Employer’s  Guide toChoosing the Right HSA
Choosing the Right HSA                                                    Overview                               How HSAs ...
Choosing the Right HSA                                                                             The emergence of HSAs  ...
Choosing the Right HSA                                                                      Four HSA statistics of interes...
Choosing the Right HSA                                                    The fundamentals of an HSA              Health S...
Choosing the Right HSA                                                    How an HSA Works       Help employees save mone...
Choosing the Right HSA                                  The Advantages of an HSA vs. an HRA or FSA                        ...
Choosing the Right HSA                        HDHPs and HSAs provide key benefits for employers                          ...
Choosing the Right HSA                                   HSAs provide your employees tax advantages:          Pre-tax cont...
Choosing the Right HSA               There are many reasons for your employees to open an HSA                             ...
Choosing the Right HSA               HDHPs/HSAs can be a great investment for your employees                              ...
Choosing the Right HSA                                                     Employees can use HSA funds for                ...
Choosing the Right HSA                  Your employees can withdraw HSA funds without penalty                             ...
Choosing the Right HSA             How to increase HDHP enrollment by offering the right HSA                              ...
Choosing the Right HSA                                                                        Fund your employees HSAs    ...
Choosing the Right HSA                                                    Communicate early and often                     ...
Choosing the Right HSA                                                           Choosing the Right HSA Custodian         ...
Choosing the Right HSA                                                    In choosing an HSA custodian         Look at th...
Choosing the Right HSA                                                    Employer’s roles and responsibilities           ...
Choosing the Right HSA                                     Ensure a Healthy Future with an Alliant HSA                    ...
Choosing the Right HSA                                                                    HSA Investment Option           ...
Choosing the Right HSA    For more information or to download our white paper, Is an HDHP/        HSA the right prescripti...
Choosing the Right HSA                     This material is prepared for educational purposes only and was developed      ...
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Choosing the Right HSA

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An employer's guide to choosing the right HSA from Alliant Credit Union. For more information, or to download our white paper, visit http://www.alliantatwork.com.

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Choosing the Right HSA

  1. 1. Employer’s Guide toChoosing the Right HSA
  2. 2. Choosing the Right HSA Overview How HSAs work Benefits of HSAs for your company and your employees How to evaluate HSA providers How to implement your program© 2010 Alliant Credit Union. All rights reserved. 2
  3. 3. Choosing the Right HSA The emergence of HSAs Healthcare Savings Accounts (HSAs) were introduced in 2003 as a way to control rising health care costs Way to save premium costs and maintain a competitive health care benefit package Companies can save 20% to 40% in their premiums. The average savings is around 30%1 Attract and retain valued employees Today 45% of U.S. companies offer an HSA-eligible High Deductible Health Plan (HDHP)2 Sources: 1. Joe Williams, business development manager for Bay Benefits Insurance Services, 2009. 2. C. William Sharon, AON Consulting/ISCEBS survey, October 2008.© 2010 Alliant Credit Union. All rights reserved. 3
  4. 4. Choosing the Right HSA Four HSA statistics of interest  Over 8 million Americans GROWTH OF have an HSA3 HSA HDHP ENROLLMENT7  8% of all U.S. employees in (from March 2005 an employee-sponsored health to January 2009) insurance plan are in an HDHP/HSA-eligible plan4  In companies that offer HDHP/ HSA as an option, about 15% of employees participate5  By 2012, between 11 and 13 million Americans are expected to have an HSA6 Sources: 3.2009 annual census by America’s Health Insurance Plans, published May 13, 2009. 4. Kaiser Family Foundation and Health Research Education Trust, “Employer Health Benefits 2008 Summary of Findings”. 5. Pediatrics, the official journal of the American Academy of Pediatrics, March 1, 2007. 6. Diamond, “Diamond Management & Technology Consultants Issues Updated HSA Estimates,” January 7, 2009. 7. 2009 AHIP HSA/HDHP Census.© 2010 Alliant Credit Union. All rights reserved. 4
  5. 5. Choosing the Right HSA The fundamentals of an HSA Health Savings Accounts: tax-deferred, interest-accumulating accounts that can only be offered in conjunction with an HDHP Employees must be covered by a qualified HDHP before enrolling in an HSA Contributions may be made to employees’ accounts by company & employee 2010 contribution limit for individual plans is $3,050; $6,150 for family plans Employees age 55 or older can also make a $1,000 “catch-up” contribution© 2010 Alliant Credit Union. All rights reserved. 5
