jmor99

Don: It seems to me that a group would be going through an awful lot of contortions trying to duplicate the HSA/HDHP arrangement. One of the biggest differences I see is that the employee misses out on a minimum of 22.65% upfront savings on his contribution to a Roth IRA. But it's an interesting approach. I wonder what anti-discrimination issues you would run into, what with unequal contributions to the VEBA, etc.

Don: Now I see your point. Frankly, I don't think it would be anymore difficult to rate than any other product. They already know utilization patterns. But here's the wall: an HSA account balance is none of the insurers business nor the employers business. They cannot be privy to the balance in my HSA account anymore than they can in my personal savings account. It's between me, the bank and the IRS ONLY. In which case the insurer won't be able to rate it.

Leevena: I agree with your response. However, just as food for thought: If the employer runs the comparability test on 1/1 and then not again until 12/31, everything should be ok both times even though the employer might have advanced to someone in need during the year. I wonder....... Even if this were possible, the employer would have to put in writing the conditions and circumstances required for the advance to be made. Here's a better, "more legal" possibility: Set the HSAs up with a provider that has a loan or advance feature. I know of one TPA that does this and a bank that will have this feature by 7/1. The more I think about this, the more I think you could make my 2nd paragraph work. For instance, if you put in writing that anyone who has incurred $1,000 (or some $ figure) before the third quarter (or some time frame) of a calendar year has the option of taking a corporate loan. A statement like this treats all employees equally. The "loan" is a loan, not an arbitrary contribution to an HSA.

You can elect to terminate the plan mid year but the results will be negative for some employees and positive for others depending on who has used how much of their annual election. If you are going to do that then to be fair you might ought to put out an advance memo for the employees to get out there and use up at least 6/12 of their annual election (which is how much they'll have in it by 7/1) or stand to lose it! Of course, there will be some who will go use it alll up by 7/1 which is bad for the employer. Then there's the problem that if you start the plan 7/1, the employees only have 1/2 a plan year to fund their HSA for the full annual deductible. Even if the carrier could administer the deductible from 7/1 thru 6/31, you have the potential problem of the tax year (for HSA purposes) being a calendar year. Further, the government adjusts the minimum deductible for HSAs based on calendar (tax) years, so it has the potential of changing on 1/1. I've often wondered if the government ever thought about how all insurance plans in this country are going to be renewed on 1/1. Maybe we can all work like dogs from 10/1 thru 1/31 and take the rest of the year off. The other option is to keep everything you've got and offer a dual option. A HDHP/HSA along with your current plan and FSA. Employees choose.

Hi, Don! Not sure I understand your question. When the carrier provides a suggested rate for the HDHP, the deductible for that plan is not varying. The deductible is the same all plan year long. The HSA is a totally separate item, an employee savings account that neither the insurance carrier nor the employer has anything to do with. The dollars in the HSA have nothing to do with the risk or funding or suggested rate of the HDHP. Here's another way to look at it. Let's say I have auto insurance with a 500 deductible and it costs me $1000 a year. I decide to get a quote for a $1000 deductible and it comes back as $800. I take the high deductible plan, but I'm uncomfortable with that much exposure. So I take the $200 I saved in premium and put it in a "wreck" savings account, and I add another $300 to it. Next year I put another 200 in it (that I saved in premium). Now I've got $700. The next year I have a wreck. I take 500 out of my wreck account plus 500 out of my pocket (which is what I would have had to do if I still had the 500 ded. plan) and the auto insurer takes care of the rest. I still have 200 in my wreck account. By being a good boy and not having wrecks, I will have a mighty fine wreck account in a few years. Party time! Meanwhile, the auto insurer doesn't know or care that I have a wreck account. All they know is that they have less risk and charge accordingly. And I have "self insured" 500 of my 1,000 exposure or the whole 1,000 if you want to look at it that way.

Not sure I understand the terminology. Could you further clarify "we'll be selecting the pre-tax provider for the savings portion of the design" ?Do you mean you'll be looking for a TPA to provide 125 services for the plan and say offer an HSA partner? Have you checked First Horizon and Exante (via United Health Care or UHC). Exante's offering seems to me to be very well thought out, not only as to funds offered but as to data entry approaches.

If there's an FSA in the plan with more than 100 participants, doesn't it have to file a 5500?

Just out of curiosity, if the plan doesn't have to be adopted, then why do the plans I've seen have a board resolution adopting the plan?

