High Deductible Plans and Health Savings Accountsnaschip.org/Chicago/Persichetti.pdf · 4 HSA...
Transcript of High Deductible Plans and Health Savings Accountsnaschip.org/Chicago/Persichetti.pdf · 4 HSA...
High Deductible Plans and Health Savings Accounts
General Background & Maryland Health Insurance Plan Experience
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Agenda
Background
Maryland Health Insurance Plan (MHIP) Experience
HSA Trends in the Employer Marketplace
Questions?
Background
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HSA Overview
A Health Savings Account (HSA) is a tax-favored account owned by an individual used to pay for current and future medical expenses.
HSAs are used in conjunction with a “High Deductible Health Plan”(HDHP).– Insurance that does not cover first dollar medical expenses (except
for preventive care)– Can be an HMO, PPO or indemnity plan, as long as it meets the
requirements
HSAs were created in Medicare legislation signed into law by President Bush on December 8, 2003.
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HSA Eligibility
Any individual that:– Is covered by an HDHP– Is not covered by other health insurance– Is not enrolled in Medicare– Can’t be claimed as a dependent on someone else’s tax return
Children cannot establish their own HSAsSpouses can establish their own HSAs, if eligible
No income limits on who may contribute to an HSA
No requirement of having earned income to contribute to an HSA
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Definition of a HDHP
Health insurance plan with minimum deductible of (for 2007):– $1,100 (self-only coverage)– $2,200 (family coverage)
Annual out-of-pocket (including deductibles and co-pays) cannot exceed (for 2007):– $5,500 (self-only coverage)– $11,000 (family coverage)
HDHPs can have:– first dollar coverage for preventive care (copays allowed)– higher out-of-pocket for non-network services
All covered benefits must apply to the plan deductible, including prescription drugs
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Definition of a HDHP
If HDHP provides prescription drug benefit, prescription drug expenses must be subject to the annual deductible or the individual may not contribute to an HSA.
Preventive care generally does not include any service or benefit intended to treat an existing illness, injury or condition.
Certain drugs and medications can be considered preventive care.
Safe harbor list of preventive care that HDHP can provide as first-dollar coverage before minimum deductible is satisfied:– Periodic health evaluations (e.g., annual physicals)– Screening services (e.g., mammograms)– Child and adult immunizations– Obesity weight loss programs
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HSA Contribution Rules
Contributions to HSA can be made by the employer or the individual, or both– If made by the employer, it is not taxable to the employee
(excluded from income and wages)– If made by the individual, it is an “above-the-line” deduction– Can be made by others on behalf of individual and deducted by the
individual– Beginning in 2007, individuals can make a one-time transfer from
their IRA to an HSA
For 2007, the maximum amount that can be contributed (and deducted) to an HSA from all sources is:– $2,850 (self-only coverage)– $5,650 (family coverage)
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HSA Contribution Rules
For individuals age 55 and older, additional “catch-up” contributions to HSA allowed– 2007 - $800, 2008 - $900, 2009 - $1,000– Contributions must stop once an individual is enrolled in any type
of Medicare.
The total amount of contributions to an HSA are based on the number of months that the individual is covered by an HDHP as of the first day of the month.– 3 months of HDHP coverage with an annual high deductible
amount of $1,200 will mean that the maximum contribution will be3/12ths of $1,200 or $300.
“Catch-up” contributions must also be pro-rated for number of months eligible.
Maryland Health Insurance Plan Experience
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Maryland Health Insurance Plan Experience
Enrollment & Demographics
Cost Analysis– HSA $2,500 deductible– PPO $1,000 and $500 deductible– EPO– Restricted to Medically Eligible and HIPAA Eligible– Open and closed group experience– Removed $300,000 from HSA medical experience due to $434,000
IP hospital stay
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Evolution of MHIP HDHP in Maryland
End of Year
84523% less than $1,000 non-
HDHP$2,500$2,500July06 – June07
237Same as $1,000 deductible non-
HDHP$2,500$1,200July05 – June06
88Same as $1,000 deductible non-
HDHP$4,500$1,200July04 – June05
SubscribersPremiumsInc. DeductDeductiblePeriod
OOP Max
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Maryland Health Insurance Plan – Monthly EnrollmentOpen Group
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07
Month
Mem
bers
HDHP $1,000 PPO $500 PPO EPO
