Transcript Document

Health Savings Account (HSAs) —
A Summary of Oxy’s HSA Medical
Plan Options
A Glimpse at Available Plans for 2007
• Basic POS ($300 deductible) plan remains.
• HMO and other regional plans
• Two high deductible HealthFund plans with
HSAs — the HealthFund Plus and the
HealthFund Saver
This presentation focuses on the HealthFund
options.
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Definitions
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EFT:
EOB:
FSA:
HDHP:
HMO:
HSA:
IRA:
OOP:
POS:
Electronic Funds Transfer
Explanation of Benefits
Flexible Spending Account
High Deductible Health Plan
Health Maintenance Organization medical plan
Health Savings Account
Individual Retirement Account
Out-of-Pocket maximum
Point-of-Service medical plan
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Contributions for the Aetna Medical Plans
2007 Plan Year
Monthly
Employee
Contributions
 Employee Only
 Employee + 1
 Family
Basic POS
$ 70
$140
$210
HealthFund
Plus
$ 50
$100
$150
HealthFund
Saver
$10
$20
$30
HSA Options
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HSA Medical Plan Options
• Two options with Health Savings Accounts (HSAs):
– HealthFund Plus
– HealthFund Saver
• These options have both a medical plan and a
savings account component.
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Medical Component of HealthFund Plans
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POS Refresher: How Deductibles Work
OOP Limit (includes deductible)
Plan
Pays
You Pay
You pay 100% up to
deductible, then 10-20%
until your out-of-pocket limit,
then Plan pays 100%
Deductible
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Deductibles
• Basic POS:
– $300 individual
– $600 family
• HealthFund Plans:
 Employee Only
 Employee + One
 Family
HealthFund
Plus
$1,250
$2,500
$2,500
HealthFund
Saver
$2,650
$5,250
$5,250
• Basic POS has a separate individual deductible for
Employee + One and Family coverage. The HealthFund
plans do not.
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OOP Maximums
• Basic POS: Separate individual and family OOP
maximums.
• HealthFund Plans: No individual OOP maximum.
• Based on salary for all plans.
• Remember, OOP max includes the deductible
under all Aetna plans.
Under the HealthFund options, benefits are not payable for
any one individual until the family deductible has been met.
This means that if you enroll for Employee + One or Family
coverage, your family must (1) meet the entire deductible
before coinsurance applies and (2) meet the entire OOP
max before the plan pays at 100%.
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OOP Maxes (cont.)
Basic POS
Differences between Basic POS and
HealthFund options are highlighted in red.
HealthFund Plus/HealthFund Saver
Individual OOP Max
Employee Only OOP Max
Annual Base
Salary
< $30,000
$30,000 - 39,999
$40,000 - 49,999
$50,000 - 59,999
$60,000 - 69,999
$70,000 - 79,999
$80,000 - 89,999
$90,000 - 99,999
$100,000 +
Annual Base
Salary
< $30,000
$30,000 - 39,999
$40,000 - 49,999
$50,000 - 59,999
$60,000 - 69,999
$70,000 - 79,999
$80,000 - 89,999
$90,000 - 99,999
$100,000 +
Basic POS
$1,300
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
HealthFund Plus HealthFund Saver
$1,300
$2,650
$1,500
$2,650
$2,000
$2,650
$2,500
$2,650
$3,000
$3,000
$3,500
$3,500
$4,000
$4,000
$4,500
$4,500
$5,000
$5,000
Family OOP Max
Employee +1 / Family OOP Max
Annual Base
Salary
< $30,000
$30,000 - 39,999
$40,000 - 49,999
$50,000 - 59,999
$60,000 - 69,999
$70,000 - 79,999
$80,000 - 89,999
$90,000 - 99,999
$100,000 +
Annual Base
Salary
< $30,000
$30,000 - 39,999
$40,000 - 49,999
$50,000 - 59,999
$60,000 - 69,999
$70,000 - 79,999
$80,000 - 89,999
$90,000 - 99,999
$100,000 +
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Basic POS
$2,000
$2,250
$3,000
$3,750
$4,500
$5,250
$6,000
$6,750
$7,500
HealthFund Plus HealthFund Saver
$2,500
$5,250
$2,500
$5,250
$3,000
$5,250
$3,750
$5,250
$4,500
$5,250
$5,250
$5,250
$6,000
$6,000
$6,750
$6,750
$7,500
$7,500
Medical Coverage for HealthFund Plans
HealthFund Plans vs. The Basic POS
• What’s the same?
