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Status of HSAs and Consumer-Driven Health Plans Under Obamacare August 7, 2013

Status of HSAs and Consumer-Driven Health Plans Under Obamacare August 7, 2013. Roy Ramthun, President HSA Consulting Services, LLC. Impact of Health Reform on CDHPs. Growth in CDHPs could be accelerated by mandates and subsidies CDHPs are generally the cheapest product on the market

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Status of HSAs and Consumer-Driven Health Plans Under Obamacare August 7, 2013

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  1. Status of HSAs and Consumer-Driven Health Plans Under ObamacareAugust 7, 2013 Roy Ramthun, President HSA Consulting Services, LLC

  2. Impact of Health Reform on CDHPs Growth in CDHPs could be accelerated by mandates and subsidies CDHPs are generally the cheapest product on the market Income-based subsidies tied to Silver plan (c) HSA Consulting Services, LLC

  3. Impact of Health Reform on CDHPs Growth in CDHPs could be accelerated by the “Cadillac plan” tax Excise tax of 40 percent for any employee whose employer-sponsored coverage has a benefit value in excess of $10,200 for single coverage and $27,500 for family coverage Effective 1/1/2018 (c) HSA Consulting Services, LLC

  4. Direct Impact on HSAs New (Higher) Penalty for Non-Qualified HSA Withdrawals The tax penalty on HSA (and Archer MSA) withdrawals that are not used for qualified medical expenses increased from 10 percent to 20 percent Effective date – 1/1/2011 (c) HSA Consulting Services, LLC

  5. Direct Impact on HSAs Change in the Definition of a “Qualified Medical Expense” Over-the-counter (OTC) medications are no longer eligible for payment or reimbursement unless obtained with a prescription (or insulin) Impacts HSAs, FSAs, & HRAs Effective 1/1/2011 (c) HSA Consulting Services, LLC

  6. Indirect Impact on HSAs New (Higher) Threshold for Medical Expense Deduction The threshold for deducting medical expenses increase from 7.5% to 10% of AGI Effective 1/1/2013 Date delayed for seniors (65+) to 1/1/2017 (c) HSA Consulting Services, LLC

  7. New Insurance Requirements New Requirements for All Insurance Plans (including CDHPs) Coverage of children up to age 26 First-dollar coverage of preventive care Annual limits on out-of-pocket expenses Minimum actuarial value Medical loss ratios Limits on deductibles for small business plans (c) HSA Consulting Services, LLC

  8. Coverage of Older Children All plans (including HDHPs) are required to cover children up to their 26th birthday, even if no longer a dependent and/or married Out-of-pocket expenses for these children are reimbursable tax-free from FSAs and HRAs, but not HSAs –but they can benefit from HSAs in other ways (c) HSA Consulting Services, LLC

  9. Preventive Care First-dollar coverage of preventive care All insurance policies required to provide first dollar coverage for preventive care services services must be covered without any cost-sharing or application of any deductibles HDHPs are currently allowed to provide first dollar coverage of preventive care services, but not all do Effective plan years starting after 9/23/2010 (c) HSA Consulting Services, LLC

  10. Out-of-Pocket Limits Annual limits on out-of-pocket expenses All policies must apply limits on annual out-of-pocket expenses Maximums set at current HSA out-of-pocket limits $6,350 for individuals and $12,700 for families for 2014 (adjusted annually for inflation) Effective 1/1/2014 (c) HSA Consulting Services, LLC

  11. Individual (AHBE) Exchanges • No HSA contributions counted in AV calculation • Only employer contributions counted (for group plans) • HDHP must meet AV standards on their own (c) HSA Consulting Services, LLC

  12. Individual (AHBE) Exchanges • De Minimus Variation Permitted for Metal Tiers (c) HSA Consulting Services, LLC

  13. Individual (AHBE) Exchanges • HSA options that meet “Bronze” tier • Option 1 (AV = 58.0%) • Deductible = $6,350 • Coinsurance = 0% • OOP Max = $6,350 • Option 2 (AV = 61.8%) • Deductible = $5,300 • Coinsurance = 0% • OOP Max = $5,300 (c) HSA Consulting Services, LLC

  14. Individual (AHBE) Exchanges • HSA options that meet “Bronze” tier • Option 3 (AV = 59.5%) • Deductible = $5,000 • Coinsurance = 50% • OOP Max = $6,000 • Option 4 (AV = 62.0%) • Deductible = $4,000 • Coinsurance = 20% • OOP Max = $6,000 (c) HSA Consulting Services, LLC

