# Employee Health Insurance Overview

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```					ABC Company

An affordable health
solution for you and

Presented by
The biggest challenge facing
employers
Annual Increase of Trend, Inflation and Workers' Earnings
1996 - 2003
18%
16%                                                                        14.9% 15.0% 15.4%
13.2%
14%
10.3%
12%
9.7% 10.4% 10.8%
10%
8%
6%
4%              3.2%                                                                               3.1%
2%              3.0%
2.2%
0%
1996 1997 1998 1999 2000 2001 2002 2003
Medical Trend                      Overall Inflation                 Workers’ Earnings

Source: Kaiser Foundation Survey of Employer Sponsored Benefits, 2003; Buck Consultants Medical Trend Reports 1996-2003
PEPY Medical, Rx and Vision Cost
\$12,000
\$11,000
\$10,519
\$10,000
\$9,107
\$9,000
\$7,885
\$8,000
\$6,827
\$7,000
\$5,911
\$6,000
\$5,000
2004      2005      2006        2007       2008       2009

15.5% Trend (current)
Base year 2004 with base cost of \$5,118 per employee per year (2003-2004)
How much do Americans spend
annually on healthcare services?
Annual Medical Care Expenses Percentage of U.S. Population

\$0                                            33%
\$1 - \$500                                     40%
\$501 - \$1,000                                  9%
\$1,001 - \$2,000                                7%
\$2,001 - \$5,000                                6%
\$5,001 - \$10,000                               3%
\$10,001 - \$25,000                              3%
\$25,001 - \$50,000                             .5%
\$50,001 - \$100,000                            .2%
\$100,001 and up                              .05%
Source: American Health Value, 2004
If 82% of Americans spend less than \$1,000
a year on healthcare, why are we paying
5 to 10x that amount for healthcare
insurance?
“The definition of
insanity is doing the
same thing over and
over again and
expecting different
results.”

–Albert Einstein
Health Savings Accounts
Introducing a new way to finance
Let’s take a look at typical premium
savings
Current Plan                      Proposed HDHP & HSA Plan
Individual out-of-pocket:                 Individual out-of-pocket:
\$1500                                  \$2,600 ded.
(\$500 ded. & \$1,000 OOP max)
Family out-of-pocket:
Family out-of-pocket:                          \$5,150 ded.
\$3,500
(\$1,500 ded. & \$2,000 OOP max)
90/70 Co-insurance                          100% coinsurance
Dr. visit co-pay                        Dr. visit applies to ded.
Rx co-pays                              Rx applies to ded.

Does this mean employee out-of-pockets will be greater with an HSA plan?
First, take a look at premium savings
by making the switch

\$9,571.15 Monthly            \$4,781.92 Monthly
\$114,853.80 Annual            \$57,383.04 Annual

That’s almost a 50% premium savings!
Then redistribute some of the savings

Total HSA contributions:                               \$41,800

Net Annual Premium Savings:          Tax Deductible!    \$15,670

What is the employee’s out-of-pocket exposure now?
Compare the out-of-pocket exposure
…it is less!
Current Plan                    Proposed HDHP & HSA Plan

Individuals:           \$1,500         Individuals:               \$2,600
Less HSA contribution     -\$1,200
Net OOP:                  \$1,400

Families               \$3,500         Families:                  \$5,650
Less HSA contribution     -\$2,400
Net OOP:                  \$3,250
Don’t forget what we learned about annual healthcare expenditures…
82% of Americans spend less than
\$1,000 a year on healthcare expenses
Annual Medical Care Expenses Percentage of U.S. Population

\$0                                            33%
\$1 - \$500                                     40%
\$501 - \$1,000                                  9%
\$1,001 - \$2,000                                7%
\$2,001 - \$5,000                                6%
\$5,001 - \$10,000                               3%
\$10,001 - \$25,000                              3%
\$25,001 - \$50,000                             .5%
\$50,001 - \$100,000                            .2%
\$100,001 and up                              .05%
Source: American Health Value, 2004
What is a Health Savings Account
(HSA)?
A Health Savings Account
(HSA) is a special bank
account that is used to pay
for out-of-pocket healthcare
expenses with pre-tax
money
What is a Health Savings Account
(HSA)?
The HSA is owned by the
employee
The individual has full
authority and control over
his/ her account
There are 2 components of an HSA
The qualified high-
HSA monies can be
deductible health
used to pay for out-of-
(QHDHP) plan provides
pocket healthcare
the insurance
expenses
protection
Examples of eligible Section 213d
expenses
Dentures
Alcoholism Treatment         Dermatologist                   Ophthalmologist
Ambulance            Drugs (Prescription                  Oral Surgery
Anesthetist         & Non-Prescription)                    Physician
Blood Tests              Eyeglasses                   Preventative Care
Blood Transfusions             Hearing                        Psychiatrist
Chiropractor             Aids/Batteries                   Psychologist
Contact Lenses            Immunizations                 Tobacco Cessation
Dental Treatment         Insulin Treatments                    Vaccines
Dental X-rays          Long Term Care                     Vasectomy

See IRS Publication 502 for complete list of eligible expenses. These
are the same expenses that qualify for FSA reimbursement.
Examples of ineligible Section 213d
expenses
Athletic club membership              Funeral, cremation or burial
Boarding school fees                            expenses
Bottled water                   Premiums for life insurance,
Cosmetic surgery &                income protection, disability,
procedures (voluntary)                loss of limbs, sight or similar
Cosmetics, hygiene products                         benefits
& similar items                   Travel for general health
Maternity clothes                          improvement

See IRS Publication 502 for complete list of eligible expenses. These
are the same expenses that qualify for FSA reimbursement.
QUESTIONS ?

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