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Putting the Pieces Together HDHP, HRA, HSA & FSA Results & Statistics Presented by Rob Thurston of HR Consulting.

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Presentation on theme: "Putting the Pieces Together HDHP, HRA, HSA & FSA Results & Statistics Presented by Rob Thurston of HR Consulting."— Presentation transcript:

1 Putting the Pieces Together HDHP, HRA, HSA & FSA Results & Statistics Presented by Rob Thurston of HR Consulting

2 Putting the Pieces Together Basic Plan Designs Basic Plan Designs Case Study Review Case Study Review Pitfalls in Plan Design Pitfalls in Plan Design Where do we go from Here? Where do we go from Here?

3 Who loves CDHC? Large ERs love HRAs- Over 40% will offer in 2008 (who have 2500+ EEs) Large ERs love HRAs- Over 40% will offer in 2008 (who have 2500+ EEs) 33% of these Large ERs offered HRAs in 2007 33% of these Large ERs offered HRAs in 2007 7% offered HRAs in 2006, 2005 7% offered HRAs in 2006, 2005 Only 5-11% of smaller ERs have offered or will offer HRAs since 2005 Only 5-11% of smaller ERs have offered or will offer HRAs since 2005

4 Who loves HSAs/HDHP? In 2005 & 2006- smaller ERs under In 2005 & 2006- smaller ERs under 2500 lives- 4% offered HSAs Only 3% of large ERs offered HSAs - In 2007, 7% of smaller ERs offered HSAs versus 14.5% of larger ERs - In 2008, 10% of smaller and 24% of larger ERs will offer HSAs YET did that happen?

5 Actual Statistics for 2008 7% of total Health Care Actual Statistics for 2008 7% of total Health Care 1/04 1/06 1/07 1/08 1/04 1/06 1/07 1/08 In millions: In millions: HRA 1.3 5.1 6.0 7.4 HRA 1.3 5.1 6.0 7.4 HSA\ HSA\ HDHP 100k 2.9 7.5 7.6 HDHP 100k 2.9 7.5 7.6 Totals 1.4 8.0 13.5 15.0 Totals 1.4 8.0 13.5 15.0

6 Democrats v. Republicans 11/2007 Consultants Survey- If Democrats win, then: If Democrats win, then: - only 7% feel Govt/single payor Plan - 40% see Strong CDHC growth - 19% see less popularity - 19% see new Health Care Strategy - 15% Other

7 If Republicans win: Consultants Survey 11/07- Consultants Survey 11/07- - Strong growth of HRAs continues - Stronger growth of HSAs/HDHP - Tax credits for individual health - Move to remove tax deductions for ER provided health - Could mean move to tax all benefits?

8 Democrats v. Republicans What do they really believe? Kaiser- What do they really believe? Kaiser- www.health08.org/analysis www.health08.org/analysiswww.health08.org/analysis - McCain would tax ER provided health benefits. No mandates - Clinton would mandate with penalties that all be covered. Single Payor - Obama would mix private and Govt with mandates for children. with mandates for children.

9 Continued Hillary Care- would cost $100 billion a year; could decrease over time Hillary Care- would cost $100 billion a year; could decrease over time Obama- $65 billion a year when fully funded Obama- $65 billion a year when fully funded McCain- no estimate given- same as current plans HOWEVER McCain- no estimate given- same as current plans HOWEVER

10 McCain Health 168,000,000 covered under employer plans in 2008 168,000,000 covered under employer plans in 2008 Removing tax deductions to Corporations would cause 10%+ in additional costs: Removing tax deductions to Corporations would cause 10%+ in additional costs: - 7.65% matching FICA/Medicaid - 7.65% matching FICA/Medicaid - 2.35%+ Work Comp, FUTA/SUTA - 2.35%+ Work Comp, FUTA/SUTA - Would state tax health benefits too? How soon? - Would state tax health benefits too? How soon?

