A High Deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. If you enroll in a HDHP with the County, you will also be required to enroll in a Health Savings Account (HSA) to which the County will contribute money to help you pay for your deductible and other out-of-pocket costs. You can also contribute pre-tax money from your paycheck into your HSA (Tax savings are at the federal level, contributions are not eligible to be contributed pre-tax at the state level in California).
What is a high deductible health plan (HDHP)?
HDHP is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. If you enroll in a HDHP with the County, you will also be automatically enrolled in a Health Savings Account (HSA) to which the County will contribute money to help you pay for your costs before the deductible and other out-of-pocket costs. You can also contribute pre-tax money from your paycheck into your HSA.
Why is the County offering these plans?
These plans give employees more options which provide greater control, flexibility, and responsibility over how their health care dollars are spent. Additional health plan options give employees the freedom to choose what plan best meets their needs and the needs of their families.
Do these plans impact in any way my existing health plan through the County?
No. These plans are being offered as additional options for employees. Employees are free to choose one of these new plans or remain enrolled in their current plan. There is no impact to existing plans.
How does the HDHP work?
If you enroll in a HDHP plan, you would pay 15% of the monthly premium cost, the same premium cost share as if you were enrolled in one of the other HMO plans. Since the premiums are lower for the HDHP, your monthly cost is generally lower than if you were enrolled in the other plans. There is a deductible of either $1,500 (if you are enrolled in single) or $3,000(if you are enrolled in the 2-party tier or family tier). If you are enrolled in a HDHP plan, you are responsible for the full cost of any medical services you incur until you meet your deductible, then co-payments apply.
For more details about reaching your deductible and out-of-pocket maximum, please refer to your Evidence of Coverage or Summary of Benefits.
All County plans, including the new HDHP plans, provide 100% coverage for preventive care from in-network providers, with no deductibles or copays. This means that you and your family can receive the important preventive care services you need to manage your health, such as routine physical exams and screenings all covered at 100%, with no out-of-pocket costs.
Here is an example: Employee Kate, her spouse, and their two children are enrolled in the Blue Shield PPO HDHP plan. They use in-network providers only. Their family deductible is $3,000 and can be reached by one person, or any combination of family members. If their medical expenses reach $3,000, then the family deductible has been satisfied for the remainder of the year, and she and her family members’ eligible services will be covered (at 90% for most services) by the plan. If Kate and her family’s medical expenses reach $6,000 (the out-of-pocket maximum), then the family’s eligible medical services for the rest of the year will be covered at 100%.
How does the HSA work with the HDHP plan?
If you choose a HDHP plan, you will be automatically enrolled in a HSA. For 2016, the County will contribute 50% of the plan deductible ($750 for self coverage; $1,500 for 2-party or family coverage) to your HSA. County contribution is prorated ($28.85/paycheck for self coverage; $57.69/paycheck for 2-party or family coverage.) You can also choose to set aside pre-tax money to offset your deductible. If you still have money in your account after you meet your deductible, you can use it for co-pays and other eligible costs.
Tax benefits of an HSA are three-fold: your additional voluntary contributions are pre-tax, interest earned is tax-free, and HSA distributions are tax-free if they are used to pay for qualified medical expenses.
Your HSA belongs to you. That means that you can keep it even if you change employers, decide to drop the plan at a later time, or retire. Interest earned on your HSA account is tax-free, and tax-free withdrawals may be made for qualified medical expenses. Unused funds and interest are carried over, without limit, from year to year. Your funds will accumulate without a maximum cap.
What can I use the funds in my HSA for?
Your HSA can be used to pay for "qualified medical expenses," as defined by IRS Code 213(d). These expenses include, but are not limited to, medical plan deductibles, diagnostic services covered by your plan, long-term care insurance premiums, LASIK surgery and some nursing services.
When you become Medicare enrolled you can use the account to purchase any health insurance other than a Medigap policy. You may not, however, continue to make contributions to your HSA once you are Medicare enrolled.
For the complete list of IRS-allowable expenses, you can request a copy of IRS Publication 502 by calling 1-800-829-3676, or visit the IRS website at www.irs.gov and select "Forms and Publications." Please note, however, while health insurance premiums are listed as an allowable expense they are not reimbursable from HSAs, unless you are receiving Federal unemployment compensation.
Can I use my HSA to pay for non-health related expenses?
Yes. You may withdraw money from your HSA for items other than qualified health expenses, but it will be subject to income tax and, if you are under 65 years old, an additional 20 percent tax penalty on the amount withdrawn.
