CCAP 201 ADVANCED

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• CCAP 201 - ADVANCED
• Understanding Consumer Directed Healthcare (CDH)
  - including HDHPs and HSAs

Presented by Scott M. Stevens, RHU CDH
Specialist/Employee Benefits Consultant
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Sign of the times
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WHY ARE WE EVEN HAVING THIS DISCUSSION?
Per-Employee/Employer Health Care Costs 2001 and
2006
Source 2006 Towers Perrin health care survey
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What Is Consumer-Directed Health Care (CDH)?

• A philosophical shift from traditional managed
  care plans.
• A demand side approach to healthcare cost
  control (vs. supply side measures including
  managed care)
• A new model for health care delivery, based on
  consumers (rather than third-party payers)
  directing their own health care dollars to the
  most efficient and effective treatment options

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Components of CDH
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Common ingredients of consumer directed plans

• Make consumers aware of the true cost of their
  care
• Engage members in health care purchases
• Give members a financial stake
• Provide resources for informed decisions

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YOUR decision support tools

• www.myuhc.com/groups/cu09
• Estimate treatment costs for conditions
• Plan cost estimator

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(No Transcript)
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Adoption of CDHPs
Source Inside Consumer-Directed Care, Nov. 4,
2005
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Local companies offering consumer-directed plans
Nebraska AIDS Project
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Exactly What Are Out of Pocket Health Ins. Costs?

• Premiums (What comes out of your paycheck)
• Copays (Office visit, facility, Rx)
• Deductibles (Ind., Family, Per confinement)
• Coinsurance (20, etc.)
• Plan Penalties (Precertification, PPO, etc.)
• Our goal To reduce your out of pocket expenses!

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What is a Health Savings Account (HSA)?

• It is a tax-exempt savings account established to
  pay certain medical expenses in conjunction with
  a qualified high deductible health insurance
  plan.
• Note Federally tax qualified MSAs were made
  available through a health insurance reform law
  that became effective January 1, 1997.

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2 Components of an HSA

• A tax-deferred interest bearing or investment
  transaction account (HSA) and
• A qualified, high deductible health plan (QHDHP)

HSA
HSA
QHDHP
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Your CCAP is Comprised of

• Health Insurance Plan
• All medical care claims are filed through them
• Decision support tools

• Savings account to invest money used for
  healthcare
• Provides debit card to pay medical expenses
• Funds in excess of 1,000 swept to investment
  account
• Online bill pay

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What is a Qualified High Deductible Plan
(QHDHP)for 2009

• Individual annual deductible of at least 1,150
  and no more than 5,800 with an out of pocket
  maximum of no more than 5,800 (CU out pocket
  max. is 3,000)
• Family annual deductible of at least 2,300 and
  no more than 11,600 with an out of pocket
  maximum of no more than 11,600 (CU out of pocket
  max. is 6,000)
• No copays
• CCAP meets the definition

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HSA Contributions

• Individual contribution is limited to 3,000 in
  09
• Family contribution is limited to 5,950 in 09
• Excess contributions are subject to a 6 excise
  tax plus ordinary income tax.
• Contribution limits increase each year according
  to federal law.
• Contributions are made on a pre-tax basis if made
  through payroll otherwise they are tax
  deductible
• Contributions can me made by Employer, Employee,
  or both.
• Age 55 and older can make catch up
  contributions of an additional 1,000, for 2009
  and thereafter (Note in order for both employee
  and spouse to make a catch up contribution, the
  spouse must have their own HSA.)

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Why Contribute to Your HSA?

• The Triple Tax Benefit
• Contributions are pre-tax or tax deductible
• Interest accumulates tax free
• Distributions for qualified expenses are tax free
• NO OTHER SAVINGS PROGRAM ALLOWS THIS!

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Tax Savings Example

• Family HSA Contribution maximum 5,950 (in 09)
• A family in the 28 tax bracket reduces their
  taxes by 1,666
• If the high deductible plan started January 1st,
  this tax savings would average 139 per month
• The tax savings is enough to pay the employees
  portion of their CCAP premium!

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HSA Future Growth Projections
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HSA Distributions

• No tax or penalty on distributions used for
  qualified expenses
• Penalty of 10, plus ordinary income tax, if
  distributions used for non-qualified expenses
• Penalty goes away at age 65 and the death of the
  account holder (tax still applies)
• If distributions continue to be used for
  qualified expenses, YOU NEVER PAY TAXES

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HSA Distribution Strategies

• If funds arent available at the time payment is
  due, pay with other funds and reimburse yourself
  at a later date with HSA funds.
• There is no time limit on reimbursement!
• E.g., expense incurred in 2008 can be reimbursed,
  TAX FREE in 2028.
• Provide your provider with your HSA account no.
  and they can electronically access payment from
  your HSA.
• Remember other TAX FREE uses of the HSA
• COBRA coverage
• Long Term Care policy premium
• Medicare parts B D premium

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Premium Differences
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Premium and HSA Contributions
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Which plan is better on a large claim?

• Employee Family Coverage
• (CCAP vs. PPO 1)

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How About On A Small Claim?(CCAP vs. PPO 1)

• Employee Family Coverage (same as previous
  family)

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Which plan is better on a large claim?

• Employee Family Coverage
• (CCAP vs. PPO 2)

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How About On A Small Claim? (CCAP vs. PPO 2)

• Employee Family Coverage (same as previous
  family)

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What if you have Employee Only Coverage? (CCAP
vs. PPO 1)
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What if you have Employee Only Coverage? (CCAP
vs. PPO 2)
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To Summarize, the KEY isMORE CASH IN YOUR POCKET
IN ANY CASE!

• If you hardly ever go to the doctor, youre
  going to save premium dollars AND get tax free
  cash with the HSA plan
• If you (and if applicable, your dependent(s))
  receive a great deal of medical care, your out of
  pocket expenses will be less with the HSA plan

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HSA Advantages for Employees

• Reduces employee out of pocket costs
• Rewards health conscience employees with cash
• Reduces income tax, increases take home pay
• Provides additional long term savings plan
• Offers more freedom of healthcare provider choice
• Can be reimbursed for a wide range of medical
  expenses including dental, vision, and certain
  premiums

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• Tidbits

• Access to cash is now much quicker and easier
• First 1,000 is immediately available via debit
  card
• Balances in excess of 1,000 are automatically
  swept to an interest bearing, money market fund
• If you prefer, you can have excess funds invested
  in a Mutual Fund account
• IF YOU HAD CCAP/HSA LAST YEAR, YOU DO NOT HAVE TO
  SET UP AN NEW HSA

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FNBO Contact Person
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Here are a few ways you can maximize your plan
experience and keep more money in your HSA
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4 Generic Prescription Drugs
Over 400 Rx available for 4!
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Generic Prescription Drugs Save
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Retail Healthcare (25 - 60 each)

• Treatments
• Bladder Infection
• Bronchitis
• Colds
• Ear Infection
• Ear Wax Removal
• Flu Screening/Treatment
• Minor Skin Irritations
• Mono
• Pink Eye
• Seasonal Allergies
• Sinus Infection
• Sore Throat
• Strep Throat
• Free Blood Pressure Checks

• Screenings
• Cholesterol/Blood Sugar
• Daycare Provider Physicals
• Pregnancy Tests
• Sports Physicals
• Tuberculosis

• Adult Immunizations
• Hepatitis A/B
• Measles/Mumps/Rubella
• Pneumonia
• Tetanus
• Tetanus/Pertussis

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Questions?