11 Future of Benefits? 60% of all health benefits paid for by the Fed/State Govts now in 2008 60% of all health benefits paid for by the Fed/State Govts now in 2008 Removing ER tax deductions for health will result in dropping coverage by Employers Removing ER tax deductions for health will result in dropping coverage by Employers States will create more offerings but impose mandates and requirements States will create more offerings but impose mandates and requirements Taxing Health is first step to tax all employer provided benefits Taxing Health is first step to tax all employer provided benefits

12 State Plans/Mandates Mandates- forces uninsured, middle income families to divert money from other expenses toward medical coverage whose price/quality/plan features they cannot control. Mandates are opposed by unions, fiscal conservatives, Obama (except for children), and most Republicans.

13 Statistics (Cont) Hewitt Assoc Survey 2007: Hewitt Assoc Survey 2007: 1- 30% of employers offering HSAs/ 1- 30% of employers offering HSAs/ HDHP in 2007 2- Hewitt estimates only 3% select 2- Hewitt estimates only 3% select HSAs, but will grow to 20% by 2011

14 Statistics (Cont) Re-enrollments in HSAs- Re-enrollments in HSAs- A-Fidelity: 95% re-enroll versus 75% for PPOs, lower for HMOs 75% for PPOs, lower for HMOs B- 85% of employers plan to help fund HSAs- about $500/single fund HSAs- about $500/single And $1000/family And $1000/family

15 Statistics- (Cont) 69% of accounts are families/kids 69% of accounts are families/kids 62% are over age 40 62% are over age 40 28%- households 4+ 28%- households 4+ 39% have high school/tech school 39% have high school/tech school 29% earn less than $50,000 29% earn less than $50,000 20% earn less than $40,000 20% earn less than $40,000 20% have less than $25,000 in net worth 20% have less than $25,000 in net worth

16 Statistics- (Cont) HDHP statistics: HDHP statistics: 1- Carriers make less $ 1- Carriers make less $ 2- Lower premiums/revenue/profits 2- Lower premiums/revenue/profits 3-Actuaries using trend Averaging 3-Actuaries using trend Averaging 4- Avg price/claim & utilization 4- Avg price/claim & utilization 5- OOP costs should be lower, accounts will cover OOP in future years 5- OOP costs should be lower, accounts will cover OOP in future years

17 Statistics- (Cont) Statistics- (Cont) National Health Care? National Health Care? -37-40% is paid by private insurance (37% in 2003) -37-40% is paid by private insurance (37% in 2003) - $2 trillion spent on health - $2 trillion spent on health - 16% of GDP in 2005 - 16% of GDP in 2005 - $6,697 for every American - $6,697 for every American -$250 billion OOP for EEs (2005) -$250 billion OOP for EEs (2005) - Drugs are 20% of OOP (2005) - Drugs are 20% of OOP (2005)

18 Statistics- (Cont) HDHP Savings: HDHP Savings: 1- Employers keeping savings 1- Employers keeping savings 2- Avg Premium Savings (AHIP) 2- Avg Premium Savings (AHIP) in 2006 was $7,529 for HDHP in 2006 was $7,529 for HDHP 3- Thats a 60% drop in premium 3- Thats a 60% drop in premium 4- 1/2006- www.VIMO.com there were 2.3 million HDHP more than Funded HSAs 4- 1/2006- www.VIMO.com there were 2.3 million HDHP more than Funded HSAswww.VIMO.com 5- Only 33% open funded HSAs 5- Only 33% open funded HSAs

19 New Websites www.vimo.com www.vimo.com www.vimo.com www.WebMD.com www.WebMD.com www.WebMD.com www.WorldDoc.com www.WorldDoc.com www.WorldDoc.com www.TelaDoc.com www.TelaDoc.com www.TelaDoc.com www.eHealthinsurance.com www.eHealthinsurance.com www.eHealthinsurance.com www.drugstore.com www.drugstore.com www.drugstore.com www.DestinationRX.com www.DestinationRX.com www.DestinationRX.com

20 Tela-Doc Consultation Process Consult STEP 1: Member schedules consult online or dials 1.800.TelaDoc Step 3: Doctor reviews Electronic Health Record and calls member for consultation. Call back guaranteed in 3 hrs (typically completed in 1 hr or less.) STEP 2: TelaDoc consulting physician is notified of patient request for consult.