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Maryland Health Insurance Plan – Subscriber Income Distribution by Plan
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Income < $35,000 $35,000 < Income < $55,000 $55,000 < Income < $75,000 $75,000 < Income
HDHP Non HDHPNotes:Income is self reported
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Maryland Health Insurance Plan – Subscriber DemographicsClosed Group
Plan Subscribers Average Age % Male Mem/SubHDHP 242 52.4 55% 1.37$1,000 PPO 808 51.8 50% 1.32$500 PPO 1,256 47.5 43% 1.30EPO 458 44.2 46% 1.20Total 2,764 48.6 46% 1.30
Plan Subscribers Average Age % Male Mem/SubHDHP 153 51.7 59% 1.26$1,000 PPO 579 50.6 50% 1.28$500 PPO 785 45.7 44% 1.27EPO 325 42.5 50% 1.16Total 1,842 47.2 48% 1.25
Plan Subscribers Average Age % Male Mem/SubHDHP 89 53.6 48% 1.56$1,000 PPO 229 54.8 49% 1.42$500 PPO 471 50.5 41% 1.36EPO 133 48.5 38% 1.29Total 922 51.6 43% 1.39
Total
Medically Eligible
HIPAA Eligible
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Maryland Health Insurance Plan – PMPY CostOpen Group
HIPAA Eligible$7,260$840$6,420293HDHP$5,701$1,249$4,452544$1,000 PPO$7,263$2,087$5,1761,058$500 PPO$10,401$2,619$7,783301EPO
$10,753$2,263$8,491670EPO
Medically Eligible
$6,755$1,664$5,0911,701$500 PPO$7,842$1,236$6,6061,187$1,000 PPO$9,206$951$8,255469HDHP
TotalRxMedicalMembersPlanPMPY Cost
Notes:Per Member Per Year data on an estimated incurred basisNo pre-existing exclusion for MHIP during data period
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Maryland Health Insurance Plan – PMPY CostClosed Group
HIPAA Eligible$7,083$899$6,184139HDHP$3,966$599$3,368325$1,000 PPO$6,012$1,359$4,652641$500 PPO$7,458$1,759$5,698172EPO
$8,818$1,973$6,844378EPO
Medically Eligible
$5,825$1,011$4,814996$500 PPO$6,881$945$5,936739$1,000 PPO$10,161$1,132$9,029193HDHP
TotalRxMedicalMembersPlanPMPY Cost
Notes:Per Member Per Year data on an estimated incurred basisRx average assumed to be same as open groupNo pre-existing exclusion for MHIP during data period
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Maryland Health Insurance Plan – Inpatient Utilization StatisticsClosed Group
3.7260.070.0Pop. Avg.
Avg. DaysAvg. Days
HIPAA Eligible3.9482.0122.3139HDHP4.9424.686.2325$1,000 PPO4.3418.198.3641$500 PPO5.4790.7145.3172EPO
4.7645.5137.6378EPO
Medically Eligible
4.2482.9115.5996$500 PPO4.6462.8101.5739$1,000 PPO8.81,145.1129.5193HDHP
Per AdmitPer 1,000Per 1,000MembersPlanAvg. Admits
Notes:Utilization statistic on an immature incurred basisNo pre-existing exclusion for MHIP during data period
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Maryland Health Insurance Plan – Member Out of Pocket (OOP) ExpensesClosed Group
TotalTax
HIPAA Eligible$3,172($350)$1,773$1,748HDHP$4,437$0$3,198$1,239$1,000 PPO$4,706$0$3,394$1,313$500 PPO$6,541$0$5,234$1,307EPO
$6,525$0$5,234$1,291EPO
Medically Eligible
$4,585$0$3,394$1,192$500 PPO$4,529$0$3,198$1,330$1,000 PPO$3,082($327)$1,773$1,636HDHP
Member OOPSavingsPremiumsCopaysPlanMemberMember
Notes:Per Member Per Year data on an estimated incurred basisRx copays estimated to equal 18% of total Rx cost for non HDHPRx copays estimated as difference between $500 PPO and HDHP paidAssumed 20% tax rate
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Maryland Health Insurance Plan – Conclusions and Observations
HSA plans:– Have higher members in upper income brackets– Have a slighlty older population– Attract more male subscribers– Attract members with higher risk profiles
Pros and Cons of High Risk Pools offering HSA plans– Pros
Consistent with general trend of medical consumerismAffords members tax advantaged savings
– ConsExposes High Risk Pool to anti-selectionLower member OOP expenses increase overall loss ratio
HSA Trends in the Employer Marketplace
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Survey results suggest CDHP growth will accelerate among smaller employersPercent of employers offering/likely to offer CDHP, by employer size
Very likely to offer in 200720062005EMPLOYER SIZE
37%21%18%12%6%7%7%5%
39%22%20,000 or more22%19%10,000-19,99921%10%5,000-9,99915%4%1,000-4,99910%4%500-99913%5%200-49917%1%50-19913%2%10-49 employees
Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans
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28%30%21%22%Jumbo employers9%10%6%6%Large employers8%10%2%4%Small employers
HRA-based CDHP
HSA-based CDHP
HRA-based CDHP
HSA-based CDHP
Very likely to offer CDHP in 2007Offer CDHP in 2006
HSA-based CDHPs quickly overtaking HRA-based plans
Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans
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Assistance required by employees enrolling in HSA-based CDHP, compared to other medical plansLarge CDHP sponsors
About the same amount
17%
More assistance
40%
Less assistance
5%
Much more assistance
31%
Don't know6%
Source: Mercer 2007 National Survey of Employer-Sponsored Health Plans
Questions?