Consumerism and

Actuarial Science in

A 21st Century Intelligent Health System

Healthcare Visions, Inc. Creating the Possible…

Ronald E. Bachman FSA. MAAAPresident & CEO

Healthcare Visions, Inc.404-697-7376

ronbachman@healthcarevisions.netwww.healthcarevisions.net

 Sr. Fellow - Center for Health TransformationSr. Fellow - Georgia Public Policy Foundation

Fellow - Wye River Group on Health

What Is a 21st Century Intelligent Health System?

• In a 21st Century Intelligent Health System, the individual has:

– Accurate, timely knowledge of personal health needs,

– Access to the best information about how to maintain personal health,

– Knowledge of whom to see and where to go for health services,

– And confidence that health providers are practicing medicine using best practices based on the most up-to-date understanding of outcomes-based medicine.

• In a 21st Century Intelligent Health System, the individual has the right to know the price and quality information about health services in the most accurate, least expensive, and most convenient manner possible.

• In a 21st Century Intelligent Health System, the individual is the center of knowledge and decision-making and has responsibility for his or her own health.

Consumer-directed or Consumerism?

Consumer-directed health plans (CDHPs) utilizing an HRA or HSA are the newest weapon in the arsenal to reduce healthcare cost.

But will this approach really lower your cost?

CDHPs are a good start and can developing experience shows they can lower costs.

CDHPs are a good 1st generation attempt. The market is moving rapidly to 2nd generation and beyond.

The transformation is NOT to CDHP but to Consumerism.

Actuaries must go beyond traditional models to reflect the behavioral change component of a consumerism design.

Healthcare Consumerism

Healthcare Consumerism is about transforming a health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants.

It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors.

Elements of Healthcare Consumerism

1. Budgeting – monthly versus annual

2. Risk Sharing – pooled claims for large groups

3. Savings – NEW with advent of HRAs and HSAs

The Core of Consumerism

The Unifying Theme for a

Health and Healthcare Strategy is:

“Implement only if it supports behavioral change consistent with the

strategy”

Behavioral ChangeBehavioral Change

Two Basic Principles for Successful Consumerism

1. Must work for the Sickest Members, as well as the healthy

2. Must work for those not wanting to get involved in decision-making, as well as the “techies”

Mega Trends

1.Personal Responsibility

2.Self-Help, Self-Care

3.Individual Ownership

4.Portability

5.Transparency (the Right to Know)

6.Consumerism (Empowerment)

The Evolution of Healthcare and Consumerism

Future Generations of Consumer Directed Healthcare

Behavioral Change and Cost Management Potential

Low Impact ---- ---- ---- ---- ---- ---- ---- ---- ---- High Impact

Traditional Planswith

ConsumerInformation

2nd Generation CDHC

Focus onBehaviorChanges

TraditionalPlans

3rd Generation CDHC

IntegratedHealth &

Performance

1st Generation CDHC

Focus on Discretionary

Spending

4th Generation CDHC

Personalized Health & Healthcare

Major Building Blocks of Consumerism

•

Personal AccountsPersonal Accounts

Incentives & Incentives & RewardsRewards

Wellness/PreventionWellness/Prevention

Early InterventionEarly Intervention

Disease ManagementDisease Management

InformationInformation

Decision SupportDecision Support

It is the creative development, efficient delivery, efficacy, and successful integration of these elements that will prove the success or failure of consumerism.