21 What Benefits Do TelaDoc Members enjoy? Access Affordability Convenience 24/7/365 access by phone High quality medical care Convenience - miss less work Saves personal time Guaranteed call back within 3 hrs. or consultation is FREE No pre-existing condition clause Fixed $35.00 consult fee Stretch their HSA/FSA dollars Free Electronic Health Record

22 Hewitt Report- 2007 1- Drugs can be Preventative: 1- Drugs can be Preventative: Hypertension, cholesterol, diabetes, osteoporosis, strokes, pediatric and neonatal vitamins, etc.. Hypertension, cholesterol, diabetes, osteoporosis, strokes, pediatric and neonatal vitamins, etc.. 2- Preventative Care: 2- Preventative Care: Tests, screening, smoking, obesity weight loss, etc.. Tests, screening, smoking, obesity weight loss, etc.. 3- Wellness/disease management 3- Wellness/disease management

23 Case Study 1 1500 employees, multiple locations located nationwide 1500 employees, multiple locations located nationwide Went from self-funded PPO & HMO option to HDHP Went from self-funded PPO & HMO option to HDHP Offered 2 Self-funded HDHP designs: Offered 2 Self-funded HDHP designs: –High Option has $1000/$2000 Deductible and $3000/$6000 OOP Max –Low Option has $2000/$3000 Deductible and $5100/$10200 OOP Max

24 Case Study 1 Offered 2 FSA Plans, Limited Scope & Full FSA Offered 2 FSA Plans, Limited Scope & Full FSA Had S125 Plan including HDHP, FSA, Dental and Vision Had S125 Plan including HDHP, FSA, Dental and Vision Added HSA in 2005 Plan Year Added HSA in 2005 Plan Year

25 Case Study 1 Results Slight Drop in FSA Participation Slight Drop in FSA Participation 63% Elected to Participate in HSA with average monthly contribution of $75 63% Elected to Participate in HSA with average monthly contribution of $75 Majority elected High Option, even though premium was higher Majority elected High Option, even though premium was higher Claims decreased by 43% Claims decreased by 43%

26 Case Study 1 Employer exceeded goal of reducing claim cost and minimizing premium increases Employer exceeded goal of reducing claim cost and minimizing premium increases Installation was not without problems: Employee view, HSA Trustee Issues & Increased workload for HR Staff Installation was not without problems: Employee view, HSA Trustee Issues & Increased workload for HR Staff Corporate concerned that employees are not getting healthcare when needed Corporate concerned that employees are not getting healthcare when needed

27 Case Study 1 In 2006, added a third option to plan that did not qualify for HSA ($500 Deductible) In 2006, added a third option to plan that did not qualify for HSA ($500 Deductible) Premium did not increase for 2006 Premium did not increase for 2006 Employees did not go to lower deductible plan – most stayed with what they had in 2005 Employees did not go to lower deductible plan – most stayed with what they had in 2005

28 Caution – Avoid These Potholes COBRA applies to HRAs COBRA applies to HRAs –This can increase liability in case of divorce as the full balance of the account must be available to both the employee and ex-spouse ERISA ERISA –Make sure that all plan documents, SPDs and employee communications are accurate--- watch for ERISA wording that can make a non- ERISA HSA and ERISA plan by inference

29 Questions? For more information, contact: For more information, contact: –Rob Thurston (801) 765-4417 –hrcg@relia.net hrcg@relia.net –www.hrconsultinggroup.com www.hrconsultinggroup.com


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