Transcript Employers - SuperAgent

Considering an HDHP
With an HSA?
Basic HSA Plan Concept
Part 1: High Deductible Health Plan
HSA
Concept
For 2008
Single
Family
Min. Deductible
$1,100
$2,200
Max. Out of Pocket
$5,600
$11,200
For 2009
Single
Family
Min. Deductible
$1,150
$2,300
Max. Out of Pocket
$5,800
$11,600
Part 2: Health Savings Account
For 2008
Max. Contribution
For 2009
Max. Contribution
Single
Family
$2,900
$5,800
Single
Family
$3,000
$5,950
Intended to
cover serious
illness or injury
Can pay for
eligible
expenses not
covered by the
health plan
Made by: Employer, Employee, and/or other party
*Contributions do not need to be prorated based on the date coverage began, as long as qualifying coverage is maintained
through December 31st of the following year.
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Why choose an HSA-Compatible health plan?
 Premium Savings
 According to employers surveyed by HSA Bank, over 59%
reported saving an average of 10 – 39%
 Lower future renewal costs
 Premium increases in HSA plans averaged under 3% while HMO,
PPO and Indemnity plans hovered over 7%. (The Maine View)
 Ability to offer health insurance to employees
 27% of small group market did not previously offer insurance
coverage to employees (ehealthinsurance)
 Employee opportunity to control healthcare spending
 Decreased rise of health care costs through lower
utilization
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Advantages of an HSA
For an Employer
 Tax benefits
 Employee-owned funds promote increased motivation
for involvement in healthcare decisions resulting in:
 Healthcare dollars being spent more wisely
 Employees ‘shopping around’ for healthcare based on quality
of care and price
 HSAs allow “matching” contribution options by
employers and employees through a cafeteria plan
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Advantages of an HSA
For an Employee
 Funds roll over year to year
 No need to “use it or lose it”
 Tax benefits on the contributions, earnings, and
distributions
 Potential for increased take-home pay
 Long-term investment opportunity
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Additional HSA Funding Options…
 IRA funds may be rolled to an HSA on a one-time basis
 Subject to the annual HSA contribution maximum
 Only traditional IRAs qualify at this time
 Individuals must remain covered by a qualifying HDHP until the last day
of the 12th month following the month of rollover to avoid tax penalties
 HRA and Health FSA may be rolled to an HSA
 Employers must amend their plan documents to allow this
 Rollovers must be made directly from the employer to the
custodian/trustee
 The IRS can help you determine if this is a possibility
*Always consult a qualified tax advisor, and/or the IRS for details and reporting
requirements in regard to taxation, fund rollovers and other stipulations.
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Designing Your
HSA Offering
HSAs, HRAs, FSAs
HSA
HRA
FSA
Employee
Employer
Employee
Employee,
Employer, Other
Employer
Employee,
Possible
Employer
Roll over
year-to-year
Yes
Generally
No
No
Portable
Yes
Generally
No
No
Account
owner
Funding
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How HSAs & FSAs Can Work Together
 Limited Purpose FSA (can have with an HSA)
 Pay for dental and vision expenses without having to use HSA funds
 Health FSA (cannot normally have at the same time as an HSA)
 Extension provides 2.5 months beyond the end of the plan year to use FSA funds
 Recent legislation allows employees to contribute to HSAs during the
extension if their FSA balance is zero during that time or the total FSA
balance is transferred to an HSA.
Example of when HSA contributions can be made if an individual still has a Health FSA.
This assumes that the FSA plan is not renewed after the extension.
Jan.
Jan. – Dec. Plan
March 15th extension
May –April Plan
July 15 extension
Feb. March April May June July
Aug.
Sept.
Oct.
Nov.
Dec.
$0 bal. Jan. 1-March 15
$5 bal. Feb. 6th, $0 bal. Feb 7th
$0 bal. May 1-July 15
$32 bal. May 2nd
Plan Year
Eligible to contribute to HSA
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NOT Eligible to contribute to HSA
How HSAs & HRAs Can Work
Together
Three types of HRAs you can have with
an HSA
 Post deductible HRA—pays for out-of-pocket
expenses after the HDHP deductible has been met
 Retirement HRA—Designated for medical expenses
after retirement
 Suspended HRA—Cannot make contributions or
take distributions from the HRA while contributing
to the HSA
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Design Makes a Difference
Business Relations Can Provide Customized
HSA Design Ideas
Things to consider
How many employees will be offered an HSAcompatible health plan?