– HealthFund plans work like Aetna Basic POS plan with
deductibles, coinsurance, and medical claim forms.
– Same network: Aetna Open Access/Choice II POS.
• What’s different about HSA plans?
– No in-network lifetime benefit maximum.
(Max under Basic POS is $3 million.)
– Most preventive services covered at 100%.
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Preventive Coverage
• HealthFund Plans: 100% coverage before
deductible for these in-network preventive
services:
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Colonoscopies
Sigmoidoscopies
PSA tests
Mammograms
Pap smears
Well child care (to age 18)
• Basic POS: 80% coverage after deductible, in
network.
Note: Subject to age and frequency schedule (posted on OxyLink).
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Drug Coverage for HealthFund Plans
• Similar to drug coverage under Basic POS.
• Differences:
– Combined medical/drug deductible, per IRS rules.
– You pay the full cost and must meet combined
deductible before coinsurance applies.
– No separate out-of-pocket maximum for drugs.
– Provided through Aetna instead of Medco.
(One ID card for medical and Rx!)
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Savings Component of HealthFund Plans
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What is a Health Savings Account?
• Tax-advantaged savings account that’s available only with
a high deductible health plan.
• New way of saving for health expenses and retirement.
– Before age 65, use it tax-free for qualified health care expenses.
– After age 65, still use it tax-free for health care, but also use it like
an IRA for other expenses.
• Like an IRA, only better!
– Never taxed if used for medical expenses.
– No income limits; employees at all salary levels may participate.
– Pretax payroll deductions available.
• The account is held at JPMorgan Chase. It’s yours, even if
you change health plans or jobs.
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You and/or Oxy Fund the Account
• Annual contributions allowed up to the amount of your
medical plan deductible every year.
HSA Option
HealthFund Plus:
 Employee Only
 Employee + 1 & Family
HealthFund Saver:
 Employee Only
 Employee + 1 & Family
Oxy
Contribution
Maximum
Employee
Contribution
Maximum
Combined
Contribution
$500
$1,000
$750
$1,500
$1,250
$2,500
None
None
$2,650
$5,250
$2,650
$5,250
• Employee contributions to an HSA are optional.
• Oxy pays the basic administrative fee while you are an
active employee and enrolled in an Oxy HealthFund; you
pay when you disenroll, terminate or retire.
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Oxy Contributions
• Applies to HealthFund Plus option.
– Beginning in 2007, Oxy will make prorated contributions
twice each month
– You own the funds once deposited.
• No Oxy contributions to HealthFund Saver option,
but significantly lower employee contributions for
medical coverage.
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Employee Contributions: Pretax
• Payroll deduction made before federal and state
taxes (in most states) are taken from paycheck.
• Some states in which Oxy operates do not allow
tax-free treatment of HSAs: Alabama, California,
New Jersey, and Pennsylvania.
• Maximum monthly contribution via payroll
deduction is 1/12 of your annual limit.
• Your contributions will be credited in your HSA
twice per month.
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Employee Contributions: After-Tax
• Send directly to Aetna via check or electronic
funds transfer (EFT) from your bank account.
• “Above-the-line” deduction on tax return:
– Reduces your taxable income by the amount of your
after-tax contribution.
– Do not have to itemize to claim deduction.
• Contribute up to April 15 of the following year.
• Your responsibility not to exceed maximum
contribution limit.
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Employee Contributions: Catch-Up
• Catch-up contributions for age 55+.
• Send directly to Aetna via check or electronic funds
transfer (EFT) from your bank account.
• Both employee & spouse may contribute.
– Spouse must also be 55+ and covered under HDHP.
– Separate account and application for spouse; separate fees also
apply and will be deducted from account.
• Up to $800 per person in 2007; eventually $1,000 by 2009.
• Separate from catch-up contributions under Oxy’s Personal
Savings Account (the PSA).
• In addition to annual contribution limits shown earlier.
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HSA Specifics
• Unlike health care FSA:
– No “use it or lose it” rule; funds roll over each year.
– You cannot draw money that is not in the account. It’s
like a bank account.
• Tax free when spent on “qualified expenses.”