2nd Generation CDHC

Focus onBehaviorChanges

3rd Generation CDHC

IntegratedHealth &

Performance

1st Generation CDHC

Focus on Discretionary

Spending

4th Generation CDHC

Personalized Health & Healthcare

Personal AccountsPersonal Accounts

Incentives & Incentives & RewardsRewards

Wellness/PreventionWellness/Prevention

Early InterventionEarly Intervention

Disease ManagementDisease Management

InformationInformation

Decision SupportDecision Support

Initial Account Only

Activity & Compliance

Rewards

Indiv. & Group Corporate Metric

Rewards

Specialized Accts,Matching HRAs,Expanded QME

100% Basic Preventive Care

Web-based behavior change support

programs

Worksite wellness,safety, stress & error

reduction

Genomics, predictive modeling push

technology

Information, health coach

Compliance Awards, disease specific

allowances

Population Mgmt, IHM, Integrated Back-to-

Work

Wireless cyber –support, cultural DM,

Holistic care

Passive Info Discretionary

Expenses

Personal health mgmt, info with

incentives to access

Health & performance info, integrated health

work data

Arrive in time info and services,

information therapy

Cash, tickets, Trinkets

Zero balance acct, activity based

incentives

Non-health corporate metric driven incentives

Personal development plan incentives,

health status related

Summary –

A peek into the future of Consumerism

Using Information & Incentives To Change Behaviors

Low Users Medium Users

High Users

Very High Users

No Claims

Generally Healthy

Acute Episodic Conditions

O/P, Low In/P, High Maternity

Chronic & Persistent . Conditions . O/P, Low In/P, High

Catastrophic

% Mem 15% 48% 14% 3% 3% 12% 4% 1%

% Dollars 0% 12% 15%

12% 5% 21%

20%

15%

% Mem 63% 32% 17%

% Dollars 12% 32% 56%

PreventionPrevention Wellness - LifestyleWellness - Lifestyle

Minimize

Early InterventionEarly Intervention

Wellness - ClinicalWellness - Clinical

Maximize

Minimize

Maximize

Wellness - LifestyleWellness - Lifestyle

Wellness - ClinicalWellness - Clinical

Low Users Medium Users High Users Very High Users

No Claim

s

Generally

Healthy

Acute EpisodicConditions

Chronic & Persistent Conditions Catastrop

hicO/P, Low

In/P, High

Maternity

O/P, Low

In/P, High

% Ee

% Dollars

% Ee

% Dollars

PatientSafety

Centers of Excellence

PatientAdvocacy/

Case Management

Pre-Natal Care

Reduce Variation in Evidence-Based

Medicine

DiseaseManagement

Reduce Variation in Evidence-Based

Medicine

Discretionary Expenses

Psycho-Social Factors / Integrated Absence Management

Personal Health ManagementDecision Support & Information

Health Promotion

Health Risk Management

Chronic Disease Management

High Cost Case Management

Website Health Risk Assessment

Patient Identification and enrollment

Targeted Behavior Modification

Care Coordination

Practice Guidelines

HealthyLifestyle Promotion

Physical Activity Campaign

Address Comorbid Conditions

Integrated Services, Communications, Measurement and EvaluationIntegrated Services, Communications, Measurement and Evaluation

Care Continuum and Tools for Changing Behaviors

Acute Conditionse.g., Infections, Respiratory, Lacerations

Navigational Support

Patient Advocacy

Care Coordination

Address Comorbid Conditions

At Risk

e.g., Inactivity, High Stress, Overweight, High Blood Pressure

Chronic Conditions

e.g., Depression, Heart Disease

Catastrophic Conditions

e.g., Cancer, Hepatitis C

Well

e.g., Low Risk, Good Nutrition, Active

Lifestyle

Wellness

Communication

Acute Case Mgmt

Utilization and Case Management

NETWORK A / TPA A NETWORK B / TPA B

Education

Prevention

Demand Management

Disease Mgmt Programs

Integrated Absence Mgmt The secret is cooperation and synergy between

components supporting the corporate strategies

Integrated Health Management ProgramAn Implementation Option for Multiple Generations

General ManagerPersonal Care Accts.

FSAs, HRAs, HSAs

Process Integration &

Disciplined Im

provement

Com

pany

Dat

a W

areh

ouse

& M

etri

cs

Potential Savings from Full Implementation of Consumerism

Achievement of savings and improved outcomes is dependent upon both the Type and Effectiveness of the programs implemented.

 Gross* Savings as % of Total Plan Costs

(Programs Applicable to All Members)

 

EffectivePrograms

Implemented

Traditional plans  

Consumerism Plans Passive 1st Generation 2nd Generation 3rd Gen & Future

Basic 2% 3% 7% 10%

Expanded 3-4% 5-8% 12-15.0% 20.0+%

Complete 4% 7% 17% 25%

Comprehensive (Future) 5% 10% 20% 30%

*Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs

Major Actuarial Issues

• Anti-selection, • Value of wellness, • Disease management ROI, • Actuarial credits for behavioral change

