Lessons Learned Lessons Learned

Wh i C L i ?Who is CompassLearning?

• Educational software company that creates curriculum and p yassessment that motivate today’s students to engage, think and learn

• Serve more than 11 million students in 20,000 schools nationwide

• Winner of multiple awards

• Private, equity-backed company based in Austin, Texas

• 250+ employees nationwidey

• HR staff of 4

O iOverview

• CompassLearning first offered a Health Savings Account (HSA) with a p g g ( )High-Deductible Health Plan (HDHP) in February 2010.

• 25% of employees enrolled in the plan during open enrollment.

• During Fall 2010 and early 2011, payroll and human resources realized there may be a problem with the HSA program based on warning signs.

Uh h!Uh oh!

• Payroll realized there was a problem with the y pHSA program after receiving a report from the bank with various unknown codes.

• Employee money was being defaulted into a general HSA holding account, not making it into the account at all, or going in at the wrong amountwrong amount.

• Employer contributions were not making it into the proper employee HSA bank accounts.into the proper employee HSA bank accounts.

• Employees had not opened their HSA bank account after enrolling in the HSA plan. g p

N Wh t?Now What?

• We realized we needed someone well versed in HSA plans and tax law to help us determine the next steps.

• Brought Tango Health in to assess the problem and see if they could help.

T H l h i di l ff d l i ll• Tango Health immediately offered solutions to all aspects of the issues such as:

Detailed and phased project mgt. planVendor selection based on our needsVendor selection based on our needs State and IRS guideline expertise Ongoing record keepingLine-of-sight Education

N t StNext Steps

PWC had to:Determine what the tax implications may be to the employees and employer for the 2010 and 2011 tax year. Determine the best way to rectify anyDetermine the best way to rectify any issues with minimal cost and time to CompassLearning and the employees.

Tango Health had to:Assess the current problem to determine the severity.Establish a project plan in phases basedEstablish a project plan in phases based on the various issues and groups.Determine if we should continue to use the current financial institution or choose a

b d i lnew one based on varying state laws.

HSAR li tiHSA Realization

RULE

Medical expenses are considered qualified for HSA purposes beginning on the later of:

The date on which the individual became HSA-eligible The date on which the individual’s HSA was established

HSAR li tiHSA Realization

ExamplepSuppose an individual was covered on an HDHP as of April 1st and their account was open and funded as of May 15th. If the account was opened by a financial institution in a state requiring funding for HSA establishment, all

di l i t M 15th ld t b lifi d f HSAmedical expenses prior to May 15th would not be qualified for HSA purposes.

Figure 1 – HSA opened in state requiring funding for HSA establishment

HSAR li tiHSA Realization

However, if the HSA was opened by a financial institution in Utah, the , p y ,establishment date would be considered to be April 1st regardless of funding all medical expenses on or after April 1st would be qualified for HSA purposes. (Figure 2)

Figure 2 – HSA opened in Utah

N t StNext Steps

CompassLearning HR had to:p gAudit all HSA transactions on the employee and employer side.Reconcile all employee deductions and employer contributions against payroll and bank records.Id tif th i t l ti lIdentify the appropriate solution per employee.Determine if we needed a new financial institution. Get the employees to open their new Tango Health accounts.

CompassLearning HR and Tango had to:Develop a project plan with categories of activities based on timing and severity. Educate and roll out Tango Health to all employees.Roll over funds from the former financial institution to OptumHealth.Work in conjunction with our broker during open enrollment and ongoingongoing.

R ll t f T H lthRoll out of Tango Health

B fit f th E lBenefits for the Employees

• Store all receipts digitally - even by taking pictures on a smartphone

• Ability to reimburse for health spending paid out of pocket saving 25-35% in taxespocket, saving 25-35% in taxes

• See balance and keep track online

I i f l di d• Import transactions from a personal credit card to quickly identify health spending

• Change payroll contribution amount as often as you like

• Financial account at OptumHealth Bank (the second largest HSA provider in the country)largest HSA provider in the country)

B i R ltBusiness Results• Time and resource savings in payroll and HR

• Reduction of errors in payroll

• 250% increase in HSA eligible account open rates (from 40% to 100%), leading to an additional $30,000 annual FICA tax savings for CompassLearning and $120 000 combined taxCompassLearning and $120,000 combined tax savings opportunities for employees.

• 10% growth in the number of employees10% growth in the number of employees enrolled in High Deductible Health Plan Option

• Happy, educated employees ☺ppy, p y

E l P ll St t tExample Payroll Statement Dear Carol Howard:

We wanted to let you know that the following payroll run has been processed for payment:We wanted to let you know that the following payroll run has been processed for payment:

Payroll date:            Jun 15, 2011Source account debit on: Jun 13, 2011Employee HSA credit on:  Jun 15, 2011E l l $1 708 33Employer total:          $1,708.33Employee total:          $4,503.93Total amount:            $6,212.26Number of transfers:     101Created:                 Jun 10, 2011 by Laurie NissenSubmitted:               Jun 10, 2011 by Laurie Nissen

IMPORTANTIf you believe that this payroll run has been processed in error, you should contact us right away. Use this link:link:

https://hsa.tangohealth.com/t/a/help/launch:contactUs/

Regards,

The Tango Health Team

Advice & TipsAdvice & Tips • When implementing a HSA with a HDHP, partner

with a firm who truly understands HSAs and the yever-changing laws.

• Make sure you have line of sight into the HSA program.

• Bring your benefit broker and HSA vendor together t l i d d t l th HSAto explain and educate employees on the HSA program.

Educate employees during open enrollmentProvide examples which show the pros andProvide examples which show the pros and cons of a HSA program Hold “lunch and learns” on HSAs

• Keep asking questions

Thank You!