How many health plan options are being offered?
What are your objectives for offering the HSA plan?
What is your goal for % enrolled?
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Plan Design Stats
 A 2006 survey of nearly 200 agents and
employers regarding plan design indicates that
More than 83% of employers contribute to their
employees’ HSAs
Of those employers, 78% contributed at least 20%
of the deductible in the 1st year
Of those employers, 71% contributed at least 20%
of the deductible beyond the 1st year
Nearly 72% of employers pay the set-up fees
Nearly 25% of employers pay the monthly fees
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Employee
Communication
Benefits of Communication & Education
 HSA plan selection--Based on an HSA Bank survey,
when an employer spent at least 90 minutes explaining the
HSA concept, the number of employees that selected an
HSA plan grew by more than 21%
 Financial gain
 Immediate: communication/education leads to employee HDHP
acceptance, which will decrease premium costs (supply and demand)
 Long-term: Employees are in control of healthcare spending and thus
utilization decreases
 Consumers paid an average of $348 less in 2005 for HSA-eligible health
insurance plans compared to 2004 (ehealthinsurance – July 27,2005)
 Overcoming the stigma of an HDHP
 Pre-enrollment and ongoing communication/education enables
employees to see beyond a higher deductible to the benefits an HSA
plan has to offer
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Employee Communication Tips
 Begin education early
 Combine multiple forms of communication: printed, web, multimedia, in-person
 Emphasize the benefits of choice and empowerment
 HSAs require employees to approach their healthcare in a new way, which
puts them in control of their healthcare dollars
 Employees need to:
 Ask about price
 Ask if procedures are necessary
 Discuss with their physician if alternatives exist
 Compare current plan design with HSA-compatible plan design
 Illustrate the tax benefits and long-term savings potential
 Involve spouses in the communication process
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Employer Communication Kit
HSA Bank offers a comprehensive communication kit, which guides
employers through the stages of their HSA program and provides important
educational materials:
1. Implementation
3. Enrollment
Employer Welcome Kit
Enrollment Instructions
Outline of what employees will receive
Sample Emails
Sample Employee Welcome Kit
2. Pre-enrollment
Fact Sheet
Brochure
Web Tools Including Calculators
PowerPoint and Macromedia®
flash presentations
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4. Ongoing
Monthly Employee Communications
Are HSAs changing spending behavior?
Increased Consumerism in Healthcare
(Research results from McKinsey & Co., June 2005)
Consumer-directed health plan holders were
more value conscious and attentive to wellness &
prevention and therefore:
50% more likely to ask about costs
30% more likely to get an annual exam
25% more likely to engage in healthy behaviors
20% more likely to comply with treatment regimens
300% more likely to choose less expensive options
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Account Trends
Based on HSA Bank’s customer base of over 186,000
accounts as of December 31, 2007
 96.5% of all open accounts rolled over funds from 2007 to 2008
 On average, accounts rolled $2163 into 2008
 Average contribution per month = $214
 Average distribution per month = $173
 Average monthly savings = $41
 Nearly 18% of accountholders saved all contributed funds and
rolled over an average balance of $4013 into 2008.
 More than a third of accountholders saved at least 50% of their
2007 contributions.
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Tax Benefits
Tax Treatment and Advantages
for an Employer
 Treated as employer-provided coverage for
medical expenses under an accident or health plan
 Excludable from gross income
 Not subject to withholding for income tax
 Not subject to other employment taxes
 (i.e., Social Security and Medicare taxes (FICA), federal
unemployment tax (FUTA), or the Railroad Retirement
Tax Act)
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Tax Treatment and Advantages for
Employees/Accountholders
 Contributions are either pre-tax through a cafeteria plan
or tax-deductible
 Earnings
 HSAs grow in the same tax-deferred manner as IRAs
 Interest and investment income are also tax-free or tax
deferred
 Distributions
 Withdrawals for qualified medical expenses are always taxfree. After age 65, funds may be withdrawn for any reason
without penalty, subject to regular income tax.