ModerateAdverseSelection

HighAdverseSelection

HighPositiveSelection

ModeratePositiveSelection

LowBenefit

HighBenefit

Higher Cost

Lower Cost

e.g., CorePlan

e.g., Age-RatedHMO

e.g., PPOor POS

e.g., Not typicallyseen

ModerateAdverseSelection

HighAdverseSelection

HighPositiveSelection

ModeratePositiveSelection

LowBenefit

HighBenefit

Higher Cost

Lower Cost

e.g., CorePlan

e.g., Age-RatedHMO

e.g., PPOor POS

e.g., Not typicallyseen

ModerateAdverseSelection

HighAdverseSelection

HighPositiveSelection

ModeratePositiveSelection

LowBenefit

HighBenefit

Higher Cost

Lower Cost

e.g., CorePlan

e.g., Age-RatedHMO

e.g., PPOor POS

e.g., Not typicallyseen

Understanding Risk Selection and Anti-selection

The primary drivers of risk selection are employee cost and the relative benefit richness of the competing options.

Employees will tend to choose the option expected to provide the best economic benefit for their situation.

For healthy individuals the selection is usually low cost/low benefit options.For less healthy individuals the selection is usually high cost/high benefit options.

Selection effect is at least directionally predictable in most cases.

Mitigating factors tend to reduce the magnitude of selection. Health care costs are not fully predictable. Plan choices are usually made at a family unit level versus the individual level..

Potential Anti-Selection from CDHC on an Optional Basis

• Introduction of CDHC on an optional basis will limit the cost reduction because fewer members will be impacted and because the members that do select CDHC are likely to have an existing favorable health status (anti-selection). Adopting companies and its members can benefit most by introducing consumerism with both a CDHC option and consumerism for all other plans.

Example - Selection in An Option Environment

OPTION # 1 – Current Plan OPTION # 2 - CDHC

% MembersParticipating

Clms/Part.Mbr. Vs Clms/All Mbrs.

RemainingMembers

Clms/Part.Mbr. Vs Clms/All Mbrs.

90% 101% 10% 87%

70% 103% 30% 92%

50% 103% 50% 97%

Consumerism Choices involve Options for Behavioral Change rather than

Optional Plan Designs

• Consumerism Choices:

• Wellness• Preventive care• Early Intervention• Lifestyle Options (diet, exercise, smoking, safety)• Self-help, self care• Discretionary Expenses (e.g. OV, ER, Rx)• Value purchasing (e.g. DXL, o/p vs. in/p)• Participation in Disease Management Programs• Compliance with Evidence Based Medicine Treatment

Plans

Survey ResultsWellness Assessment Risk Factors

Risk Factors for Health Conditions

27%

77%

60%

81%

8%

1%

30%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Stress

Overweight/Underweight

Physical Inactivity

Poor Diet

Tobacco Use

Alcohol Use

Overdue Preventive Visits

Value of Wellness – What is it?

How Much Physical Activity Do the Experts Recommend? 30? 60? 90? Minutes of What?

The Centers for Disease Control and Prevention and the American College of Sports Medicine recommend the following:

• 20 minutes of vigorous-intensity physical activity 3 times a week or

• 30 minutes of moderate-intensity physical activity 5 or more times a week.

What is moderate-intensity physical activity? Any activity that burns 3.5 to 7 calories per minute (e.g., walking briskly).

What is vigorous-intensity physical activity? Any activity that burns 7 or more calories per minute (e.g.,

climbing up and down stairs).

National Business Group on HealthComments on Wellness

Recent studies indicate that moderate increases in employees’ physical activity levels can result in significant decreases in company costs. Although existing research is limited, employers may use calculation tools and internal data to calculate the potential savings of an effective physical activity promotion program.

To reach a rough estimate of the cost of its employees’ physical inactivity, a company could turn to www.activelivingleadership.org for a new online tool.

This Physical Inactivity Cost Calculator was developed by, among others, the Active Living Leadership Initiative, Fifty Plus Lifelong Fitness and the National Coalition for Promoting Physical Activity and Health.

Examples of Corporate Wellness & ROI

Motorola’s wellness programs which saves the company

$3.93 for every $1 invested.

Northeast Utilities WellAware Program which in its first 24 months reduced lifestyle and behavioral claims by $1,400,000.

Caterpillar’s Healthy Balance program which is projected to result in long term savings of $700 million by 2015.

Johnson & Johnson’s Health and Wellness Program which has produced average annual health care savings of $224.66 per employee.

Wellness ROI Studies

Many studies have focused specifically on the return on investment (ROI) from worksite health promotion and disease prevention programs.