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Sample “Qualified Expenses” under HSA
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Medical deductibles and coinsurance
Diagnostic services
Dental and orthodontia
Routine physicals
LASIK surgery, contact lenses and eyeglasses
Non-covered prescriptions such as birth control pills, drugs
for sexual dysfunction, plus most over-the-counter drugs
Hearing aids
Medicare and Medicare Advantage premiums
COBRA premiums
Qualified long-term care premiums
Certain retiree medical premiums/contributions
See IRS Publication 502 for details
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Items in black may be reimbursed from
Regular FSA or HSA. Items in red may
only be reimbursed from HSA.
Accessing Your HSA Funds
• Use Aetna HSA debit card or Aetna-issued checks at
pharmacy, provider’s office or ATM to access HSA funds.
– No fee to use debit card at provider’s office or pharmacy. Fee for
use at ATM.
– HSA checks available upon request. $10 for book of 25.
• Process:
– Pharmacies: You can use your VISA debit card at time of purchase.
– Physician services:
• Submit medical claim for network discounts and credit toward
deductible.
• Generally, network providers file medical claims on your behalf
and will not require payment in advance.
• Pay doctor’s bill after claim has been processed.
– No claim forms to obtain reimbursement from HSA.
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Accessing Your HSA Funds (cont.)
• You must have funds in your account to obtain
reimbursement.
• Keep all your receipts and documentation in case
they are requested by the IRS.
• Remember, you don’t have to use your HSA funds
for current expenses.
• Details are in your Aetna Welcome Kit.
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Tax Advantages
• Contributions tax free.
• Investment earnings tax free.
• Withdrawals tax free if used for qualified
expenses.
Notes:
• If HSA funds are used for other than qualified medical expenses, the expenditure will be taxed
and, for individuals who are not disabled or not over age 65, subject to a 10% penalty tax.
• Some states in which Oxy operates do not allow tax-free treatment of HSAs. (See slide 18.)
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Investment Options
• If account balance < $2,000:
– Interest-bearing, FDIC-insured account at JPMorgan Chase Bank.
– Cash account earning 4.11% as of September 2006.
• If account balance > $2,000:
– Access to 8 JPMorgan mutual fund options:
• 3 Asset Allocation funds
• 2 Fixed Income funds
• 2 US Equity funds
• 1 International Equity fund
– $2.50/month investment fee applies if you invest in mutual funds.
– Mutual funds are not FDIC-insured and expose investors to the
risk of loss of principal, but provide the opportunity to earn higher
returns than might be available in the HSA cash account.
– More information is made available when your balance hits $2,000.
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HSA Fees
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Why Would I Enroll?
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Employee Example
Annual Salary
Coverage Level
Claims
Preventive
Non-Preventive
OOP Max
Deductible
$75,000
Employee + 1
$1,800
$300
$1,500
$5,250
Basic POS
$600
HealthFund Plus
$2,500
HealthFund Saver
$5,250
Claims minus Preventive Covered at 100%
Claims up to Deductible
Add'l Claims above Deductible
Coinsurance (20%)
$1,800
$600
$1,200
$240
$1,500
$1,500
$0
$0
$1,500
$1,500
$0
$0
Claims Expense
+ Medical Plan Contributions
- HSA Seed
$840
$1,680
$0
$1,500
$1,200
$1,000
$1,500
$240
$0
Employee Spend
$2,520
$1,700
$1,740
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Sample Employee
Oxy Salary = $40k, Family Coverage
Claims shown on the bottom axis, employee’s expenses
(including medical contributions) on the side. Lines show
employee expenses at different claims levels. This graph
shows that:
 Below ~$3k in claims, this family has the lowest out-ofpocket expenses in the HealthFund Saver plan.
 Above ~$3k in claims, this family has the lowest out-ofpocket expenses in the HealthFund Plus plan.
Family
Use the Plan Cost Estimator to choose the right plan for you.
$6,000
EE Spend
$5,000
$4,000
Basic POS
$3,000
HealthFund Plus
HealthFund Saver
$2,000
$1,000
$0
$0
$300
$500
$1,000
$2,000
$3,000
$5,000 $10,000 $15,000 $20,000
Annual Allowed Claims
EE Spend = Oxy medical contributions + coinsurance/deductible – HSA seed
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Sample Employee
Oxy Salary = $75k, Family Coverage
Claims shown on the bottom axis, employee’s expenses
(including medical contributions) on the side. Lines show
employee expenses at different claims levels. This graph
shows that:
 Below ~$3k in claims, this family has the lowest out-ofpocket expenses in the HealthFund Saver plan.
