Transcript Putting the Pieces Together- HRA, HSA & FSA

Putting the Pieces
Together- HRA, HSA &
FSA-Where Do They
Fit?
Presented by
Rob Thurston, President, HR Consulting Group,
Inc.
Putting the Pieces Together
PBasic Plan Designs
PCase Study Review
PPitfalls in Plan Design
PWhere do we go from Here?
Who will be Covered?
PFirst Question to ask: Who will be
covered?
PHealth FSA & HRA B Any
employee, can be employer
defined
PHSA Any Individual, not entitled
to medicare or claimed as a tax
dependent & is enrolled in a
qualified HDHP
Is there a Qualified HDHP
Plan?
PBe careful B not just any plan will
do
PAmounts are indexed B make sure
plans will be updated to meet
annual requirements
PShould the employer offer more
than one option?
How can Employee Pay?
PHealth FSA B Employee can pay
pre- tax through a S125 Cafeteria
Plan
PHRA B Employee does not pay into
HRA portion, however employee
can pre-tax the HDHP
PHSA B Employee can pre-tax both
the HDHP and the HSA
contribution through a S125
Cafeteria Plan
What will Employer Pay?
PHealth FSA B should employer
make a contribution?
PHDHP B will employer increase
contribution towards HDHP?
PHRA B How much does employer
want to put into the account?
PHSA B Does employer want to
make a contribution B warning,
money will belong to employee!
How will Unused Amounts be
Handled?
PHealth FSA B will employer allow
2 2 month extension to pay claims?
PHRA B will employer allow
employee to take money with
them? Will there be a limit placed
on the liability?
PHSA B if employer money is
deposited, will employer have
problem over loss of control of
funds?
What Type of Expenses will Be
Eligible?
PHealth FSA B should be limited
scope or full FSA or both?
PHRA B should be limited scope?
PHSA B employer has no control
here
PCoordination if all three are
present
Company Culture
PHow will plan design be viewed by
employees?
PWhat is normal communication
process used?
PWhat goals are being set by
Corporation?
Case Study 1
PSmall Employer under 100 lives
PDid not have HDHP that qualified
for HSA
PGoal was to minimize rate
increases (2005 has 23% rate
increase)
Case Study 1
PWent with PPO plan with
$3,000/$5,500 Deductible and
$5,000/$10,000 OOP
PHad general purpose FSA and
Dental Plan
PWanted more control over money,
did not want to contribute to HSA
Case Study 1
PLets Look at Single Coverage
Design:
PHealth FSA B Employee can
contribute up to $1800 B FSA pays
first
PHRA B Employer contributes
$1200
PHDHP B Expenses covered by
Insurance
Case Study 2
P1500 employees, multiple
locations located nationwide
PWent from self-funded PPO &
HMO option to HDHP
POffered 2 Self-funded HDHP
designs:
BHigh Option has $1000/$2000
Deductible and $3000/$6000 OOP Max
BLow Option has $2000/$3000
Deductible and $5100/$10200 OOP
Max
Case Study 2
POffered 2 FSA Plans, Limited
Scope & Full FSA
PHad S125 Plan including HDHP,
FSA, Dental and Vision
PAdded HSA in 2005 Plan Year
Case Study 2
PSlight Drop in FSA Participation
P63% Elected to Participate in HSA
with average monthly contribution
of $75
PMajority elected High Option, even
though premium was higher
PClaims decreased by 43%
Case Study 2
PEmployer exceeded goal of reducing
claim cost and minimizing premium
increases
PInstallation was not without
problems: Employee view, HSA
Trustee Issues & Increased workload
for HR Staff
PCorporate concerned that employees
are not getting healthcare when
needed
Case Study 2
PIn 2006, added a third option to
plan that did not qualify for HSA
($500 Deductible)
PPremium did not increase for
2006
PEmployees did not go to lower
deductible plan B most stayed with
what they had in 2005
Caution B Avoid These
Potholes!
PMid-Year Changes
B HSA can be added mid-plan year, but this can
be messy and some options are still being
discussed by IRS (i.e. changing to a limited
scope FSA, may not be valid)
PNon-Discrimination
B Before making contributions to an HSA, an
employer should be sure to review the
comparability rules...if it is not part of a S125
Cafeteria Plan
Caution B Avoid These
Potholes
PCOBRA applies to HRA's
B This can increase liability in case of divorce as
the full balance of the account must be
available to both the employee and ex-spouse
PERISA
B Make sure that all plan documents, SPD's and
employee communications are accurate--watch for ERISA wording that can make a nonERISA HSA and ERISA plan by inference
Questions?
PFor more information, contact:
PRob Thurston, HR Consulting Group,
Inc.
P(801) 765-4417
[email protected]