employers

Document Sample
employers Powered By Docstoc
					Considering a
   Health Savings Account?
Basic HSA Plan Concept

                       Part 1:
              High Deductible Health Plan                        Intended to
                  For 2006         Single      Family
                                                                cover serious
                                                              illness or injury
              Minimum
              Deductible*          $1,050      $2,100
  HSA
              Max. Out of
 Concept      Pocket**             $5,250      $10,500



                         Part 2:
                                                              Pays for small
                 Health Savings Account                       expenses until
                   For 2006        Single      Family
                                                               deductible is
              Max Contribution       Up to deductible             met.
                                  $2,700       $5,450

           Made by: Employer, Employee, and/or other party.




                                                                                  2
Why choose a high deductible
health plan?

o Premium savings
   • According to employers surveyed by HSA Bank, over 59%
     reported saving an average of 10 – 39%
o Ability to offer health insurance to employees
   • 27% of small group market did not previously offer insurance
     coverage to employees (ehealthinsurance)
o Put employees in control of health care spending
o Curb rising health care costs through lower utilization
o Reduce future renewal costs
   • Premium increases in HSA plans averaged under 3% while HMO,
     PPO and Indemnity plans hovered over 7%. (The Maine View)


                                                                    3
HSAs, HRAs, FSAs


                      HSA            HRA             FSA
 Account
                    Employee        Employer       Employee
 owner
                    Employee,                      Employee,
 Funding                            Employer
                  Employer, Other               Possible Employer
 Rollover year-                     Generally
                       Yes                             No
 to-year                              No
                                    Generally
 Portable              Yes                             No
                                      No



                                                                    4
Designing your HSA
Advantages of an HSA

To an Employer
o Employee owned funds promote increased
  involvement in health care decisions
   • Spend health care dollars more wisely
   • Encourages employees to „shop around‟ based on quality
     of care and price
o Provides employers and employees with tax
  benefits
o HSAs allow “matching” contribution options by
  employers and employees

                                                              6
Advantages of an HSA

To an Employee
o Increased consumer choice
o Funds rollover year to year, eliminating the “use it”
  or “lose it” philosophy
o Tax benefits on the contributions, earnings, and
  distributions
   • Increases take home pay
o Long-term investment opportunity
o Portability


                                                          7
How HSAs/HRAs/FSAs
can work together

o HSA
  • Limited Purpose FSA
    o Pay for dental and vision expenses without having to use
      HSA funds
    o FSA Extension
        • Provides 2.5 months beyond the end of the plan year to use FSA
          funds
  • Post Deductible HRA




                                                                           8
Plan Design Matters

o HSAs are relatively new and employees may not
  fully understand the benefits that an HSA
  provides
o Creating an attractive HSA plan design
  encourages employees to select the HSA option
  • Employer saves on health care costs




                                                  9
Plan Design: Factors to Consider

o Health plan options
  • How do you determine an employee‟s premium
    portion?
     o Percent of premium v. defined contribution
     o Will employees receive incentives to choose a lower cost
       option?
     o Example: Lower or no premiums/contributions to HSA
  • What deductible options are offered?
     o Consider two HSA deductible options to ease transition




                                                                  10
Plan Design: Factors to Consider

o Account options
  • Will you make contributions to the account?
  • Will you help employees establish the account?
    o Will you pay for setup or ongoing fees?
  • Will you facilitate payroll contributions?
  • Will you contribute a lump sum or ongoing
    amounts to employee HSAs?
  • Will you pay premiums or fund the deductible?



                                                     11
Plan Design Stats

o Surveyed nearly 200 agents and employers
  regarding plan design
   • More than 83% of employers contribute to their
     employees‟ HSAs
     o Of those employers, 78% contribute at least 20% of
       the deductible in the 1st year
     o Of those employers, 71% contribute 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


                                                            12
Communication Process
Communication/Education

 o Financial gain
   • Immediate: Communication/education leads to
     employee acceptance, which will decrease premium
     costs
   • Long-term: Employees are in control of health care
     spending and thus decrease utilization
      o Consumers paying an average of $348 less this year for
        HSA-eligible health insurance plans compared to 2004
       (ehealthinsurance – July 27,2005)

 o Overcoming the stigma of an HDHP
   • Communication/education enables employees to see
     beyond a higher deductible and see the benefits an HSA
     plan has to offer




                                                                 14
Communication Tips

 o Begin communication early.
 o Combine multiple forms of communication:
   print, web, multi-media, in-person.
 o Emphasize the benefits of choice and
   empowerment.
 o Compare current plan design with HSA plan
   design.
 o Illustrate the tax benefits and long term
   savings potential.
 o Involve spouses in the communication process.

