IS a high-deductible medical plan your best choice?

Purdue Benefitswww.purdue.edu/benefits

IS A HIGH-DEDUCTIBLE MEDICAL PLAN YOUR BEST CHOICE?TAKING THE MYSTERY OUT OF HIGH-DEDUCTIBLE HEALTH PLANS AND HEALTH SAVINGS ACCOUNTS

Agenda

o High-Deductible Health Plan With HSA

High-Deductible Health Plan Basics

Health Savings Account (HSA) Basics

IRS Says

How It Works

Scenarios

Plan Tips (How To Make It Work For You)


High Deductible Health Plan Basics

HIGH DEDUCTIBLE HEALTH PLAN BASICS

High-Deductible Health Plan Plus HSA

Plan Basics

Health Plan

(HDHP)

Health Savings Account (HSA)

Purdue Health Plans Plus HSA

o Created as a way to help with rising health care costs

Offer tax advantages for medical expenses

Provide HSA owners with control of where dollars are being spento HSA owners are generally more

interested in how funds are being spent when they own the account

Health care providers have incentive to lower rates due to a more competitive environment

Background

o Intent of high-deductible health plans and HSA Improved version of FSA with retirement savings feature

Allows unspent funds to roll over every year Employers are not required, but are able to contribute Account earns interest and offers investment options Account goes with you if you leave Purdue Able to save funds for retirement medical expenses, including

premiums Remember that funds used for non-medical expenses are fully taxable

Prevalence of plans According to Mercer’s National Survey of Employer-Sponsored

Health Plans 2012: o 36% of 2,809 employers surveyed offer an HDHPo Up from 20% in 2008

Background

Plan Basics

Deductible

Premium

Coinsurance

Out-of-Pocket Maximum

Preventive Care Contributions

Account Management

High-Deductible Health Plan (HDHP)


Withdrawals

o High-Deductible Health Plan Lowest premiums compared to more

traditional health plans

Higher deductible and maximum limit on out-of-pocket covered expenses in a calendar year

Includes both medical and prescription costs

100% coverage with in-network providers for preventive care and preventive generic medications for certain conditions (i.e. asthma, diabetes, heart disease and stroke,

prenatal vitamins, smoking cessation)

Plan Basics

High Deductible Health Plan (HDHP)

Deductible

Coinsurance

Out-of-Pocket

Maximum

Preventive Care

Preventive Care

Plan Basics


Deductible

Coinsurance

Out-of-Pocket

Maximum

Preventive Care

Preventive Care

o Preventive care 100% covered with in-network providers, includes but not limited to: Annual exams, routine prenatal and well-child

care, and child and adult immunizations Preventive (non-diagnostic) screening services

e.g., cancer, diseases (heart and vascular, infectious) Conditions: metabolic, nutritional, endocrine, mental

health, obstetric and gynecological, and pediatric Disorders (musculoskeletal, vision and hearing)

Eligible preventive medications For certain conditions such as: asthma, heart disease

and stroke Prenatal vitamins, generic contraceptives approved by

the FDA, smoking cessation

Plan Basics

2014 Deductible

In-Network Out-of-Network

Purdue Health Plan Plus HSA 1

$1,750 employee only$3,500 family



$ 2,500 employee only$ 5,000 family


o Deductible Phase: You pay 100% of all eligible expenses up to

the plan's annual deductible. Includes: Non-preventive medical visits and services

o Doctor visits, labs, diagnostics, hospitalizations

Non-preventive prescriptions


Deductible

Coinsurance

Out-of-Pocket

Maximum

Preventive Care

Preventive Care

Plan Basics

2014 Prescription CoinsurancePurdue Health Plan Plus HSA 1& HSA 2

Prescription Type

Home Delivery(90 day supply)

Retail(30 day supply)

Preventive Generic

0% 0%

Generic Ded. then $25 max Ded. then $10 maxPreferred Ded. then 25% Ded. then 35%Non-Preferred Ded. then 45% Ded. then 55%

2014 Medical Coinsurance In-Network Out-of-Network

Purdue Health Plan Plus HSA 1 20% 40%Purdue Health Plan Plus HSA 2 25% 45%

*Member Pays the Difference program is still in effect.

o Coinsurance Phase: After meeting your deductible, you pay a

smaller percentage of expenses High Deductible Health Plan (HDHP)