 Above ~$3k in claims, this family has the lowest out-ofpocket expenses in the HealthFund Plus plan.
Family
Use the Plan Cost Estimator to choose the right plan for you.
$7,000
$6,000
EE Spend
$5,000
Basic POS
$4,000
HealthFund Plus
$3,000
HealthFund Saver
$2,000
$1,000
$0
$0
$300
$500
$1,000
$2,000
$3,000
$5,000 $10,000 $15,000 $20,000
Annual Allowed Claims
EE Spend = Oxy medical contributions + coinsurance/deductible – HSA seed
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HSA Pros/Cons
PROS
CONS
• Tax advantages and interest/
investment earnings.
• No “use it or lose it” rule.
• Portable.
• Most preventive services
covered at 100%.
• Unlike IRAs, no income limits.
• Additional complexity.
• Higher deductible.
• Limited purpose FSA
(discussed on slide 34).
• Risk of principal loss in optional
mutual fund investments.
• Employees have more
ownership/accountability.
• Incentive to constrain
unnecessary utilization.
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What Else Do I Need to Know?
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“Limited Purpose” FSA
• If you enroll in an HSA and a health care FSA, the FSA
must be a “Limited Purpose” FSA
• Before you meet the combined medical/drug deductible,
the only things you may reimburse from your Limited
Purpose FSA are expenses for:
– Dental
– Vision
– Certain preventive care drugs and services
• After meeting the deductible, you may use your Limited
Purpose FSA for all qualified health care expenses.
• “Use it or lose it” rule still applies.
• Consider maximizing contribution to HSA before
contributing to Limited Purpose FSA.
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Who Can Enroll?
• To enroll in an HSA, you must:
– Be covered by a High Deductible Health Plan (HDHP), as
defined by IRS. (Both of Oxy’s HealthFund plans meet the
requirements.)
– Not be covered by another health plan (e.g., your
spouse’s medical plan) that is not a high deductible health
plan and/or FSA plan.
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Spouses with Medical/FSA Coverage
If your spouse has a:
Allowable Participation Under Oxy’s HealthFunds/HSAs
Non-HDHP Medical
Plan (including
Medicare)

Regular Flexible
Spending Account (FSA)
for Health Care
You and your eligible dependents may enroll in an Oxy HealthFund plan but not in
a Health Savings Account

If you are covered under your spouse’s medical plan, you and your eligible
dependents may enroll in an Oxy HealthFund plan but not in a Health Savings
Account.
If you are not covered under your spouse’s medical plan, you and your eligible
dependents may enroll in an Oxy HealthFund plan and in a Health Savings
Account. Your HSA contribution limit is based on your coverage level
deductible under your HealthFund plan.
Note: This chart is not intended to be all-inclusive or to address unique circumstances. Seek guidance from a qualified
tax advisor as needed.
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Can I Take the HDHP Without the HSA?
• You may enroll in an Oxy HealthFund plan and
decide:
– Not to make a contribution to an HSA.
– To make a contribution to an HSA account with another
insurer or financial institution.
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What Else?
• Prescription drug issues:
– Refill information will not pass from Medco to Aetna.
– Get new prescriptions to set up mail order with Aetna.
• If you terminate, retire, or disenroll from an Oxy
HealthFund plan, you keep the HSA but you must
pay the basic account administrative fee.
• Aetna/JPMorgan Chase will send the necessary
tax forms showing your prior year’s contributions &
withdrawals.
• Aetna will send a Welcome Kit with more
information to enrollees.
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The Small Print
The company expects and intends to continue its benefit plans but does not guarantee
any specific level of benefits or the continuation of any benefits during any periods of
active employment, inactive employment, disability or retirement. Benefits are provided
solely at the company's discretion and do not create a contract of employment.
The company reserves the right to modify, suspend or terminate any of its plans at any
time. This information is applicable to eligible nonrepresented employees. Applicability
to represented employees is governed by local collective bargaining agreements.
Subject to this and future agreements, the company reserves the right to change, amend
or terminate any benefit plan at any time.
The information provided in this document is NOT tax advice. While the
information is believed to be accurate as of the print date, it is subject to
change. Consult a qualified tax expert for advice on determining eligibility
for any tax benefit mentioned herein.
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