  6. 6. Choosing the Right HSA How an HSA Works  Help employees save money to use for their qualified medical expenses  Paid for with pretax or tax-deductible dollars and is fully owned by the employee  Employees and employers can contribute to an HSA  HSA accountholders can withdraw funds at any time, without penalty, if used for qualified medical expenses  Access to funds typically by debit card, check or online banking system  HSA funds earn interest provided by the HSA custodian  The account is portable and unused funds accumulate and rollover year to year© 2010 Alliant Credit Union. All rights reserved. 6
  7. 7. Choosing the Right HSA The Advantages of an HSA vs. an HRA or FSA HSA (Health Saving Account) HRA (Health Reimbursement Account) FSA (Flexible Spending Account) Eligibility Employees must be covered by an HDHP. Employees in companies that offer this benefit. Employees in companies that offer this benefit. (Employees no longer covered by an HDHP keep the (Former employees can be included) (Former employees cannot be included) HSA, but can no longer make contributions) Qualifying health Employee must be covered by an HDHP Although usually offered in conjunction with an HDHP, No health insurance requirements insurance needed there are no health insurance requirements for an employee to participate in an HRA Contributions Funding can be made by the employer, the Funding can be made only by the employer Funding is usually made by employees through a employee or any person on behalf of an eligible reduction in their salary. Contributions can be made employee by employer, employee or both Annual contribution In 2011, the contribution limit to individual plans is No contribution limits, although employers typically No required contribution limit, although employers limits $3,050. Limit for family plans is $6,150. Employees contribute less than the annual deductible of their usually impose one aged 55 or older can also make a “catch-up” health plan offering contribution of $1,000 Qualifying expenses Most unreimbursed medical expenses Note: an Most unreimbursed medical expenses, although Most unreimbursed medical expenses, although employee may qualify for both an HSA and an FSA. employers may impose limitations, such as no employers may impose limitations. Cannot be used However, they cannot “double-dip” – be reimbursed by payments for long-term care or health insurance for long-term care or health insurance premiums both accounts for the same expense premiums Allowable non-medical Permitted, but subject to income tax and 20% penalty. Not permitted Not permitted withdrawals After accountholder reaches age 65, or upon death or disability, funds used for non-medical expenses are subject only to income tax Carryover of unused Full amount of funds can be carried over Permitted, although some employers limit the Balances left at year’s end (or up to 2 ½ months funds and rollovers indefinitely amount that can be carried over. Employees are after year’s end, if employer permits) are forfeited to allowed a limited, one-time rollover to an HSA employer. Employees are allowed a limited, one-time rollover to an HSA Portability Portable Funds may be portable – it’s at the discretion of No, funds usually forfeited at termination, although the employer. Also, subject to COBRA provisions COBRA extensions sometimes apply© 2010 Alliant Credit Union. All rights reserved. 7
  8. 8. Choosing the Right HSA HDHPs and HSAs provide key benefits for employers  HOW HSAs BENEFIT EMPLOYERS Reduced premiums  Tax savings  An enhanced benefit package  An incentive for your employees to make responsible health care spending decisions  An incentive for your employees to focus on maintaining their health  Less administrative hassles© 2010 Alliant Credit Union. All rights reserved. 8
  9. 9. Choosing the Right HSA HSAs provide your employees tax advantages: Pre-tax contributions made via payroll deductions will reduce federal tax liability Contributions and dividends are not taxable if used for qualified medical expenses Contributions made with after-tax dollars are deductible Unused funds remain in the HSA year after year, earning tax-deferred interest© 2010 Alliant Credit Union. All rights reserved. 9
  10. 10. Choosing the Right HSA There are many reasons for your employees to open an HSA Control the way funds Save for future are spent Account medical expenses is portable and invested Can move the HSA from one financial institution to another© 2010 Alliant Credit Union. All rights reserved. 10
  11. 11. Choosing the Right HSA HDHPs/HSAs can be a great investment for your employees Your company can HSAs are a great Funds left in HSA will make contributions to retirement savings tool earn interest tax-free employees’ HSAs Once deductible is met, many The HDHP deductible is HDHP plans pay 100% of typically less than the HSA qualified medical expenses contribution limits© 2010 Alliant Credit Union. All rights reserved. 11
  12. 12. Choosing the Right HSA Employees can use HSA funds for qualified medical expenses including Dental treatment, such as fillings, COBRA insurance braces and extractions Medicare premiums (if no longer Eye exams, eyeglasses and contact lenses covered by an HDHP) but not Medigap Out-of-pocket expenses, such as deductibles, Retiree health expenses coinsurance and co-payments Hearing Aids Prescriptions Acupuncture Qualified long-term care services and insurance Qualified medical expenses are subject to change by the IRS. Please visit www.irs.gov for a current list of qualified medical expenses.© 2010 Alliant Credit Union. All rights reserved. 12
  13. 13. Choosing the Right HSA Your employees can withdraw HSA funds without penalty  At any time to cover qualified medical expenses  Funds used for non-medical expenses when accountholders reach age 65, or upon death or disability, are subject only to income taxes and will not be assessed a penalty© 2010 Alliant Credit Union. All rights reserved. 13