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How to Get Started
Enrollment Options
 Group Online Enrollment
(generally most efficient method regardless of size)
 Employer initiates enrollment via our group set-up site
 Choose type of approval
 Choose how fees will be paid
 Employee
 Completes information on customized enrollment site
 Electronic Enrollment Originated From Paper
(typically used by larger groups when group online enrollment is not chosen)
 Employee completes paper application
 Employer creates electronic data files and images of the paper
applications
 Individual Online Enrollment
(used when the employee pays the fees)
 Employee completes information on individual online enrollment site
 Paper Applications
 Employee fills out paper application and sends to HSA Bank
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How are Fees collected
If Employers are paying:
 The employer can pay fees up front for the remainder of
calendar or plan year
 Employer can be invoiced
 Per employee pricing available on a monthly or quarterly
basis
If Employees/Accountholders are paying:
 Set-up fees are paid with the submission of the
application
 Monthly fees will be deducted from the account
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Coordinating HSA Contributions
Since both employees and employers can make contributions, it is important to
coordinate in order to avoid excess contributions and tax penalties. The maximum
can be contributed through a combination of sources or a single source as long as
the annual limit is not exceeded.
EMPLOYER
CONTRIBUTIONS
INDIVIDUAL /
EMPLOYEE
CONTRIBUTIONS
IRA Transfers
≤
HSA
Contribution
Limits
Up to the IRS determined
maximums
2008:
$2,900 single
$5,800 family
2008:
$3,000 single
$5,950 family
*If an individual has HSA accounts with different administrators, all
contributions count toward the annual contribution maximum.
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Employer Contributions

Online (ACH Pull)

ACH Direct

Company ACH or Wire Transfer + File

Submit a Check
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 Convenient in-house system in Employer Login area
 Provided list of all employees tied to Federal ID #
 Columns after each name for ER, EE, EX allows for simple designation of
employer, employee and employee pre-tax contribution amounts
 Employer sends ACH direct to employee’s accounts
 Utilize discretionary data field in ACH file to code contribution sources
 Company sends one ACH or Wire Transfer + File
 The transaction file dictates how the money is distributed to each account
 With Contribution Form
Employer’s Comparable
Contributions
 Comparability testing period based on a calendar year
and determined on a monthly basis. Testing based on
contributions to employees covered under the employer’s
HDHP. There is a 35% penalty for failing to meet
comparable contribution requirements.
 Note: The employer must make comparable contributions for all
employees with HDHPs who open HSAs under the employer’s
plan. Contact the IRS to determine the requirements for
employees who have an HSA-Compatible health plan but have not
opened an HSA by December 31st.
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Exceptions to the
Comparability Rule
Exceptions
 Due to new legislation, employers may contribute more for
employees who are non-highly-compensated employees
(non-HCEs) as long as contributions compare within
employment categories. Non-HCEs are defined under
Internal Revenue Code §414 (q)
 Comparability rules do not apply to employer contributions
made through a Section 125 Cafeteria Plan.
 Employers may make matching contributions through a
Section 125 Cafeteria Plan (Non-Discrimination rules apply)
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Comparable Contributions Example
Family
Single /
Full-Time
HCE
NonHCE
Deductible
$1200
Same
Dollar
% of
Deductible
Self + One /
Full-Time
HCE
NonHCE
$1200
$2500
$100
$200
50%
$600
75%
$900
Self + Two /
Full-Time
Self + Three /
Full-Time
HCE
NonHCE
HCE
NonHCE
$2500
$2500
$2500
$2500
$2500
$150
$250
$175
$275
$200
$300
25%
$625
30%
$750
50%
$1250
60%
$1500
75%
$1875
80%
$2000
*Employer may contribute up to the maximum amount as determined by the IRS.
For 2008: $2900 for individual coverage and $5800 for family coverage For 2009: $3000 for
individual and $5950 for family.
**Apply the same concept for part-time employees within each category
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Employee Contributions
 Online Contributions (through Internet Banking)
 Recurring or one-time, as needed
 Check
 With Contribution Form tear-off (on each statement or
downloaded from website)
 With Deposit Ticket
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Savings Account Option
Interest bearing “bank” account
Accounts are opened as an FDIC-insured bank
account through Webster Bank, N.A.