Findings on the return on investment for health promotion and disease management programs were reported for nine employers: Canada & North America Life; Chevron.; City of Mesa, AZ; General Mills; General Motors; Johnson & Johnson; Pacific Bell; Procter & Gamble; and Tenneco. These programs provide health education to their employees to promote behaviors that will improve health or prevent disease, and typically include exercise programs, health-risk appraisal, weight control, nutrition information, stress management, disease screening, and smoking cessation.

The review found significant return on investment for the programs provided by these nine employers, with the range of benefit-to-cost ratios, ranging from $1.49 to $4.91 in benefits per dollar spent on the program, and a median of $3.14.

Savings from National Wellness Program

Savings estimates revealed that participation in the National Wellness Program was associated with significant savings in dollars per employee from 1991 to 1995, with the highest dollar savings achieved in 1995 ($16 per employee per month).

Evaluation of the program showed that health risk assessment was associated with significant and substantial reductions in healthcare costs.

Employees who completed one, two, or three health risk assessments on average had lower 1997 health care costs of $112.89, $134.22, and $152.29, respectively. Employees who had completed at least one health risk assessment and participated in an additional wellness activity had an average cost savings of $200.35 per year.

CIGNA Wellness Savings

The Working Well Moms Program has decreased pharmacy costs – 62% fewer prescriptions for breast-fed children. The program has also contributed to decreased medical costs – a savings of $240,000 in healthcare expenses. In addition, program participants have 74 fewer absences per 100 mothers, a savings of $60,000 in lost time annually.

The Working Well Triumph Program has resulted in healthcare costs savings of more than $900 per program participant.

The Working Well Flu Shots Program participants have 29% less absenteeism as compared to employees not getting a shot. This

produced a savings of $33 per employee participant. The overall return on investment for the program was 3 to 1.

CIGNA’s smoking cessation program helped 67 percent of its participants quit smoking after 12 months, a quit rate up to three times higher than comparable smoking cessation programs. CIGNA estimates saving $949 in health care costs for each successful participant, a return on investment of 9.5 to 1.

Disease Management for Chronic and Persistent Conditions

The Agriculture and Health and Human Services Departments’ Dietary Guidelines for Americans 2005 recommend the following:

• To reduce the risk of chronic disease—at least 30 minutes of moderate-intensity physical activity on most, preferably all days of the week;

• To prevent the gradual accumulation of excess weight in adulthood, up to 30 additional minutes per day may be required over the 30 minutes for reduction of chronic disease risk and other health benefits; and

• To sustain weight loss for previously overweight/obese people, about 60 to 90 minutes of moderate-intensity physical activity per day is recommended.

Passive Assertive Aggressive Program Type: Phone and mail

out- reach, no incentives

Incentives (i.e., waiving Rx copays)

Incentives (i.e, waiving Rx copays,

premium differential

DM vendor pricing method

Per employee per month, all

employees

Low PEPM on all ees plus hourly or per

case rate on participants only (rate

varies based on participant risk

status)

Low PEPM on all ees plus hourly or per case rate on participants only (rate varies based on participant risk

status)

Percentage of chronic diseased participating in program

10% 50% 75%

Return on investment of disease management programs

0 - .5 1.5 - 2 1.5 - 3

Disease Management Program ROI

Medical Claims % Change

2003 Study

(13.5K members)3.7% increase in medical cost

2004 Study

(9 mos.)

(49K members)

Early indicators 6% increase in medical cost over 2003

Continuously Enrolled Members: Allowed claims

Change in Utilization (# of Units)

2003 Study(12 months of data)

2004 Study(9 months of data)

Inpatient Admissions -5.2% -6.7%

ER Visits -2.6% -15.9%

Outpatient Events -14.4% -4.6%

ALL Office Visits -3.3% -3.4%

PCP Visits -10.9% -12.3%

Specialists visits +3.4% +3.6%

First Year Aetna HealthFund Members2004 results (9 mos.) show low medical cost increase

Note: 12 month continuously enrolled results due in August

What Happens in the Second Year to Allowed Claims?

1Q ’03 2Q ’03 3Q ’03 4Q ’03 1Q ’04 2Q ‘04 3Q ’04 4Q ’04

AHF**

PPO

* Allowed Claims are total claims, eligible for payment before benefit plan is applied

** Based on all AHF members from 18 of 19 plan sponsors in 2003 study; one plan sponsor removed due to large increase in AHF enrollment.