                                                   15
Why Service & Support

 o New concept
   • Questions will arise beyond the open enrollment
     period as employees adjust to having and utilizing
     an HSA
 o Attempt to change spending
   • HSAs require employees to look at their healthcare
     in a new way, putting them in control of their
     healthcare dollars
   • Employees need to:
      o Ask about price
      o Ask if procedures are necessary
      o Discuss if and what alternatives exist

                                                          16
Are HSAs changing spending behavior?

Increased Consumerism in Healthcare
(Research results from McKinsey & Co.)
   Consumer-directed health plan consumers were
   more value conscious and attentive to wellness &
   prevention
        o 50% more likely to ask about costs
        o 3 times more likely to choose less expensive option
        o 25% more likely to engage in healthy behaviors
        o 30% more likely to get an annual exam
        o 20% more likely to comply with treatment regimens




                                                                17
Are HSAs changing spending behavior?

 Account Trends
   (Based on HSA Bank’s customer base of over 130,000 accounts)
 • 95.9% of all open accounts rolled over funds from
   2005 to 2006
 • On average, accounts rolled over $1582 into 2006
 • Average contribution per month = $156.78
 • Average distribution per month = $98.61
 • Net average per month = $58.17 or 38% saved
 • Nearly 32% save all contributed HSA funds
 • Nearly 51% save at least half of the contributed HSA
   funds


                                                                  18
Tax Benefits
Tax treatment of HSAs for
employees/accountholders

o Pre-tax
   • Contributions are deducted from accountholder‟s federal
     taxable income
o Earnings
   • HSAs grow in the same tax-deferred manner as IRAs
o Distributions
   • Withdrawals can be made for medical expenses tax-free.
     After age 65, funds may be withdrawn for any reason
     without penalty and medical expenses remain tax-free




                                                               20
Tax Savings Example

 Contribution                    $3,000 per year for 25 yrs
 Annual medical expenses                     $500 per year
 Tax Bracket                                28% (Federal)
                                              5% (State)
 Average interest rate                                 3%
            TAX SAVINGS ON CONTRIBUTIONS =
                         $24,750.00
           TAX SAVINGS ON DEFERRED GROWTH =
                         $9,453.89
       ACCOUNT BALANCE AT THE END OF 25 YEARS =
                         $91,148.16


                                                              21
What is the tax treatment of employer
contributions to an individual’s HSA?

 o Treated as employer-provided coverage for
   medical expenses under an accident or health
   plan
 o Excludable from gross income
 o Not subject to withholding for income tax
 o Not subject to other employment taxes
   • (i.e., Social Security and Medicare taxes (FICA),
     federal unemployment tax (FUTA), or the Railroad
     Retirement Tax Act)


                                                         22
How to Get Started
Our Capabilities

 o Several enrollment and contribution options
   offered to the employer
 o Employer Login Area
 o Initial and ongoing service and support,
   including training and educational materials
 o Innovative and useful services available for
   employers and employees




                                                  24
Electronic Enrollment
Originated electronically, e-sign compliant
             Electronic        Authorizes
                                                         Electronic
                               HDHP and
   Member    Enrollment       HSA through
                                                         Data files
                Tool                                      created
                                 e-sign


                                                                              HSA
                      Health plan                                          Enrollment
                      enrollment                                              Data
                         data                                                (PGP
                                                                           Encrypted)



                      Health Plan                                      HSA Bank FTP
                   processes HDHP                                         Server
                      enrollment

                                                                      Account Opening
                                       Verification of HDHP status
                                                                     Procedures Initiated



                                                                                            25
Electronic Enrollment
Originated from Paper
                         Complete
                                                   Electronic
                          and Sign
         Member                                    Data files
                           Paper                    created
                         Application


                                                                 Can a tif image be
              HSA Enrollment Data      Tif image
                                                    Yes         created of the signed
               (PGP Encrypted)          of app                      application?




