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High Deductible Health Plan (HDHP)and

Health Savings Account (HSA)

INFORMATIONAL SESSIONSNOVEMBER 2011

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Agenda

• Introduction of HDHP/HSA

• Overview of the HDHP

• Overview of Health Savings Accounts (HSA)

• Employee Plan Design Comparison/Scenarios

• Questions and Answer Session

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High Deductible Health Plan (HDHP)

• HDHP is a PPO plan administered by United HealthCare (UHC)

• PPO plan provides coverage for in-network and out-of-network services

• UHC provider network is same as for HMO and POS plans

• Calendar year deductible applies to both in-network and out-of-network services

• High deductible required to enable Health Savings Account participation

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Overview of HDHP

In Network

Out of Network

Annual DeductibleIndividual (Employee Only)Family (Employee +1 or more dependents)

$1,500$3,000

$1,500$3,000

Co-Insurance 20% 40%

Coinsurance MaximumIndividualFamily

$1,250$2,500

$2,500$5,000

Annual Out-of-pocket Maximum (Including Deductibles)IndividualFamily

$2,750$5,500

$4,000$8,000

Lifetime Maximum Unlimited Unlimited

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Special Considerations of HDHP

• Co-Insurance applies after deductible is met

• Family deductible applies when you are one or more dependents

• Family deductible must be fully met even if only one person utilizes the plan

• Deductible and co-insurance apply to prescription drugs (NO co-pays)

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Monthly Employee Premiums

Employee OnlyEmployee + One

DependentEmployee + Two

or More Dependents

FT Faculty & Staff Earning Less Than $34,000

$5.47 $19.81 $39.62

FT Faculty & Staff Earning $34,000 or More

$5.98 $21.65 $43.31

PT Faculty & Staff $132.17 $271.00 $400.11

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Why to Choose the HDHP?

• Lower health insurance premiums

• Greater flexibility and control in how your healthcare dollars are spent or saved

• Ability to contribute to a tax-advantaged Health Savings Account (HSA)

• May offer the best value among the available plan choices

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Why to Fund the Health Savings Account?

• Washington University helps fund your account with $400 per year*

• Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free when used to pay for qualified medical expenses

• No “use-it-or-lose-it” requirement; grow your account balance year over year

• The funds and account is yours and goes with you even if you change jobs or insurance coverage

I* Employees with salaries under $115,000 must contribute at least $200/year to their HSA and employees with salaries over $115,000 must contribute $400/year to their HSA in order to receive the University contribution.

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• Contribute on a tax-free basis either through:– Payroll deduction (pre-tax contribution)– Directly to USBank (top-line tax deduction)

• Contribution limits (2012): – Single Coverage - contribute up to $3,100

(less University contribution of $400)– Family Coverage - contribute up to $6,250

(less University contribution of $400)– Catch-Up Contribution: age 55 or older – up

to an additional $1,000

Making Contributions to an HSA

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Using Your HSA Funds

Use your U.S. Bank Payment Card, write a check, or pay online to reimburse healthcare expenses.

• Make sure your expense is eligible

• Save your receipts

•You do not have to submit receipts for reimbursement

• Reimburse yourself now or later

•There is no specified deadline for reimbursement

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Qualified Medical Expenses

• IRS Publication 502* contains a list of all approved qualified medical expenses, including:

• Doctor’s office visits• Prescriptions• Some over-the-counter items*• Hospital visits• Acupuncture• Chiropractor• Eyeglasses and contact lenses• Dental treatment• Eye surgery• Smoking cessation programs• Therapy

* IRS Publication 502 can be found on-line at www.mycdh.usbank.com, under Useful Links & Resources.

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• Enroll in the Health Plan through the employer and elect the U.S. Bank HSA

• Employer processes enrollment file

• Payment card(s) are ordered and mailed

• Employees receive “welcome” notification via email

• Complete online enrollment process

Enrollment Experience

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Managing Your HSA Online

• Online capability to request additional card for spouse and dependents

• Convenient online Bill Pay and direct deposit reimbursement options

• Update dependent information, designate beneficiaries, etc.

• Automated e-mail reminders and notices

• Access to important decision support tools to make informed healthcare decisions from the U.S. Bank Healthcare Toolbox

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“I’m on my way to the doctor. Do I have an adequate balance?”

“I just purchased a prescription at my pharmacy. Will my HSA balance cover the cost?”