If I enroll in a HDHP with HSA, can I also enroll in the County’s FSA plan?
No. An employee enrolled in a high deductible health plan with a health savings account cannot also have a general purpose health care flexible spending account. IRS rules prohibit it. However, you would be eligible to enroll in the County’s Limited Expense Health Care Flexible Savings Account (LEX FSA).
What is the Limited Expense Health Care Flexible Savings Account (LEX FSA)?
It is an account where you contribute money from your salary before taxes are withheld, incur eligible dental and vision care expenses and get reimbursed. It is available only to employees who are enrolled in a high deductible health plan (HDHP) with a health savings account (HSA). Dental and vision care expenses are the only reimbursable expenses covered under the LEX FSA. Eligible expenses include your out-of-pocket costs for such services/products as:
- Dental Care Vision Care
- Cleanings Refractions
- Fillings Eyeglasses
- Crowns Contact lenses
- Vision correction procedures
Cosmetic services – even if dental or vision related – are not eligible expenses. All of the other expenses normally eligible under a "general" health care flexible spending account are NOT eligible under a LEX FSA. By using a LEX FSA, you can preserve the funds in your health savings account to use/save for other purposes.
I only have single coverage. Can I use my HSA to pay for my spouse’s or other family member’s uncovered medical expenses?
Yes, however, you are not allowed to have both an HSA and a Health Care FSA at the same time. You may enroll in the LIMITED Healthcare FSA (for dental and vision eligible expenses only.)
How should I decide if a HDHP is right for me?
If your medical expenses are generally limited to routine or preventive care, you may want to consider an HDHP, especially since the County is contributing a significant portion of the deductible- 50% for 2016. An HSA is also a tool you can use to make additional voluntary contributions to accelerate the accumulation of funds for future or retiree medical expenses.
A HDHP plan also offers protection from unexpected accidents or illnesses at a lower premium cost.
What if I have a catastrophic event? What is my financial risk if I am enrolled in a HDHP plan?
Your out-of-pocket expenses for covered medical services are limited to the catastrophic in-network limit of $3,000 for Self-Only coverage and $6,000 for 2-Party and Family coverage. Once you hit this limit in expenses in a calendar year, your medical services are 100% covered and you will not incur additional out-of-pocket covered medical expenses including doctor visits co-pays and prescriptions.
How will I know when I meet my deductible?
Your deductible “resets” at the start of each plan (calendar) year. When you visit your doctor or have a procedure, your provider submits a claim to your health plan. Your plan will track the cost of the service and apply eligible costs to your deductible. To find out what your plan considers to be an eligible cost, read through your plan documents or contact your plan with any questions. The explanation of benefits (EOB) form that your plan sends after you receive a service will show whether you have met your deductible or not. If you are still below the limit, your EOB will say that the plan has not paid for the service and you will need to pay the full cost. If you have met your deductible, your EOB will show how much your plan paid, according to its rules. You can also call your plan and ask how close you are to meeting your deductible. It’s a smart idea to keep track on your end, too. Be sure to keep a record and copy of all your healthcare receipts and claims, along with how much should be applied to your deductible. That way you can make sure that your health plan is recording your payments and applying them to your deductible correctly.
Employees are responsible for making sure they are not enrolled in an FSA or other type of health benefit disqualifying for an HSA. It is ultimately the enrollee's responsibility to follow IRS rules.
How can I receive the most value from a HDHP plan?
You can get the most value from your HDHP my actively managing your health care:
- Know the plan and how you use your medical care. Knowing how your plan works and keeping track of how much you’ve paid each plan year are the first steps to knowing how to use your plan well.
- Use preventive care. Take advantage of your 100% in-network preventive care so you can stay healthy and detect problems before they become serious.
- Lead a healthy lifestyle. Not only will you feel better, but you may end up spending less on health care – less of your own money – and saving more of your HSA for future health care needs.
- Know the costs and look for appropriate alternatives. Taking financial responsibility is another part of using the plan. You can save money by shopping for the best local, in-network rates and by budgeting your expenses so you can set aside enough money in your HSA. You should also consider alternative means of care and discuss them with your provider (e.g. generic instead of brand drugs, an X-ray instead of an MRI, going to your primary care physician or an urgent care facility rather than an emergency room for non-life threatening medical conditions, etc.).
Before my visit, how can I find out how much I’ll need to pay?
If you are a Kaiser member, call the number on the front of your ID card. If you are a Blue Shield member, call your doctor’s office. Remember that estimates are based on the services you’re scheduled to receive, and may not be exactly what you’ll owe for your visit.