Deductible

Coinsurance

Out-of-Pocket

Maximum

Preventive Care

Preventive Care

Plan Basics

Annual Out-of-Pocket Maximum

In-Network Out-of-Network





$ 5,000 employee only$ 10,000 family


o Out-of-Pocket Maximum Phase: Plan pays 100% of eligible medical and

prescription drug costs once you meet the annual maximum

This is the most you will pay for medical and prescription drugs during 2014


Deductible

Coinsurance

Out-of-Pocket

Maximum

Preventive Care

Preventive Care


High-Deductible Health Plan

HEALTH SAVINGS ACCOUNT (HSA) BASICS

o What Is An HSA? A bank account – called a health savings

account (HSA)

Offers tax advantages and allows savings to build over time

Available with high deductible health plans only

Administered by PayFlex

Debit card allows convenient access to funds in the account

Account access via web and mobile File claims, view account balance,

transfer funds, etc.

Plan Basics


Contributions

Withdrawals

Account Management

2014 HSA

IRS Contribution Limit

Purdue Contributions

Remaining Employee Contribution Allowed

Employee $3,300 $650 $2,650

Family $6,550 $1,300 $5,250

o HSA Contributions

Purdue contributes, and you have the option to contribute to the same account

Plan Basics


Contributions

Withdrawals

Account Management

o HSA Contributions

Contributions are deposited pre-tax and available for use on or after each pay date

Age 55 or older any time during 2014, eligible to contribute an additional $1,000

Update contributions any time during year through EBenefits

Option to contribute after-tax

Plan Basics


Contributions

Withdrawals

Account Management

Plan Basicso HSA Funds

Remaining funds in account roll over every year, never lose contributions Even if you separate or retire

Funds earn interest and grow tax-free with investment options available once minimum balance is met Potential for long-term, tax-free savings

No limit on account balance

Funds available to beneficiary in the event of death


Contributions

Withdrawals

Account Management

o HSA Withdrawals Funds never taxed when used for eligible

expenses such as: Medical (e.g. doctor visit, hospital stay) Prescription and Over-the-counter drugs

(with doctor's prescription) Vision (e.g. contacts, glasses) Dental (e.g. fillings, braces)

Upon retirement , use funds tax-free for medical premiums and eligible medical expenses Including COBRA, Medicare premiums and supplement

plans, and long-term care premiums

Age 65 or older able to pay tax and withdraw funds with no tax penalty for any reason

Plan Basics


Contributions

Withdrawals

Account Management

o HSA Withdrawals Pay eligible expenses of any family member

who qualifies as a dependent on your tax return, even if you cover only yourself Dependent must be covered under plan, for

expenses to apply toward your plan’s deductible

Same-sex domestic partners are eligible to be covered under an employee’s HDHPo Partner must be employee’s qualified tax

dependent for University’s HSA family contribution to apply

o Tax-free distributions can be made from the HSA for the qualified tax dependent’s health expenses

Plan Basics


Contributions

Withdrawals

Account Management

Plan Basicso HSA Withdrawals

Flexibility to pay expenses from HSA or pay out-of-pocket and reimburse yourself Direct deposit option available

Use funds for you, your spouse, and your tax dependents, even if you cover only yourself

Keep your receipts for expenses If not an eligible expense:

o Pay tax on purchase(s)o 20% tax penalty


Contributions

Withdrawals

Account Management

o Limited Purpose Flexible Spending Account (LPFSA) In addition to the HSA, you

have the option to contribute pre-tax to a Limited Purpose FSA (LPFSA)

May only be used for eligible dental and vision expenses

Funds are available for use immediately

Must use funds by end of year (use it or lose it rule)

2014 contribution limit of $2,500 per employee

Plan Basics

o Limited Purpose Flexible Spending Account (LPFSA) If you choose the LPFSA with

your HSA, you will receive one card

PayFlex’s technology will understand which purchases should be applied to your Limited Purpose FSA before your HSA

Claim forms and direct deposit available if you choose to pay out of pocket and reimburse yourself

Plan Basics


IRS SAYS

High-Deductible Health Plan Plus HSA

o To offer an HSA with a high-deductible health plan, certain IRS rules apply

Higher deductible and out-of-pocket maximum with lower premiums than traditional plans

Must combine medical and prescription expenses to one deductible and out-of-pocket maximum

Offer preventive care and certain preventive medications at no cost

Charge fair market value for services (i.e., No “low or no” cost services)