              HSA Bank FTP                                             No

                 Server
                                                            Paper Applications



                  HSA Bank

             Account Opening
            Procedures Initiated


                                                                                        26
Electronic Enrollment
Date file to pre-populate application
      Health Plan   Electronic data / Census file
          or          created based on HDHP
       Employer              enrollment


                                HSA
                             Enrollment
                                Data
                               (PGP
                             Encrypted)


                         HSA Bank FTP               HSA Bank pre-
                                                                       Member
                            Server                  populates app

                                                                      Signs and
                                                                    Returns to HSA
                                                                         Bank


                                                                    Account Opens




                                                                                     27
HSA Bank Group
Online Enrollment
 Part 1: Employer Set-up
                                                       Employee



                                    Payment of
                                      Fees
                                                       Employer
               HSA Bank                                                                          Custom Link
  Employer    Website (Group                                                                    for Employees
                 set-up)
                                                    Immediate
                                     Enrollment                                    Upload
                                        type                       Employer     EMPLOYER
                                                       Batch        Login        Census File
                                                                               (SSN required)
                                                   By Approval


 Part 2: Employee Enrollment

                               Personal Info
                Custom                            Processed
                                                                              Electronic and/
               Enrollment                         based on        Account
  Employee     Website for
                               Acct. Options
                                                  enrollment      Opens
                                                                                 or Paper
                                                                               Welcome Kit
               Employees                             type
                                  Esign




                                                                                                                28
HSA Bank Individual
Online Enrollment




                                    Personal Information

               HSA Bank’s Online                                            Electronic
  Individual                          Account Options      Account Opens
               Enrollment Website                                          Welcome Kit

                                           Esign




                                                                                         29
Paper Enrollment


 Step 1: Complete the proper HSA Bank forms

 Step 2: Mail the forms to HSA Bank with the initial contribution, set-up
 and check fee (if applicable)


 Step 3: Accounts open in 1-2 business days of receipt or the effective
 date of the plan, whichever is later


 Step 4: Within 2 weeks, the accountholder will receive a welcome kit,
 debit cards (if applicable) and checks (if applicable)




                                                                            30
How are Fees collected

If Employers are paying:
o The employer can pay fees upfront for the
  remainder of calendar or plan year
o Employer can be invoiced
o Per employee pricing available on a
  monthly, quarterly or annual basis

If Employees/Accountholder are paying:
o Fees will be deducted from the account

                                              31
Employer Contributions

o   Online Contributions
      1. New in-house system in Employer Login area
      2. Provided with a list of all employees tied to Federal ID #
      3. Column after each name for ER, EE, EX

o   ACH Direct
      1. Employer sends ACH direct to employee‟s accounts
      2. Utilize discretionary data field in ACH file to code contribution sources

o   Company ACH or Wire Transfer + File
      1. Company send one ACH file or Wire Transfer
      2. The transaction file dictates how the money is distributed to each account

o   Submit a Check
      With Contribution Form (or similar format)




                                                                                      32
Employee Contributions

o Online Contributions
  • Recurring or one-time, as needed
o Check
  • With Contribution Form tear-off
  • With Deposit Ticket
o Automatic Transfer
  • Bank originated ACH
     o Recurring



                                       33
Employer Comparable Contributions

                           Single /        Family /           Single /        Family /
                          Full-Time        Full-Time         Part-time        Part-time
    Deductible              $1,000            $2,000           $1,000           $2,000
    Same Dollar              $100              $100              $50              $50
    % of                    50% or           50% or            25% or           25% or
    Deductible               $500            $1,000             $250             $500


  Comparability testing period based on a calendar year and determined on a
  monthly basis. Testing based on contributions to employees covered under
  the employers HDHP.
  Note: If the employer contributes to an employees HSA for an employee that is not covered under
  the employers plan, the employer must make comparable contributions to all employees with
  HDHPs




                                                                                                    34
Employers Comparable
Contributions Exceptions

o Comparability rules do not apply to
  employer contributions made through a Section
  125 cafeteria Plan.
o Employers may make matching
  contributions through a Section 125
  Cafeteria Plan (Non-discrimination rules apply)




                                                    35
Coordinating HSA Contributions

  Since both employees and employers can make contributions, it is
  important to coordinate contributions to avoid excess contributions
  and tax penalties.




         EMPLOYER                                   HSA
       CONTRIBUTIONS


                                     ≤
                                                 Contribution
                                                   Limits
                                               Up to 100% of deductible
       INDIVIDUAL /                            with maximum of $2,700
        EMPLOYEE                               for single and $5,450 for
      CONTRIBUTIONS
                                                   family coverage.