Budman: 1)self insured plans "integrating" HSAs--I wouldn't say that HSAs are being "integrated" into their health plans. What I see happening is that self insured employers are adding another health plan option (qualified high deductible health plan) to their current offering and adding the convenience of payroll deduction (usually pre-tax thru a 125 plan) for employee contributions to their HSA (set up at a bank). 2) How are premium savings determined? Most self insured plans are being administered by an insurance carrier. The underwriting dept. should be able to provide a suggested rate for the HDHP (as well as their current plan) which should show the savings in premium. For instance, wouldn't the COBRA rate for the HDHP differ from the COBRA rate for the employer's standard plan? 3) Are employers changing from self insured to fully insured or vice versa (because of HSAs)? No. 4)What are common examples of plan offerings by self insured plans? Perhaps it needs to be clarified that plan designs don't necessarily have anything to do with the way those plans are funded. Let's say a currently self insured employer offers it's employees a plan with a $500 deductible, 80/20 co-insurance, 2000 out-of-pocket max. They decide to offer a qualified HDHP EITHER as a replacement of the current plan OR in addition to the current plan. The HDHP must have a minimum ann. deductible of $1050/2100 (ind./fam) and a maximum $5250/10500 out-of-pocket. Any designs in between those two limits is OK. For instance, the plan could have a $1050 deductible and immediately go to 100% coverage and that would be a qualified HDHP for an individual who could then set up and contribute to an HSA. 5) How can TPAs make up for lost revenue? They can't, unless they can "convince" an employer that a TPA needs to be involved with HSA recordkeeping, which still won't make up for those kinds of revenues.

I'm assuming that the employee's spouse wasn't offered COBRA at the time the employee enrolled in part A. Correct me if I'm wrong, but doesn't the employee have 36 months from the time they're notified of their rights?

This comes under the heading of an administrative error. You could go ahead and honor the 90 day period this time but you would want to prepare and file a Plan of Correction to be filed with your 125 documents to CYA in the event of an audit. The Plan of Correction follows an IRS acceptable format.

If I'm not mistaken, they're also exempt from SUTA.

LLC owners excluded only from the 125 plan. No one excluded from the health plan (including spouses and children). Regarding spouses of LLC owners: The answer as to whether they can participate in the 125 plan might be dependent on how their personal tax return is filed. In other words, are they married filing jointly? If so, there might be a problem with the spouse of the owner participating in the 125 plan. LLC owners get specific treatment regarding health care expenses on their personal tax return. Their accountant should know. No problem with children participating in a 125 plan (subject to notes below). The 25% test under a 125 plan deals with key employee contributions (pre-taxed health premiums)vs. non-key employee contributions. Spouses and children are not considered key employees (unless their income places them in that category). The other requirement is that the plan cannot discriminate in favor of Highly Compensated Employees (HCEs) as to eligibility to participate, and as to contributions and benefits. This definition includes spouses and children of HCEs as HCEs themselves. There are others in this forum who believe that this definition is so unclear that it is not legally enforceable in a court of law, and therefore can be disregarded.

It was in connection with cosmetic surgery--claim denied.

Actually, I think the C&B test is a 75% test? Regardless: 1) 70% is within 71% of 50%. I.E., 50 divided by 70 equals 71% 2) It won't make any difference that it occurred off-cycle (off anniversary) with the 125 plan IF the excess is payroll deducted post tax. In other words, the 50% ee portion continues on pre-tax with no changes and the difference (70% less 50%) is deducted post tax. The full amount would be pre-taxed at the next anniversary date or qualifying event. No employer action can supersede or pre-empt federal law.

That's a little like asking "where is a source for typical realtor fees". You have to look at what the industry traditionally has done. Around here, brokers earn 2-3% on that size group. But everything is negotiable.

I don't see why not. After all, it's a non-profit! Seriously, why can't any provider or manufacturer give whatever discount it wishes to employees (assuming the board of directors or stockholders don't complain)? Perhaps these additional discounts could be seen as extensions of the health plan. In which case they could be conceived of as MORE than "de minimis" fringe benefits. Interesting question. In the past I doubt the IRS would have been interested. However, in the current climate wherein non-profits are starting to be questioned about their non-profit status because of price gouging, maybe they would.

