CCAP 101

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• CCAP 101
• 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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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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Premium Differences
Coverage Status CCAP Plan - Per Month PPO 2 Plan Per Month PPO 1 Plan Per Month Annual Premium Savings if you elect the CCAP Plan versus PPO 2 PPO 1
Employee 39 68 122 348 996 792 2,220 636 1,812 1,104 1,956
Employee Spouse 83 149 268 348 996 792 2,220 636 1,812 1,104 1,956
Employee child(ren) 69 122 220 348 996 792 2,220 636 1,812 1,104 1,956
Employee Family 111 203 366 348 996 792 2,220 636 1,812 1,104 1,956
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Premium and HSA Contributions
Coverage Status CCAP Plan - Per Month PPO 2 Plan Per Month PPO 1 Plan Per Month Net Annual Savings if you elect the CCAP Plan versus PPO 2 PPO 1
Employee 39 68 122 1,098 1,746 1,792 3,220 1,636 2,812 2,104 2,956
Employee Spouse 83 149 268 1,098 1,746 1,792 3,220 1,636 2,812 2,104 2,956
Employee child(ren) 69 122 220 1,098 1,746 1,792 3,220 1,636 2,812 2,104 2,956
Employee Family 111 203 366 1,098 1,746 1,792 3,220 1,636 2,812 2,104 2,956
Annual HSA Contribution You Get 750 (E)/ 1,000 (ES,EC,EF) You Get 0 You Get 0 1,098 1,746 1,792 3,220 1,636 2,812 2,104 2,956
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Which plan is better on a large claim?

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

PPO 1 Plan CCAP Plan
Example By-pass surgery-total cost 50,000 50,000
Deductible 300 3,000
Coinsurance 20700 20 3,000
Maximum out of pocket 1,000 6,000 HSA ?
Rx Copays (3 per mo. For 12 mos.) 25x3x12900 0
Premium Contribution 366x124,392 111x121,332
Total Out Of Pocket Expense 6,292 6,332 - HSA
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How About On A Small Claim?(CCAP vs. PPO 1)

• Employee Family Coverage (same as previous
  family)

PPO 1 Plan CCAP Plan
A dependent breaks an arm 3,000 3,000
Deductible 300 0 (met deduct.)
Coinsurance 20540 0 (met coins.)
Maximum out of pocket 840 (not met) Met on previous claim
Rx Copays (2 per mo. For 12 months) 25x2x12600 N/A
2nd Family Member Out of Pocket 1,440 0
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Which plan is better on a large claim?

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

PPO 2 Plan CCAP Plan
Example By-pass surgery-total cost 50,000 50,000
Deductible 750 3,000
Coinsurance 201,250 20 3,000
Maximum out of pocket 2,000 6,000 HSA ?
Rx Copays (3 per mo. For 12 mos.) 25x3x12900 0
Premium Contribution 203x122,436 111x121,332
Total Out Of Pocket Expense 5,336 6,332 - HSA
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How About On A Small Claim? (CCAP vs. PPO 2)

• Employee Family Coverage (same as previous
  family)

PPO 2 Plan CCAP Plan
A dependent breaks an arm 3,000 3,000
Deductible 750 0 (met deduct.)
Coinsurance 20450 0 (met coins.)
Maximum out of pocket 1,200 (not met) Met on previous claim
Rx Copays (2 per mo. For 12 months) 25x2x12600 N/A
2nd Family Member Out of Pocket 1,800 0
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What if you have Employee Only Coverage? (CCAP
vs. PPO 1)
PPO 1 Plan CCAP Plan
Example Broken Leg-total cost 12,000 12,000
Deductible 300 1,500
Coinsurance 20700 20 1,500
Out of pocket 1,000 3,000 - 7502,250
Rx Copays (2 per mo. For 12 mos.) 7.50/25 or 10/30 300 max. N/A
Premium Contribution 122 x12 1,464 39 x 12 468
Actual Out Of Pocket Expense 2,764 2,718 - HSA
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What if you have Employee Only Coverage? (CCAP
vs. PPO 2)
PPO 2 Plan CCAP Plan
Example Broken Leg-total cost 12,000 12,000
Deductible 750 1,500
Coinsurance 201,250 20 1,500
Out of pocket 2,000 3,000 - 7502,250
Rx Copays (2 per mo. For 12 mos.) 7.50/25 or 10/30 300 max. N/A
Premium Contribution 68 x12 816 39 x 12 468
Actual Out Of Pocket Expense 3,116 2,718 - HSA
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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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HSA Future Growth Projections
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Questions?