Allo

wed

Cla

ims

PM

PM

$140

$160

$180

$200

$220

$240

$260

+10.3%

+8.7%

• Utilization in AHF increased at a lower rate than PPO, based on allowed* claims

• Reinforces assumption that AHF trend will be 1% below PPO

• Studies will continue to evaluate AHF trend into the third year

Highlights of the 2003 Aetna HealthFund 12-Month Study

• Lower medical cost increase, applicable to first-year AHF members - 3.7 % compared to double digit PPO plans

• Diabetics continue to seek necessary care, relative to comparative populations

• Increases in certain preventive care services • Reduction in pharmacy scripts and increased generic

usage• Increased use of online tools, information, and satisfied

members

2004 United Health Plan Experience

The iPlan study found:

• A drop in the number of claims per 1,000 enrollees compared to the year before enrollment;

• A decrease in total emergency room visits, illustrating more selective, responsible use of emergency services;

• Significantly less-than-expected medical cost trends (per member/per month) than for traditional health plans; when iPlan was the only option, the annual cost trend was less than 1 percent;

• Reductions in specialist visits, outpatient surgeries and radiology and lab services; and

• Higher utilization of preventive services among iPlan participants.

• 15% reduction in pharmacy costs

• 92% generic substitution rate (open formulary, 100% of rebates go back to employer)

• 5% increase in preventive care expenditures

• 18% reduction in outpatient visits

• 85% graduation rate (Health Coach Program)

• 42% HRA completion with incentive; 28% opt-in to Health Coach

• 60% of clients offer integrated health improvement incentives.

LumenosKey Results – Utilization Impact

Are HSAs the right vehicle for large employer groups?

Yes, If………..

Or

No, Because…….

Need to Understand the Consumer Movement & the Transformation

that is Underway

HSAs and HRAs Very Different

HSA – A law, with specific requirements and benefit design requirements.

Most TAX ADVANTAGED vehicle ever created*******************************************************HRAs – No Law, this is a regulatory creation based upon

an IRS ruling. Most FLEXIBLE vehicle ever created

Incentive Awards - Three Very Different Personal Care Accounts

• FSAs – Traditional Group Plans

• Health Reimbursements Arrangements (HRAs) – Employers’ choice for cash flow flexible incentive based medical plan benefit designs (best suited for self-insured groups)

• Health Savings Accounts (HSAs) – Employees’ choice for funded portable triple tax advantaged with “High Deductible Health Plans” (best suited for individuals and small groups)

• Combination Accounts – creative but confusing

Important Differences between Use of HRAs and HSAs for Supporting

Behavioral Change

Generation 1

Initial Account Only

Generation 2

Activity & Compliance Rewards

Generation 3

Indiv. & Group Corporate Metric Rewards

Generation 4Specialized Accts,Matching HRAs,Expanded QME

1. Any Amount 2. Notional Acct 3. Employer Determined 4. Employer Only Contributions

1. Flexible Activity & Compliance Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare

1. Flexible Indiv & Group Rewards 2. Employer Determined 3. Can not be cashed out 4. Must be used for healthcare

1. Specialized Notional Accts, 2. Can terminate by employer rules 3. Potential IRS Expanded QME

Health Savings Health Savings AccountsAccounts

1. Amounts Set by law 2. Real Dollars in Acct 3. Er or Ee Contrib 4. Contributions up to

plan deductible of $1000-2650 Single

$2000-5250 Family

1. Ltd Potential 2. Must give Cash Option 3. Awards must be same $ amt or same % of deductible 3. HSA can be used (with 10% penalty) for non- healthcare expenses

1. Ltd Potential 2. All participants must receive same amount or same % of deductible 3. Difficult to use for Group Incentives

1. Ltd Potential 2. 100% Vested & Portable 3. Can use matching HRAs, 4. Potential IRS Expanded QME

Health Health Reimbursement Reimbursement ArrangementsArrangements

Personal Care

Accounts

The Evolution of Personal Care Accounts

• Current State

HRAs HSAs

Employer-based Healthcare with Individual Accountability

Individual-based Healthcare

Employer-based

Defined Contribution Developments

FSAs

Employer-based Healthcare

Traditional (Use it or Lose it)

Special Purpose Non-Plan

Combination Accounts

Employer-based healthcare

Special Purpose Accounts

Incentive Matching

Are HSAs the Wave of the Future?Which Point of View Direction will We Take?