  14. 14. Choosing the Right HSA How to increase HDHP enrollment by offering the right HSA Educate Employees Fund Offer Employees’ Wellness Accounts Programs© 2010 Alliant Credit Union. All rights reserved. 14
  15. 15. Choosing the Right HSA Fund your employees HSAs 72% 61% 61% of consumers are more likely to 72% of the firms that offer an participate in an HDHP if their employer HDHP/HSA fund the account8 contributes to their HSA9 $898/ $1,522 single coverage family coverage 71% The average employer contribution 71% of employees who received employer is $898 for single coverage; contributions opened an HSA versus 48% $1,522 for family coverage10 of those who received no contribution11 How much should your company contribute to your employees’ HSAs? 50% to 70% of the deductible, benefit experts recommend12 Sources: 8. Kaiser Family Foundation and Health Research Education Trust, “Employer Health Benefits 2008 Summary of Findings”. 9. Guardian Life Insurance, “Benefits & Behavior: Spotlight on Consumer-Driven Health Care,” 2008.10. U.S. Bureau of Labor Statistics, 2008, cited in “Benefits Marketplace 2009,” on Benefitnews.com. 11. Blue Cross & Blue Shield Association study, cited in “Members of CDHPs more engaged,” Business Insurance, October 27, 2008 12. Joe Williams, business development manager for Bay Benefits Insurance Services, 2009.© 2010 Alliant Credit Union. All rights reserved. 15
  16. 16. Choosing the Right HSA Communicate early and often Be prepared to address a learning Be prepared curve when introducing an HSA Have materials to explain how the plan Have materials works and the benefits Communicate via intranet, newsletters, Communicate payroll stuffers, staff meetings, etc.© 2010 Alliant Credit Union. All rights reserved. 16
  17. 17. Choosing the Right HSA Choosing the Right HSA Custodian Although some HDHP insurance companies have a “preferred relationship” with an HSA custodian, there’s no requirement to choose that custodian Although large banks are winning HSA market share If you change insurance Wider range of investment due to deals with large plan providers, its affiliate HSA options and higher interest consultants and employers, provider will often raise rates offered through smaller providers and third- your fees or lower independent HSA providers party administrators may your interest13 provide the best products and services for the end user Source: 13. ehow.com, tips on choosing an HSA provider by Diane Monde Dill, cited in HR Management, July 28, 2009.© 2010 Alliant Credit Union. All rights reserved. 17
  18. 18. Choosing the Right HSA In choosing an HSA custodian  Look at the relationship from your employees’ point-of-view  Choose an HSA custodian with a high interest rate  Choose an HSA custodian with a low-fee or no-fee structure  Choose a custodian that provides your employees with easy access to their HSA funds  Choose a custodian with good investment options  Choose a custodian that provides excellent customer service for its HSA  Choose a custodian that works well with its clients© 2010 Alliant Credit Union. All rights reserved. 18
  19. 19. Choosing the Right HSA Employer’s roles and responsibilities Include your accounting and programming departments for tax purposes and record keeping Plan to offer HSA contributions? Involve your payroll department or vendor Make sure the HSA custodian is compatible with your processes and operations Define which activities are the responsibility of the HSA custodian You will not be involved with any claim reviews, adjudications or reimbursement checks© 2010 Alliant Credit Union. All rights reserved. 19
  20. 20. Choosing the Right HSA Ensure a Healthy Future with an Alliant HSA 24/7 EARN MORE Personal and automated with one of the industry’s member service twenty highest dividend rates four hours a day, seven days a week SAVE MORE GET MORE with no fees for account with a Free VISA® HSA opening, maintenance Debit Card, Free HSA or transactions Checks, and Free online banking Alliant membership is an exclusive benefit available to employees, retirees and members of qualifying Select Employee Groups, organizations/associations and their family members; and individuals who live or work in qualifying communities and their family members. Applicants must also meet other eligibility requirements for Alliant membership. Please visit www.alliantcreditunion.org for details regarding Alliant membership eligibility.© 2010 Alliant Credit Union. All rights reserved. 20
  21. 21. Choosing the Right HSA HSA Investment Option trustworthy full-service no cost, no obligation consultations Retirement Income Experienced advisors with Get the assistance you Planning, 401k and a credit union service need, consistent with Pension Plan Rollovers, philosophy your risk tolerance, IRA Services, College investment Saving Plans & Wealth timelines & goals Management *Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/ SIPC, a registered broker/ dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America. FR121002-4F80© 2010 Alliant Credit Union. All rights reserved. 21
  22. 22. Choosing the Right HSA For more information or to download our white paper, Is an HDHP/ HSA the right prescription for your company?, visit http:// www.alliantatwork.com/.© 2010 Alliant Credit Union. All rights reserved. 22
  23. 23. Choosing the Right HSA This material is prepared for educational purposes only and was developed by Alliant Credit Union. All reasonable efforts were taken to ensure the accuracy of the information provided and to properly attribute sources. However, consult your plan administrator, tax and legal advisors for advice. Alliant disclaims any liability for your reliance on the information presented.© 2010 Alliant Credit Union. All rights reserved.SEG333-r11/10 23
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