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Employee Health Insurance Overview

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Employee Health Insurance Overview Powered By Docstoc
					ABC Company

An affordable health
 solution for you and
     your employees

         Presented by
         <Your Name>
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
Your future medical premium outlook
                        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)
   Costs includes dependent premium
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
        your employees’ healthcare
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
  Current Plan Premiums        Proposed Plan Premiums

   $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
from premiums into HSA accounts

 Premium savings                                         57,470
 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
                                 Premiums



               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.
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