Do-it-Yourself Health Care –The Health Savings Account
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Do-it-Yourself Health Care –The Health Savings Account
- 1. October 27, 2009 Dave Spalding, VP Medical Banking Blue Cross and Blue Shield of Minnesota © 2008 Blue Cross and Blue Shield of Minnesota Do-it-Yourself Health Care – The Health Savings Account Change and Reform in the American Health Care System
- 3. Brief History of HSAs
- 4. HSA Timeline 8 million people covered by HSAs Archer Medical Savings Accounts (MSA) HSAs take off following key changes Medicare Modernization Act creates Health Savings Accounts 1996 2003 2009 Dec. 2006 1995 2010
- 8. The Basics
- 17. HSA Math Example
- 18. Income Tax Savings Example
- 21. Are higher deductibles “working”? The Finance Department says YES Source: Watson Wyatt 2008 Purchasing Value in Healthcare employer survey Forecasted premium increase
- 22. Employer Contributors and Amounts Source: Blue Cross Blue Shield Association CDH survey 2008 Source: Kaiser Family Foundation / HRET 2009 Annual Benefits Survey
- 25. Changing Consumer Behavior Source: Blue Cross Blue Shield Association CDH survey 2008
- 26. More Data Source: Blue Cross Blue Shield Association CDH survey 2008
- 27. Healthier Behavior Source: Blue Cross Blue Shield Association CDH survey 2008
- 33. © 2008 Blue Cross ® and Blue Shield ® of Minnesota is a nonprofit independent licensee of the Blue Cross and Blue Shield Association
Editor's Notes
- Sandy Shapiro makes introductory remarks and introduces the Options Blue team.
- I wanted to take a moment to review the history of CDHPs. FSAs have been around for a long time, but HSAs and HRAs are still pretty new. 1996 Archer Medical Savings Accounts (MSAs) were first introduced as a pilot program. They were similar to today’s HSA with respect to coordination with a high deductible health plan and tax advantages However they were limited in scope and available only to self-employed and small businesses 2002 the IRS issued a series of rulings and other guidance that describe the requirements for a health reimbursement arrangement. Medicare Prescription Drug, Improvement and Modernization Act was introduced in 2003 Removed limitations on MSAs and re-named them “health savings accounts” or HSAs (Section 223 of the Code) December, 2006 additional changes were made that improved account funding opportunities SelectAccount: 20 years of administering personal spending accounts. Blue Cross: our early MSA experience paid off and allowed us to be leaders in offering HSAs in this market. Blue Cross: largest CDHP enrollment for a single state insurer; 8 th nationally in terms of CDHP health plan enrollment. 54% of our enrollment is in HSAs. Blue Cross is very committed to consumer directed health plans. We have 20 years of experience administering personal spending accounts. (notes: invested $10 million in the last two years, and another $8 to $10 million over the next two years). Blue Cross was the first plan in Minnesota to introduce CDHP plans. Today, we rank 8 th nationally in CDHP membership (213,000 members). And among the Blues, Minnesota ranks #1 in CDHP membership. SelectAccount, our subsidiary that administers the spending accounts, is the 8 th largest custodian nationally (managing $68 million in total HSA assets). Small employers account for 88% of our CHDP groups and 20% of CDHP membership. Our single largest customer is the Minnesota Service Cooperatives with 12,600 account holders. And, we have 13,300 Individual account holders. Our penetration of small and mid-size employers translates into products and services well suited to Concordia’s customer base. Source for rankings: Inside Consumer Directed Health Care
- As I just mentioned, the IRS defines what is a qualified HDHP. It’s subject to change each year IRS makes this change and they have to let us know by June 1 for the following year. In 2008 these requirements are -
- For 2008. these amounts are… Indivuduals who are 55 and older, the IRS allows them to make…
- There are significant consequences if you withdraw dollars for non-qualified medical expenses. For starters, you need to count it as income when you file your tax return. Plus, a 10 % tax penalty applies. However, if you are over age 65, you’ll pay income tax on those dollars, but no penalty. At death if the surviving spouse is the designated beneficiary, the HAS becomes an HAS for that individual. If someone other than a spouse is the designated beneficiary, the HAS is terminated as of the date of death and the fair market value becomes taxable income to that person. If there is no designated beneficiary the remaining assets become part of the estate and the fair market value becomes taxable income to the deceased individaul on the final return.
- Speak to bullets…. Custodial account owned by the individual . It’s also portable – because the account is owned by the employee if an employee terminates his/her employment the account travels with the employee. If the employee continues to be covered under a qualified HDHP he/she can continue to contribute to their HSA. If they are no longer covered by a HDHP, they can no longer contribute however they can spend down their account or save the dollars for future expenses. The account can be funded by the employee, employer or both to a maximum contribution amount set by the IRS Contributions can be used for current medical expenses or saved for future use – such as their future retirement expenses. its up for the employee to decide when they want to use their dollars. Puts the employee in the driver seat. Withdrawals are not taxed if used for qualified medical expenses. Unused funds roll over to the next year – there is not “use it or lose it” like with an FSA Interest earned and investment gains are also tax free. HSAs must be paired with a qualified HDHP – The IRS sets these requirements, which we will now look at review…
- Speak to bullets…. Custodial account owned by the individual . It’s also portable – because the account is owned by the employee if an employee terminates his/her employment the account travels with the employee. If the employee continues to be covered under a qualified HDHP he/she can continue to contribute to their HSA. If they are no longer covered by a HDHP, they can no longer contribute however they can spend down their account or save the dollars for future expenses. The account can be funded by the employee, employer or both to a maximum contribution amount set by the IRS Contributions can be used for current medical expenses or saved for future use – such as their future retirement expenses. its up for the employee to decide when they want to use their dollars. Puts the employee in the driver seat. Withdrawals are not taxed if used for qualified medical expenses. Unused funds roll over to the next year – there is not “use it or lose it” like with an FSA Interest earned and investment gains are also tax free. HSAs must be paired with a qualified HDHP – The IRS sets these requirements, which we will now look at review…
- Speak to bullets…. Custodial account owned by the individual . It’s also portable – because the account is owned by the employee if an employee terminates his/her employment the account travels with the employee. If the employee continues to be covered under a qualified HDHP he/she can continue to contribute to their HSA. If they are no longer covered by a HDHP, they can no longer contribute however they can spend down their account or save the dollars for future expenses. The account can be funded by the employee, employer or both to a maximum contribution amount set by the IRS Contributions can be used for current medical expenses or saved for future use – such as their future retirement expenses. its up for the employee to decide when they want to use their dollars. Puts the employee in the driver seat. Withdrawals are not taxed if used for qualified medical expenses. Unused funds roll over to the next year – there is not “use it or lose it” like with an FSA Interest earned and investment gains are also tax free. HSAs must be paired with a qualified HDHP – The IRS sets these requirements, which we will now look at review…