Celebrating 75 Years 1932 -2007. Consumer Directed Health Plans How can they Impact Retiree Health Benefits.

Celebrating 75 Years

1932 -2007

Consumer Directed Health PlansHow can they Impact Retiree Health Benefits

Consumer Directed Plans

• Usually use a High Deductible Health Plan

• Have a component of participant responsibility.

• Empower participants to make independent decisions while providing an economic incentive.

• Successful plans will provide tools to help participants in their decision process.

What are Consumer Directed Health Plans?

• HRA’s - Health Reimbursement Arrangements

• HSA’s - Health Savings Accounts

• MSA’s (MMSA’s)- (Medicare) Medical Savings Accounts

HRA - Health Reimbursement Account

Employer Benefits

• Do not require a qualified plan• More flexibility in plan design• Employer owns benefit• Only portable to the extent

employer allows • Limited long term liability• Stabilization of rising costs

Employee Benefits• Direct access to providers of choice -

no referrals• No out of pocket expenditure for

expenses under HRA balance• Control over healthcare decisions• Increasing benefits - rewarded for good

health• Stabilization of rising costs

HRA - Health Reimbursement Account

• Qualifeid High Deductible Plan (Required)

• Tax Free Savings Plan to Pay for Healthcare Expenses

• Available to any size Group• Employee Owns Account

HSA Plans

• High Deductible• No first Dollar Benefits except for

Preventative Care• Filed as a HSA Compatible Plan

HSA - Qualified Medical Plan

• Must use a Qualified Financial Vendor

• Can Fund up to $2850 (single) or $5650 (family) for 2007

• Catch-up Provision – Over age 55, $800 for 2007, $900 for 2008

• Employee and/or Employer can make contributions

• Employee owns the Account• Funds are fully portable

HSA - Health Savings Account

• Medical expenses under IRS Code 213(d) *– Medical– Dental– Vision

• COBRA Premiums *• Medicare Premiums *• Long Term Care Premiums *• Retirement Savings - Subject to State and

Federal Taxes

* Subject to State Taxes

HSA -Use of Funds

HSA - Health Savings Account

Employer Benefits• Predictable Costs• Employer and Employee Can Fund• Usually better pricing than HRA

Plans • No long term liability• Stabilization of rising costs

Employee Benefits• Direct access to providers of choice - no

referrals• No out of pocket expenditure for expenses

under HSA balance• Control over healthcare decisions• Increasing benefits - rewarded for good

health• Stabilization of rising costs• Employee owns the account

HSA - Health Savings Account

Example of Retiree Pricing

Fresno County – Unblended Retiree Benefits

• Blue Shield $250 Ded PPO Plan including Rx, Dental, & Vision = $823.47 per month Retiree Only

• Blue Shield $1500 Ded HSA Plan $4500 OoP Max including Rx, Dental, & Vision = $468.12 per month Retiree Only

• Savings = $355.35 Mth, $4264 Ann

• Pays almost entire liability, Plus Tax benefits for HSA account.

Why HSA’s for County Retiree’s

• More Affordable for Retirees• Reduces GASB liability where rates

are still blended• Easy way to introduce to Employee

Population• If offered to Employees provides a

way to save for Retirement Health Benefits

MSA Medical Savings Account

• Original Term for HSA’s• Now an option for Medicare MA

Plans(MA = Medicare Advantage)

• Still evolving, look to the future• High Deductible Plan combined with

a Benefit/Savings account• Only Medicare can fund the account