  15. Individual (AHBE) Exchanges • HSA options that meet “Silver” tier • Option 1 (AV = 71.7%) • Deductible = $3,000 • Coinsurance = 0% • OOP Max = $3,000 • Option 2 (AV = 68.3%) • Deductible = $3,600 • Coinsurance = 0% • OOP Max = $3,600 (c) HSA Consulting Services, LLC

  16. Individual (AHBE) Exchanges • HSA options that meet “Silver” tier • Option 3 (AV = 71.8%) • Deductible = $1,500 • Coinsurance = 20% • OOP Max = $6,000 • Option 4 (AV = 68.3%) • Deductible = $2,100 • Coinsurance = 20% • OOP Max = $6,000 (c) HSA Consulting Services, LLC

  17. Individual (AHBE) Exchanges • HSA options that meet “Gold” tier • Option 1 (AV = 81.9%) • Deductible = $1,625 • Coinsurance = 0% • OOP Max = $1,625 • Option 2 (AV = 78.1%) • Deductible = $2,100 • Coinsurance = 0% • OOP Max = $2,100 (c) HSA Consulting Services, LLC

  18. Individual (AHBE) Exchanges • HSA options that meet “Gold” tier • Option 3 (AV = 81.6%) • Deductible = $1,250 • Coinsurance = 10% • OOP Max = $2,000 • Option 4 (AV = 78.7%) • Deductible = $1,250 • Coinsurance = 20% • OOP Max = $2,500 (c) HSA Consulting Services, LLC

  19. Individual (AHBE) Exchanges (c) HSA Consulting Services, LLC

  20. Individual (AHBE) Exchanges • Unanswered questions: • Will states (and HHS) permit HSA plan designs? • Will carriers participate? • Will carriers sell bronze plans? (c) HSA Consulting Services, LLC

  21. Individual (AHBE) Exchanges • Unanswered questions: • Will carriers sell HSA plans? • Will the HSA plans be affordable? • Will the subsidies make them more affordable? • Will consumers buy them? (c) HSA Consulting Services, LLC

  22. Individual (AHBE) Exchanges (c) HSA Consulting Services, LLC

  23. Individual (AHBE) Exchanges Vermont (c) HSA Consulting Services, LLC

  24. Individual (AHBE) Exchanges • Other Issues • MLR • Preventive care • “Young Invincible” policies (c) HSA Consulting Services, LLC

  25. SHOP Exchanges • Limits on deductibles ($2,000 / $4,000) • Employer Contributions to HSAs/HRAs • Count towards AV determination • HSA vs. HRA contributions (c) HSA Consulting Services, LLC

  26. SHOP Exchanges • Employer Contributions to HSAs & HRAs increase AV • Bronze HDHP (AV = 62.0%) • AV with $500 contribution = 68.0% • AV with $1,000 contribution = 73.6% • AV with $2,000 contribution = 82.4% (c) HSA Consulting Services, LLC

  27. SHOP Exchanges • Other issues • Plan choice not offered in FFEs until 2015 • MLR • Preventive care (c) HSA Consulting Services, LLC

  28. Outside the Exchanges • Calculation of Minimum Value (MV) • Costs paid by plan divided by total allowed costs under covered benefits = MV percentage • MV > 60% • HSA contributions • HRA contributions (c) HSA Consulting Services, LLC

  29. Outside the Exchanges • IRS Proposed Safe Harbors: • HSA-qualified plan with $3,500 deductible, 80/20 cost-sharing, and $6,000 OOP limit • HSA-qualified plan with $4,500 deductible, 70/30 cost-sharing, $6,400 OOP limit, plus a $500 employer HSA contribution (c) HSA Consulting Services, LLC

  30. Outside the Exchanges • IRS Proposed Safe Harbors: 3. Non-HSA plan with: • $3,500 medical deductible • 60/40 plan cost-sharing, • $0 drug deductible • drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers • 75/25 coinsurance for specialty drugs • $6,400 OOP limit (c) HSA Consulting Services, LLC

  31. 2014 HSA Amounts • HSA Contribution Limits • Single coverage – $3,300 • Family coverage -- $6,550 • Minimum HDHP Deductibles • No change ($1,250 / $2,500) • Maximum HDHP Out-of-Pocket • Single coverage – $6,350 • Family coverage -- $12,700 (c) HSA Consulting Services, LLC

  32. Contact Info Roy Ramthun, President HSA Consulting Services, LLC eMail: roy@hsaconsultingservices.com Phone: (202) 747-4467 Web: www.mrhsa.com (c) HSA Consulting Services, LLC

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