Motions passed by JHCC, HSA to be added
by Rachel Voris
In October the Joint Health Care Committee (JHCC) passed nine motions that could change the way health care plans function at the university. Donald Smith, the chief human resources officer, endorsed those motions on November 26. Smith said that while he endorsed the nine motions, work is necessary to transform the intent of the motions into UA Choice Plan policy and procedures. A detailed report including interviews with Erika Van Flein and Michelle Pope will be sent to all employees on Dec. 12 with information on implementation of each motion and how those motions impact health care.
One of the motions passed by the JHCC that could greatly benefit UA employees is the addition of a health savings account (HSA) with a qualifying high deductible health plan. This article will describe the health savings account, as well information on a qualifying high deductible health plan, as a way to better understand the health savings account.
The Importance of a High Deductible Plan
Since the health savings account has to be used in conjunction with a qualifying high deductible health plan (HDHP), it is important to understand the details and advantages of the high deductible plan, including re-working the way that the employee, or consumer, handles health care. When enrolled in the high deductible plan, employees have a lower payroll deduction but a higher deductible to reach before the university begins to contribute 83 percent to health care costs. Because of this higher deductible, people may think twice before they go to see a doctor for medical care, Director of Benefits at the Statewide Benefits Office Erika Van Flein explained.
“I don’t think people put off necessary care, but they may put off things that could resolve themselves like colds. It is the whole point of the high deductible and consumer driven health plans: make consumers think twice before using care,” Van Flein said.
The overall goal of the high deductible health plan is for the consumer to have a vested interest in their health care, whereas before rising costs, there was little incentive to be concerned about cost. Plans were relatively cheap. Copays and deductibles were low. The high deductible plan ideally helps consumers be more aware of health care costs, which will hopefully help control the overall cost of health care currently rising by eight to 10 percent annually.
What is a qualifying high deductible health plan?
The university’s current high deductible health plan is not qualified for a health savings account because the pharmacy plan is not subject to the plan’s deductibles and coinsurance. The current copay system ($5 for generic, $25 for preferred brand drugs and $50 for non-preferred brand drugs) will have to be changed so pharmacy purchases will be subject to the same deductible as doctor visits.
The qualifying HDHP will also have changes to deductibles. Whenever more than one person is on a plan, whether a spouse, children, or spouse and children, an aggregated deductible must be met. There is no individual deductible in those situations. This means that the full family deductible must be met before the university co-pay goes into effect.
Other restrictions on the qualifying HDHP with the HSA are that an employee can’t have any other coverage, such as a spouse’s plan, retiree coverage, Medicare, or TriCare. This includes a regular Flexible Spending Account (FSA) for the employee or spouse because the FSA is said to provide “first dollar coverage” and is not allowed with an HSA.
So why would anyone want one of these plans? The biggest reason is that these health savings accounts are owned by the employee. This means they’re “portable,” and the account can be taken with the individual if you leave the university. In addition, the unused amount rolls over year to year and has the potential to grow into an account you can use for qualifying medical expenses in retirement. The total amount you can deposit into an HSA is larger than an FSA ($3,250 for an individual and $6,450 for a family in 2013, verses $2,500 for the FSA regardless of family size), and there’s even a catch-up allowance of an additional $1,000 if you’re age 55 or older. The contribution limits can be adjusted annually for inflation.
A request for proposal is currently underway for a health savings account (HSA) administrator. The outcome of the current proposal review for health plan and pharmacy administration will also affect when and how the HSA is implemented because Premera does not currently coordinate claims information with CVS Caremark.
According to a survey completed by America’s Health Insurance Plans, an industry trade group, more than 10 million people are enrolled in high-deductible health plans linked to health savings accounts at the time of the 2010 census.
More specific information about the health savings account and the proposed high deductible health plan will be published in the December benefits update.