New technologies: U.S. Bank Healthcare Mobile

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• Access investment account information such as balance and fund performance

• Manage your investment account online (i.e. buy and sell funds)

HSA Investment Experience

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Accountholder Support

• HSA Consumer Services Representatives available Monday through Friday,

7:00 a.m. to 7:00 p.m. (CST) – 877-470-1771

• Monthly statements available online or mailed to your residence

• Annual IRS reports are provided

• Interactive Voice Response (IVR), 24/7 – 877-470-1771

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Scenario #1: Single Employee (Income >$34,000) – Generally Healthy

Premium/Procedure UHC

Choice HMO

UHC

Choice Plus POS

UHC HDHP BC Excel BC Choice

Annual Physical ($280)$0 $0 $0 $0 $0

Office Visit – Illness

($90) $25 $25 $90 $90 $90

Antibiotic – Generic

($10) $10 $10 $10 $10 $10

Out-of-Pocket Cost

($380) $35 $35 $100 $100 $100

Premium Contribution$468.84 $775.20 $71.76 $1,097.76 $244.56

HSA Contribution($400)

Potential Tax Savings* (HSA) @ 28% Rate ($756)

Total Annual Cost$503.84 $810.20 ($984.24) $1.197.76 $344.56

* Tax savings will vary based on your current FSA contribution and medical plan election.

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Scenario #2: Employee Plus Spouse (income >$34,000) – Have 1st Baby in July

Premium/Procedure UHC Choice HMO

UHCChoice Plus

POS

UHC HDHP BC Excel BC Choice

Pre-Natal Care – 6 OB visits ($740)

$40 $40 $740 $548 $740

Office Visit – Illness($90)

$25 $25 $90 $18 $26

Normal Delivery($6,000)

$300 $300 $2,936 $1,200 $1,200

Out-of-Pocket Cost($6,830)

$365 $365 $3,766 $1,766 $1,966

Premium Contribution $3,137.04 $4,802.28 $389.76 $5,556.54 $1,164.36

HSA Contribution ($400)

Potential Tax Savings* (HSA) @ 28% Rate

($1,638)

Total Annual Cost $3,194.54 $4,877.60 $2,117.76 $7,322.54 $3,130.36

* Tax savings will vary based on your current FSA contribution and medical plan election.

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Scenario #3: Employee Plus Spouse (income >$34,000) – Elective Surgery for Family Member

Premium/Procedure UHC Choice HMO

UHCChoice Plus

POS

UHC HDHP BC Excel BC Choice

Annual Physical($280)

$0 $0 $0 $0 $0

Office Visits (1 PCP, 2 specialists) - ($330)

$105 $105 $330 $330 $330

MRI – Knee ($750) $150 $150 $750 $286 $486

Elective Knee Surgery ($7,000 charge)

$150 $150 $2,936 $1,384 $1,400

Rehabilitation ($1,560 – 18 visits)

$720 $720 $312 $0 $312

Out-of-Pocket Cost($9,920)

$1,125 $1,125 $4,328 $2,000 $2,528

Premium Contribution $2,615.52 $3,846.72 $259.80 $4,474.68 $781.68

HSA Contribution ($400)

Potential Tax Savings* (HSA) @ 28% Rate

($1,638)

Total Annual Cost $3,740.52 $4,971.72 $2,549.80 $6,474.68 $3,309.68

* Tax savings will vary based on your current FSA contribution and medical plan election.

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Scenario #4: Employee Plus Family with Two Children – One child has a sports injury, the other child has asthmaPremium/Procedure UHC

Choice HMOUHC

Choice Plus POS

UHC HDHP BC Excel BC Choice

Child 1* - Emergency Room Visit, Treatment for Broken Leg, and Physical Therapy ($7,200)

$630 $630 $3,840 $1,840 $2,040

Child 2 - Emergency Room Visit, 1 Night in the Hospital, 4 office visits, and Asthma Medications($5,800/$1,700 Rx)

$400 + $540 (Rx)

$940 $1,250 $1,560 + $540 (Rx)

$1,760 +$540 (Rx)

Employee – Routine Physical ($250)

$0 $0 $0 $0 $0

Spouse – Well Woman Exam ($230) and 2 office visits for illness ($180)

$0 + $50 $0 + $50 $36 $410 $410

Out-of-Pocket Cost ($15,360) $1,620 $1,620 $5,126 $4,350 $4,750

Premium Contribution $3,658.56 $5,757.84 $519.72 $6,638.40 $1,547.04

HSA Contribution ($400)

Potential Tax Savings** (HSA) @ 28% Rate

($1,638)

Total Annual Cost $5,278.56 $7,377.84 $3,608.72 $10,988.40 $6,297.04* 4 specialist visits, 8 physical therapy sessions** Tax savings will vary based on your current FSA contribution and medical plan election.

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Closing Thoughts and Considerations

• If you plan to fully-fund the HSA, the HDHP option should be a good choice for most employees

• Be aware that the plan works differently than the HMO and POS plans• First dollar deductible before any coverage, including Rx

(except preventive care)• True out-of-pocket maximum (no copays and Rx counts

towards maximum)• Research the full cost of your routine medical care and

prescriptions • Information can be found on the health plan websites and

Medco.comI

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Questions?

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