IRS Says

o To participate in an HSA, certain IRS rules apply You must be covered under a high-

deductible health plan (HDHP)

You cannot be covered under any non-HDHP plan in addition to your Purdue HDHP plan

If your spouse has non-HDHP coverage, you cannot be covered by that plan

If you elect an HSA, your spouse cannot have a health care FSA

You cannot be claimed as a dependent on someone else's tax return

IRS Says

Insurance or accounts not allowed with an HSA: Non-HDHP medical

coverage Health care flexible

spending account (HCFSA) or a Spouse's HCFSA

Part A and/or Part B Medicare

TRICARE or TRICARE For Life

Any VA benefits used within previous 3 months

IRS Says

You can have additional insurance that provides benefits for the following items: Accident Disability Dental care Vision care Long term care Specified disease or illness Insurance that pays a fixed

amount per day for hospitalization

o To participate in an HSA, certain IRS rules apply

o To participate in an HSA, certain IRS rules apply You must keep records to show:

Funds were used exclusively to pay or reimburse qualified medical expenses,

qualified medical expenses had not been previously paid or reimbursed from another source, and

medical expenses had not been taken as an itemized deduction in any year

Expenses incurred before you establish your HSA are not qualified medical expenses

IRS Says

o To participate in an HSA, certain IRS rules apply If funds are withdrawn for

anything other than a qualified medical expense prior to retirement, you are subject to taxes plus a 20% tax penalty

IRS Says

o Special Limitation Groups Long Term Disability

Not eligible for HSA

COBRA Not eligible for HSA

Over 65 Active Employees Eligible for HSA, if not covered

under Medicare (including Part A)

Under 65 Retirees Not eligible for HSA

Over 65 Retirees Not eligible for HSA

Purdue’s Special Rules


HOW IT WORKSHigh-Deductible Health Plan Plus HSA

o Doctor’s office

Show your Anthem ID card

Doctor’s office processes through Anthem

Your doctor’s office will bill you for any amount owed

Amount owed will count toward your medical/prescription deductible and out-of-pocket maximum

Choose to use your HSA card or another form of payment

How It Works

o Pharmacy

Show your Anthem ID card

Pharmacy processes through Express Scripts

Payment due at time of purchase

Choose to use your HSA card or another form of payment

Amount owed will count toward your medical/ prescription deductible and out-of-pocket maximum unless you choose a brand name prescription over generic (Member Pays The Difference)

How It Works

o Eye care provider

Show your Purdue ID card

Choose to use your HSA/LPFSA card or another form of payment

o Dentist’s office

If you are covered under a Purdue dental plan, show your Purdue ID card

Choose to use your HSA/LPFSA card or another form of payment

How It Works


SCENARIOSHigh-Deductible Health Plan Plus HSA

Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500

Sandy pays: Sandy pays: Sandy pays:

Annual premium $747 $178 $0

+

Deductible + $750 + $1,000 + $1,000

Coinsurance + $50 N/A N/A

Claims paid using Purdue contribution

N/A - $650 - $650

Sandy pays medical expenses + annual premium

$1,547 $528 $350

Scenarios Sandy: Employee only with $1,000 in medical costs*

Under $44,000 annual salary $44,000 and above annual salary

Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500


Annual premium $1,496 $497 $0

+

Deductible + $750 + $1,000 + $1,000

Coinsurance + $50 N/A N/A


N/A - $650 - $650


$2,296 $847 $350

*Scenario assumes in-network providers are used in all cases.

Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500



+

Deductible + $750 + $1,750 + $2,500

Coinsurance + $850 + $650 + $625


N/A - $650 - $650


$2,347 $1,928 $2,475

Scenarios Sandy: Employee only with $5,000 in medical costs*

Under $44,000 annual salary $44,000 and above annual salary

Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500



+

Deductible + $750 + $1,750 + $2,500

Coinsurance + $850 + $650 + $625


N/A - $650 - $650


$3,096 $2,247 $2,475


Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500



+

Deductible + $750 + $1,750 + $2,500

Coinsurance + $1,650* + $1,750* + $2,500*


N/A - $650 - $650


$3,147 $3,028 $4,350

Scenarios

Purdue Health Plan



Annual deductible

= $750

Annual deductible

= $1,750

Annual deductible

= $2,500



+

Deductible + $750 + $1,750 + $2,500

Coinsurance + $1,650* + $1,750* + $2,500*


N/A - $650 - $650


$3,896 $3,347 $4,350

Sandy: Employee only with $40,000 in medical costs*Under $44,000 annual salary $44,000 and above annual salary



