Medical inflation has outpaced standard inflation and other costs, averaging about 10-12% per year. Due to a decrease in legislative funding for benefits, more of these costs have had to be absorbed by the University and employees through increased premiums. This has prevented campus from being able to use available funds for salaries or other campus initiatives.
Research indicates that employers with HDHP + HSA plans tend to dramatically reduce the 10-12% average annual medical inflation since employees will utilize the medical insurance only when necessary since the initial costs are very high (prior to meeting the plan deductible). Employees will also ask more questions when they do utilize, asking doctors and medical personnel about costs of procedures, alternative solutions, etc, making the plans more consumer-driven. With the HSA, employees are incentivized to have healthier habits due to the amount of savings they can accumulate. This money can be used in the future when medical, dental, or vision expenses arise.
Both accounts offer a tax shelter to the employee to save for medical expenses and use similar types of expenses that are eligible for reimbursement. An FSA has a lower annual contribution limit ($2,500 starting with FY13) and the funds invested must be used on qualified medical expenses during the current plan year or the funds are forfeited. The account is linked to the employer so if the employee leaves employment mid-year, the FSA contributions stop and reimbursable expenses have to have occurred during the employment period to qualify for reimbursement. The contributions are set up during open enrollment by the employee and then cannot be altered during the plan year unless there is a life change, such as marriage, divorce, or the birth of a child.
With an HSA, contribution limits are higher ($3,100 for single coverage; $6,250 for family coverage) and unused funds during the year can be rolled over to future plan years without a penalty. The funds are also portable so the employee can take them with them if they leave employment at SUU. Employee contributions can be changed any time during the year as the employee sees fit with no life changes being required.
SUU’s open enrollment for Fiscal Year 2012-2013 is scheduled to run from April 16, 2012 – June 8, 2012. Employees will receive information in mid-April relating to forms, types of benefits eligible for changes, costs associated, etc.
Yes, an employee can chose between the medical options during open enrollment for the next fiscal year. It should be noted, though, that the one-time $500 HSA contribution incentive is only good for those who switch during FY13 and any employee who switches from the HDHP back to the traditional plan during open enrollment will no longer be able to contribute to their HSA and must pay whatever employee premium share is attached to the traditional plan for the applicable plan year.
Switching to a High Deductible Health Plan will not impact your current dental nor your current vision benefits. The premiums that you are currently paying for dental and vision will remain the same for Fiscal year 2013. You can use your HSA money saved to pay for dental + vision expenses but the coverage levels, benefits, premiums, etc, will remain unchanged.
Yes. Because both plan options (traditional and HDHP) will use EMI Health as their insurance carrier with the same preferred provider network, both plans will allow the employee to utilize the EMI Health discounts in place for the various types of procedures, prescriptions, etc.
Health Savings Accounts can not go into the negative, but there are options. The employee could 1) pay the entire expense out of pocket now and once the HSA has accumulated enough money to pay for the expense, the employee could make an HSA withdrawal, reimbursing themselves for the expense or 2) withdraw all available HSA funds at the time to help pay for the expense, then pay the balance out of pocket. Over time, the HSA will have more contributions flow into it (and the employee could chose to set up a voluntary payroll deduction to increase the amount going into the HSA). Since the expense occurred while the employee was on a HDHP, once they have the funds in their HSA, they would make a second withdrawal, essentially reimbursing himself or herself for the medical expense.
The High Deductible Health Plan SUU has selected has a similar co-pay/co-insurance to what the traditional plan is. Once the HDHP deductible is met, office visits will go to a co-pay system ($30 primary/$40 secondary), as will prescriptions ($10/$40/50%). Other procedures will be covered at 80%, leaving the employee to cover 20%.
An employee will stay in the co-insurance range until their out-of-pocket maximum is met at which point the insurance pays 100%.
There are several ways to contribute to a Health Savings Account. The most common (and adventitious) method is through employer payroll deduction, where SUU can make the contributions pre-tax. Authorization forms for Health Savings Account contributions will be available in the Human Resources office and online after July 1.
Similar to Flexible Spending Accounts, the University will have a vendor that will administer Health Savings Accounts for our employees. The Insurance Committee is currently reviewing proposals from two companies that work exclusively with EMI Health to administer HSAs for their clients. Employees will receive additional information on the vendor and the different types of HSA investment/accounts types in their open enrollment materials.
The presentation talks about a one-time $500 employer contribution incentive into my HSA if I switch this coming fiscal year. How will that contribution work with the amount I have to contribute each pay period to my HSA?
Each pay period, the University will contribute the equivalent of your current 10% premium to your HSA. The $500 incentive will be paid in one installment of $500 and will be applied to the July 15th paycheck.
Employees can use their HSA to pay for COBRA premiums (in the event they leave SUU and want to continue insurance coverage in this method), Long Term Care insurance premiums, or Medicare Premiums for Part B, Part D, or Advantage Plans (Part C). Supplements to Medicare (through AARP for example) can not be paid through your HSA.
An employee can be covered by both a high deductible health plan and Medicare. However, once an employee signs up for Medicare, they can no longer contribute to a Health Savings Account. They can use any existing HSA funds to pay for Medicare-related items (outside of premiums), but can not contribute further to an HSA.
An employee may be covered by both a high deductible health plan and a traditional plan, but the employee with the HDHP would be ineligible for Health Saving Account contributions. Assuming you (as an SUU employee) wants to take advantage of the HSA benefit, your spouse will need to drop you from their traditional plan so you will only be covered by the high deductible plan, therefore being eligible for the HSA. Your spouse can remain on both plans (since eligibility for HSA contributions is based on the employee’s plan) as can the dependent children. You can also use your HSA funds to cover any expenses your spouse’s plan would not cover.
An employee (plus spouse and children) may be covered by two high deductible health plans, and both can contribute to HSAs with their employer. The one caveat: both you (the SUU employee) and your spouse will be limited to the family coverage annual contribution level (currently $6,250) for your HSAs – so the most both of you (and/or your employers) can contribute combined for 2012 calendar year is $6,250.
Please call the HR office at 435-586-7754 for a list of available times of other presentations. An online version of the presentation will also be available mid-April for those who missed a campus presentation or work off-campus.
Please complete the below questionnaire and submit it. A member from Human Resources will review your question and post it to this FAQ page for their use and the use of other employees.