Yes, if….1. we recognize the HSA legislation and regulations as a good start and another

building block for consumerism and behavioral change.2. there is additional legislation/regulation to support large Er interests in providing

HSAs (use for healthcare only, Rx coverage problem, combination accounts).3. there is legislative support for the common use of FSAs for targeted needs, HSAs

as “Health Savings Accounts” and HRAs as “Health Reimbursement Arrangements.

No, because….1. they were not legislated/regulated with large employers in mind.2. of a desire to promote individual insurance over individual ownership (under

employer and individual policies)3. they are just a tool to cost shift to employees, they can not reward behavior change4. they are only desirable to the young, healthy, and wealthy

Are HSAs the right vehicle for large employer groups?

Yes, If………..

Or

No, Because…….

Need to Understand the Consumer Movement & the Transformation

that is Underway

The Fundamental Policy Question

Will Legislation/Regulation Use HSAs to:

… mainly promote portable Individual & Small Group Insurance,

OR

… expand Personal Care Account ownership through in both an employer-based and individual-based healthcare system thru HSAs, HRAs, and FSAs.

Growth of Personal Care Accounts

HRAs HSAs2000* None None2001* 19,000 None2002* 53,000 None2003* 394,000 None2004(est) 1-1.5M 400,0002005(est) 3.2 M 1.0M+2006(est) 6.0+M ???2007(est) 12-15M ???

* Deliotte Consulting

The Answer – Flexible Health Savings Accounts (FHSAs)

FHSAs would have the tax advantages of HSAs and the key flexibilities of HRAs.

Basic Principles:1. Retain personal responsibility goal of HSA/HDHPs2. Focus on Behavior Change3. Recognize value of Pay for Compliance as a driver for

behavior change and shared savings with personal responsibility

4. Expand adoption and funding of HSAs by large employers

Flexible Health Savings Accounts (FHSAs)The Next Generation

Four needs that would allow FHSAs the flexibility to:

1. Provide financial Rewards and Incentives for Behavioral Change.

2. Encourage Employer/Carrier FHSA contributions towards healthcare

3. Be provided with plan designs other than HDHPs

4. Address FHSA/HSA Technical Issues

FHSA Flexibilty to Provide Financial Rewards and Incentives for Behavioral

Change

1.  Allow for compliance incentives under disease management programs (e.g. diabetes, asthma, CHF) and wellness initiatives (e.g. wellness assessments, smoking cessation, etc.).

2. Change Comparability Rule to mean all members under a given program of care or treatment, such as, a disease management or wellness program.

3. Rewards and/or incentives should not be limited by the deductible limit, but should be consistent with expected savings from programs for which participation is being rewarded.

FHSA Flexibility to Encourage Employer Contributions to Healthcare

1. Allow employers/carriers to voluntarily contract with employees to require employer/carrier funded FHSAs to be used only for healthcare expenses while employed and covered under the plan.

2. Remove cap on employer/carrier funded FHSA contributions or expand to at least the plan’s Maximum Out-Of-Pocket total exposure in a given calendar year. 

FHSAs Flexibility to be Provided with Plan Designs Other than HDHPs

1. Preventive drugs include maintenance drugs. Drugs now defined as preventive by the Treasury Dept. can be covered below the deductible, while the cost of maintenance drugs is now included in the deductible.

2. Allow Rx to exist as carve out benefits at least for prescription drugs associated with chronic and persistent disease states

3. Allow “incentive only based” FHSAs for employer/carrier only funding under non-HDHPs (i.e. no initial FHSA funding or employee funding)

4. Allow some mental health and substance abuse benefits (besides EAPs) to be included under preventive care.

FHSA Flexibility - Technical Issues

1. Allow FHSA/HSAs to go into effect on the first day of coverage is effective.

2. Allow FHSA/HSA contributions for a full calendar year regardless of when a plan is effective.

3. Allow FHSA/HSAs to be used to pay for health coverage premiums (other than current limited use for (1) Premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), and (2) premiums for HDHP coverage for those who receive federal or state unemployment compensation).

4. Allow Flexibility to "post-date" the FHSA/HSA effective date so that FHSA/HSA dollars can cover expenses incurred before the account was established. Allow the account to be opened under a "provisional status" until the necessary paperwork is filed, at which time the account becomes active.

The Ultimate Successful The Ultimate Successful Implementation of ConsumerismImplementation of Consumerism

It’s about moving from a It’s about moving from a

““benefitbenefit” ”

to anto an

““accumulating assetaccumulating asset.”.”