PLAN TIPSHigh-Deductible Health Plan Plus HSA

Tipso Take advantage of your 100% covered preventive

benefits, including preventive medications

o Talk with your doctor or pharmacist Be open and honest, keep the line of communication open As the patient, you have the right to know

Ask the tough questions Make sure to get copies of medical records and imaging to reduce

duplicate services

o Use Tier 1 labs for the best savings www.purdue.edu/hr/Benefits/Medical/purdueChoiceFund.html#Tier1labs

o Check out the Center for Healthy Living for a high quality, low cost option $45 flat fee for center visits No-cost health coach services

Tobacco cessation Medication therapy management Nutritional counseling Employee assistance counseling

Convenient online scheduling option Tier 1 lab location

o Lower your costs for prescriptions Use generics Try home delivery Check with retailers for low cost

prescription programs

Tips

Tipso Always show your insurance

information, even when you have to meet your deductible Medical and prescription

expenses In-network provider discounts

o Keep your receipts and explanations of benefits (EOBs)

o Consider a Limited Purpose Flexible Spending Account Vision/dental expenses

o Check in to additional coverage with accident / critical illness insurance options

Tipso Benefit from the triple tax advantages

Contributions you make are pre-tax Consider contributing what you

would have paid for 2013 premiums

Add what you would typically contribute to your FSA

Funds in HSA grow with interest tax-free You have option to allow HSA to build

now, save funds for later

Funds are tax-free when used for eligible expenses Continue to use HSA funds tax-free on

eligible expenses after retirement, including Medicare premiums

Tipso Choose the right level

of care and save Sample costs for

established patient visit for sinus infection symptoms Assumes 2014 cost No labs/tests included

Convenience Care ClinicAmount Billed $89.00

Discount* $28.00

What’s left to pay $61.00

Immediate Care/Urgent CareAmount Billed $148.00

Discount* $46.35


Center for Healthy LivingAmount Billed $45

Discount $0


* Based on 2013 Cigna discount

o Use available technology Center for Healthy Living

Schedule appointments online

Castlight Shop around for care

Express Scripts Price medications and

order home delivery refills

PayFlex (Healthhub) Track your expenses

EBenefits Update HSA contributions anytime

Tips

Center for Healthy Living

1.Schedule an appointment

2.View lab results from your visits with the center

Castlight1.Search personalized cost and quality information for in-network providers and services

2.Track how close you are to meeting your deductible

3.Connect seamlessly to Express Scripts for prescription pricing, ordering and more

4.See tips to help manage you health care

Castlight1. View your

family’s spending, including:

medical prescription what Purdue

paid

2. Review past medical spending to see how much you paid and why

CastlightCastlight Mobile

Available for iPhone, Android and other smartphones

View personalized cost and quality information

View provider details Check your deductible and out-of-

pocket maximum status

Castlight Guides By Phone Full access over the telephone Call toll-free 888-272-9572, Monday -

Friday, 8 a.m. - 9 p.m.

Castlight www.purdue.edu/castlight

Express Scripts1. Order home

delivery prescriptions

2. Make the switch from retail to home delivery

3. Track your prescription expenses and view history

Express Scripts1. Price

medications and compare costs:

Retail vs. home delivery

Brand name vs. generic equivalent

PayFlex1. View account

details and history

2. File claims, view eligible expenses, and order additional debit cards

3. Update settings to receive email/text notifications

4. Enroll in direct deposit, submit documents online

PayFlex1. Link your bank

account to transfer funds to and from your HSA with ease and view investment options

2. Set up recurring transactions, print claim forms, and use planning tools

PayFlex Mobile Access real-time account information Account balances Claims status Transaction details

Account alerts

Submit claims

Take pictures of receipts and submit from your phone

PayFlex

EBenefits1. Increase and

decrease HSA contributions at any time during the year

Resources

Purdue Benefits

www.purdue.edu/benefits

[email protected]

www.purdue.edu/hrhelpTry HR’s new secure message tool!

765-494-2222

Anthemwww.anthem.comCheck out Anthem’s tools and resources today!

Castlight www.purdue.edu/castlightMobile app available!

888-272-9572

Center for Healthy Living

www.purdue.edu/healthylivingNow schedule appointments online!

765-494-0111

Documents

IS a high-deductible medical plan your best choice?