                                                                           36
Financial Options

o Interest bearing “bank” account
  • All accounts are opened as an FDIC-insured bank account with
    current annual percent yield ranging from 1.00% to 4.60%

o Investment Options
  • Default: Self-directed brokerage
  • Mutual fund selection
  • Full-service brokerage




                                                                   37
Self-Directed Brokerage

o Ameritrade Corporate Services
  • Access to stocks, bonds and over 11,000 mutual
    funds
  • Trades are made online or over the phone
  • Accountholder must contact HSA Bank to transfer
    funds from HSA to brokerage account
    o HSA Bank intends to release a transfer system to allow
      accountholders to transfer funds from their HSAs to their
      brokerage accounts online this summer



                                                                  38
Mutual Fund Selection

o Devenir Investment Advisors
  • Selection Options
    o Employer can choose to offer our standard selection of
      historically top-performing mutual funds
    o Employer can choose to offer same funds as included
      with their 401(k)
  • Trades are completed online through HSA Bank‟s
    Internet Banking system




                                                               39
Distributions

o Debit Card from Visa
   • POS with signature
      (no transaction fee)
   • ATM with PIN ($1.50 transaction fee)
   • POS with PIN ($1.50 transaction fee)
o Checks $7.95 for 50 checks
  (no transaction fee)
o Online Transfer
   • From HSA directly to external account
o Withdrawal Forms
  ($4.00 transaction fee)




                                             40
Distributions

o Current SmartCard Option
   • Creates functionality to choose between multiple
     accounts, such as HSA, FSA, and HRA, for payment




                                                        41
Distribution Design

Scenario A
                    Insurer
 Doctor              Applies
  Visit   Submit     network    Sends               Pay
          Claim     discounts    EOB               doctor




Scenario B


                   Fill                   Pay
               prescription             Pharmacy




                                                            42
Employer Login Area

o Provides employers with online access to:
   •   View and manage list of employees with HSAs
   •   Upload contribution data and census files
   •   Sign-up for updates
   •   Sign-up for group online enrollment
   •   Obtain statistical data based on your group
   •   Make online contributions to employee HSAs
   •   Create and delete administration users




                                                     43
Employer Communication & Reporting

 o Standard
   • Email confirmation of deposits
   • Customized employer guide
   • Email updates on consumer-driven health care and HSA account
     features
   • Employer Newsletter


 o Customized Reports
   • Data feeds with account stats
      (Ex.- Ave. balance, total distributions/contributions, max. dist., etc)
   • Quality assurance statistics and data
      (Ex.- Phone stats, fulfillment guarantees, etc.)




                                                                                44
Educational & Training Resources

o Comprehensive Training Options for you and your clients
   •   FLASH Animation presentation
   •   Customizable PowerPoint presentations
   •   Webinar presentations
   •   In person training seminars
o Sample Topics
   •   What can an HSA and HSA Bank offer? (Staff training)
   •   Why choose an HDHP and HSA? (Employers & Employees)
   •   How to design your plan offering (Employers)
   •   What is an HSA? (Basic and Advanced)
   •   How to use your HSA (Individual)



                                                              45
Calculation Tools

o Contribution Calculator
   • Calculates the prorated contribution limit based on the
     number of months you are effective under a health plan.
o Tax Savings Calculator
   • Calculates the tax-savings based on pre-tax
     contributions.
o Future Value Calculator
   • Calculates the future value of the HSA based on your
     annual contributions, expenses, and anticipated growth.
o Health Plan Comparison Tool
   • Compares HSA and non-HSA plans based on information
     provided by user.


                                                               46
Website

o HSA Bank has created a website to serve the
  specific needs of and provide relevant
  information to:
  •   Prospective accountholders
  •   Accountholders
  •   Employers
  •   Insurance agents




                                                47
Customization Options

 o   Application materials
 o   Brochures
 o   Debit cards
 o   Website
 o   Welcome letter
 o   Statements
 o   Custom toll-free number



                               48
Service & Support

o Dedicated Business Relations:
  Each relationship is assigned a dedicated
  coordinator to assist the relationship and
  its employer clients.
o Regional Vice President:
  Local contact to assist the relationship and
  its employer clients.
o Client Assistance Center:
  Our client assistance center provides dedicated customer service to accountholders and
  prospective accountholders.
o Spanish Language Support:
  Our client assistance center and business relations teams provide Spanish language
  support to relationships, accountholders and prospective accountholders.
o 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 the financial, insurance,
  and benefits administration industries.




                                                                                           49
Thank you for considering…




                             50

				
DOCUMENT INFO