Try MBI (Metavante)

Leevena--my apologies for being so blunt. But here are additional responses: There are 35 to 40 million uninsured America (a significant portion of that in the last 5 years). HSAs will allow those at the borderline income thresholds to come back into the insured game. But I doubt that will have any impact on these numbers. The poor aren't going to take a beating. The poor and the wealthy have relatively equal access to health care although the form differs. It's those who are trying to work and play the game that are going to take the beating, i.e., the low income. How is a 2-75 man group able to offer 2 health options? Most carriers in this market won't do it. The employers are jumping into HSAs with no other offerings because it's not available, and it's their only hope just to be able to keep group health ins. What difference does it make when the account is funded if you don't have the money either time? HSAs offer hope. But I remember when PPOs first came out and the hope they offered (there were 30-45% rate reductions and everybody said hallelujah). It lasted about 18-24 months in this part of the country. And look where we are now. The one "hopeful" difference this time is that there's an anti-consumption incentive. We'll see.

I recently saw a presentation by a local carrier that showed that 45% of all their paid claims dollars came from the "worried well" category, in other words, people who think they're sick or afraid they might get sick. If those people start having to spend their own money (via HSAs) maybe over utilization will slow down. Initial surveys by another carrier that's been doing HSAs for 2-3 years now shows that inflation is being held to what it is in the rest of the economy, which maybe we can live with for the long term. One thing is certain: we can't continue to live with 10-15% inflation in the health care sector. The problem I see with HSAs is that the chronically ill and the low income are going to take a beating. They're going to fall thru the cracks. A person making 7.50/hr is barely surviving. They're living day to day. Long term (which for them means maybe a month) planning is not an option. Every day contains a money crisis. Most of these have already dropped out of the insurance game and have their fingers crossed. Their thinking is that "I'll just show up at the county hospital emergency room where they have to take care of me." (That's where all the uninsured emergencies get sent in our area--and by the way, it's amazing how quickly and efficiently those folks get processed vs. people who have insurance.) The thinking that HDHPs are now more affordable to lower income people is ludicrous. All it is, is cost shifting. The individual now keeps that part of the premium that would have bought a lower deductible plan and puts it in his HSA. HELLO!? He couldn't afford it to begin with! I recently saw an article that stated that although HSAs seem to be gaining penetration, only 1/3 or less have actually been funded. Regarding Locusts point on catastrophic /emergency costs, HSAs can't have much impact there from a consumer standpoint. An emergency is no time to shop. (I saw that article--and that's an ignorant or intentionally biased slant on what HSAs are intended to do.) But long term, as people become more educated about who charges what, it might make a difference in which emergency room they choose.

I totally forgot about the employer not being able to have a say so in the expenditures from the acount. Their whole reasoning in going the HSA route was from the consumer driven health care standpoint. That is, by having the HSA, the employee has an incentive to stay away from the doctor because it's their money now, not the employers. But now it looks like they're in deep stuff. Not only can the TPA NOT have a say so, but I suspect they're in violation of ERISA requirements when monies are separated from the employers general assets and placed in, of all places, the TPAs "HSA account". Won't it be neat, when some TPA claims processor decides to take off to Costa Rica or the Bahamas or Switzerland with just the click of a mouse.

Part of the answer to this might have to do with how they intend to file their tax return. For instance, if they are married filing separately there might be a chance. This might be a good question for a cpa. If filing a joint return, not a chance, since the S-corp owner gets credits(?) on their personal return for medical expenses. We need a cpa to jump in here.

If you don't have EBIAs publications, you can do the following: --lookat the upper right bar of this screen and click on "search" --in the "search by keywords" box, enter "125 discrimination test" --in the "search where" field click on "cafeteria plans" --in the "show me" fields, click "most recent first" --click on "perform the search" You will be given the last reply of about 25 different threads on this subject. By clicking on the "post preview" # at the bottom of each reply, you will be taken to the complete thread. There you will find your answers (as such). This subject has been beaten to death here recently so you may not get a lot of responses.

The employer is concerned about misuse of HSA money, so they are hiring the TPA to act as a "watchdog" to perform the same function as FSA claims adjudication. (The employer is making significant contributions to the HSA). Furthermore, some of these employees have never had a checking account or credit card in their life and live paycheck to paycheck. The temptation will be high. I can understand the concerns and also understand that a TPA is not needed. My concern is being certain that the money is truly "trusted" which WOULD be the case if deposits were made directly into the employees HSA accounts at a bank. But that's not what's happening here. Thanks for your reply!

A TPA is offering HSA claims adjudication as a service. The client employer writes it's checks (which include employee/employer contributions) directly to the TPA. The TPA deposits the money into an "HSA account". All employers and employees monies are commingled in the HSA account. Is this type of account required to meet ERISA trust requirements?