Current interest rate and annual percentage yield
information is available on our website,
www.hsabank.com or by calling 800-357-6246.
 Interest rates are subject to change. Fees may
reduce earnings.
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Self-Directed Investment Option
TD Ameritrade Corporate Services
Access to stocks, bonds and over 11,000
mutual funds
Trades are made online or over the phone
Transfer funds from your HSA to your
investment account:
Online through Internet Banking
By calling the Client Assistance Center
HSA Bank does not charge a fee; however,
trading fees may apply
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Mutual Fund Selection
Devenir Investment Advisors
Selection Options
Employer can choose to offer our standard selection
of historically top-performing mutual funds
For an additional fee, employers can choose to
select mutual funds similar to their 401(k) offering
Trades are completed online through HSA
Bank’s Internet Banking system
HSA Bank does not charge a fee. An annual fee
of $24 is charged by the Mutual Fund Selection
vendor; however, no trading fees apply
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Methods of Distribution
 Debit Card from Visa
 POS with signature
(no transaction fee)
 ATM with PIN ($2 fee)
 POS with PIN ($2 fee)
 Checks, $7.95 for 50 + 10
deposit tickets
(no transaction fee)
 Withdrawal Forms
($10 fee)
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Communication & Reporting
Accountholder
 Account statements
 IRS reporting
 Email confirmation of account opening and
ongoing activity
Employer
 Email confirmation of deposits
 Employer newsletter
 Email updates on consumer-driven health care and
HSA account features
 Aggregate reporting available upon request
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Calculation Tools
 Is an HSA Right for Me
 Compares a traditional health plan with an HSA-compatible plan to
determine potential savings
http://www.hsabank.com/calculators/decision_tool.aspx
 Future Value Calculator
 Calculates tax savings on contributions and tax-deferred growth as
well as the future value of your Health Savings Account
http://www.hsabank.com/calculators/future_value.aspx
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www.hsabank.com
 HSA Bank has created a website to serve the specific needs of
and provide relevant information to:
 Prospective accountholders
 Calculation Tools
 HSA Information
 Enrollment
 Accountholders
 Internet Banking
 Self Service (forms, check/debit card
orders, secure contact form)
 Employers




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Employer Administration Area
Group Online Enrollment
Group Online Contributions
Communication Kit
Employer Login Area
 Online access for employers to:
View and manage their list of employees with HSAs
Upload contribution data and census files
Sign-up for updates
Sign-up for Group Online Enrollment
Make online contributions to employee HSAs
(separate sign-up required)
Download the communication kit
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Customization Options
 Application materials
 Brochure Inserts
 Welcome letter
 Custom toll-free
number
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Expertise & Commitment
Industry leadership
Have over $500 million in FDIC insured
deposits and over $65 million additional dollars
in non-FDIC insured investment accounts
Administer more than 210,000 accounts in all
50 states
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Experience
Ten years in the HSA-industry
Began with Medical Savings Accounts in 1997
Continued with HSAs in 2004
Maintain relationships with over 300
health plans/TPAs
Work with more than 15,000 employer
groups
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Service & Support
 Business Relations Department:
Exclusively assists our employer, agent, broker, broker/dealer, health plan &
TPA clients. (866) 357-5232 Monday-Friday 7 a.m. – 7 p.m. CST
 Regional Vice President & Assistant Vice President:
Provide local assistance for our employer, agent, broker, broker/dealer, health
plan & TPA clients.
 Client Assistance Center:
Provides dedicated customer service to individual and prospective
accountholders.
 Spanish Language Support:
Our Client Assistance Center and Business Relations teams provide Spanish
language support for employer relationships, accountholders and prospective
accountholders.
 Experience:
Our Business Relations Coordinators and Client Assistance Center receive the
most comprehensive and up-to-date HSA training in the industry. Our
representatives have a strong customer service background and many have
worked in finance, insurance, and benefits administration.
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Thank you for considering…
zixbypass
*Investment products are not FDIC insured, are not a deposit or other obligation of or guaranteed by
the bank, and are subject to investment risks including possible loss of the principal amount invested.