable
Main differences between Plan A/B and C • Plan C deductible must be met before the plan will pay • All eligible medical and prescription drug expenses are applied toward the deductible • HSA funds can be used to pay for expenses until deductible is met (including dental and vision) • Premiums significantly lower
HSA: Not everyone qualifies • Anyone in the following situations: • Enrolled in Medicare, TRICARE and / or TRICARE for Life • Enrolled with the Veteran’s Administration (VA) and /or has received VA medical services within a three-month period immediately preceding enrollment in Plan C • Receiving benefits from Social Security (Plan A) • Can be claimed as a dependent on another individual’s tax return (i.e. Parents) • Spouse has FSA • “Permitted Insurance” • Discount card • Supplemental coverage (disease, illness, accident)
Active members 65 and over • Eligible to enroll in Plan C and contribute to an HSA , but: • You cannot apply to receive SS benefits (Part A) • Cannot enroll in Medicare Part B • HSA contributions stop once enrolled in Medicare and /or Social Security • Spouse enrollment does not make employee ineligible
Catch up contributions • Applies to members age 55 and over • Can contribute an additional $1,000 each year over the contribution maximum • Husband and wife can each make catch up contributions • Change form required • Catch up can’t be made if spouse is 55 but member isn’t
Spouses and Dependents • Member and spouse can each have an HSA, even if spouse is employed elsewhere • Husband and wife who both work for the State must be enrolled separately and have separate HSA • HSA funds cannot be transferred to another family member’s HSA • HSA can be used to reimburse dependent expenses, even if covered under a non-QHDHP
Spouses and dependents cont. • $6,450 is the contribution maximum for a husband and wife even if each have a QHDHP and each cover dependent children or if one spouse has single coverage and the other spouse covers all of the dependent children. • Contributions will have to be divided out.
What happens after I retire? • HSA balance owned by member • Tax free distributions for eligible expenses • Direct Bill, Medicare, COBRA and LTC premiums can be paid from HSA – except MediGap • After 65, distributions for non-eligible expenses are taxed – no penalty tax
Bits and pieces • HSA funds can be used to pay for LTC premiums, COBRA premiums and Medicare premiums • There are penalties for ineligible purchases – 20% • No qualifying event needed to change contribution amount • Investment options available (discussed later) • IRA transfers • Eligible expenses after age 65 • IRS Publications 502 and 969 • Expenses prior to having an HSA
QUESTIONS Q. Can you give scenarios of who would and who wouldn’t want to enroll in Plan C? A. We will be posting to the health plan website a health plan comparison tool for individuals to use to help make the best decision for them. The tool will allow an individual to enter information based on their medical situation and compare the various health plans to help assist with their plan choice. Q. How is the employer contribution to the HSA ($1,500 / $2,250) treated for tax purposes? Is this recorded as taxable income to the employee? A. The contribution is tax-free and is not listed as taxable income as long as the funds are used for eligible expenses. Q. Are the employee contributions taken out of all 26 pay periods or only 24? A. Employee contributions are only deducted from 24 pay periods. Q. Can my wife carry non-HDHP insurance through her employer AND be a covered dependant under the State HDHP on my insurance? A. No, your spouse would have to choose between one of the two plans. Q. My spouse and I both work for the State. We would enroll in our own Plan C coverage and have our own HSA. I would have our son on my plan so would have the $5000 deductible and $2250 ER contribution. If I run out of money in my HSA but have more medical expenses, can we use the money in his HSA to pay my expenses? Or can we use his account only for himself and child? A. You both can reimburse expenses out of each other’s HSA’s. The only rule here is that an expense can only be reimbursed once. Q. My son turns 26 in 2013 so will be dropped from my coverage. Will I need to return a portion of the ER contribution when he is no longer on my plan? A. No.
QUESTIONS Q. I can enroll in Plan C, State will pay their share of $1500 to my HSA in January, I can pay a minimum of $25 to the account monthly even after I retire. Is that correct? A. No, members must be enrolled in a HDHP in order to enroll. However, if a member retires and elects the HDHP under the Direct Bill program they could continue contributing. If the retiree gets another job, they could make their contributions pre tax (ideal). If not, they still may be eligible to receive a benefit by deducting their after tax contributions from their taxes during tax time. You should check with a tax advisor to make sure your situation would qualify for the tax deduction. Q. Once I retire, will I be able to continue the Plan C for 2014 on onward? A. There is a HDHP option under the Direct Bill program, but there is no HSA contribution from the State.. Q. Where can I find the employee out of pocket charges for health care expenses like x-rays, CT, etc.? A. The only way to find out what a procedure would cost would be to contact the medical provider and find out what they charge for that specific procedure and then contact the medical carrier and find out what the discount is for that procedure. There is not a set price guide for something like this. Q. Where can I find the employee out of pocket charges for prescription expenses? Under Plan A I pay $3.50 for a prescription; will I still pay $3.50 for that prescription under Plan C? A. Members can go to www.caremark.com to set up their own personal account. Once you have logged in, you can click on Understand My Plan and Benefits to get pricing information on a prescription. On Plans A and B, you pay a coinsurance amount for your prescription. On Plan C, you pay the full amount of the discounted price until the deductible is reached.
QUESTIONS Q. I go to the doctor and forget my HSA debit card so I pay with my personal debit card. Can I pay myself back from the HSA as long as I keep documentation for proof it’s for medical expenses? A.Yes. However, I would advise telling the Dr.’s office to submit your claim through insurance first and mail you a bill. This is because they may not know the exact amount to charge you that day since there is no co pay with Plan C. Q. Can we use the HSA for over the counter drugs? A. Yes, but as with the Health Care FSA, you’ll need a doctor’s prescription for anything with an active ingredient in it. Items that do not have an active ingredient like cotton balls, q-tips and band aids can be purchased with HSA funds with no prescription. Q. Will I have to pay Quest Lab at full price under Plan C until Deductible is met? Plan A has had Quest Lab items paid for. A. The current LabQuest benefit under Plans A and B will not be available under Plan C. However, lab work is still covered at a discount. The member would then have to pay the balance.