Putting%20the%20Pieces%20Together-%20HRA,%20HSA%20 - PowerPoint PPT Presentation
Title: Putting%20the%20Pieces%20Together-%20HRA,%20HSA%20
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Putting the Pieces Together- HRA, HSA FSA-Where
Do They Fit?
- Presented byRob Thurston, President, HR
Consulting Group, Inc. March 13, 2006
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Putting the Pieces Together
- Basic Plan Designs
- Case Study Review
- Pitfalls in Plan Design
- Where do we go from Here?
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Who will be Covered?
- First Question to ask Who will be covered?
- Health FSA HRA B Any employee, can be employer
defined - HSA Any Individual, not entitled to medicare or
claimed as a tax dependent is enrolled in a
qualified HDHP
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Is there a Qualified HDHP Plan?
- Be careful B not just any plan will do
- Amounts are indexed B make sure plans will be
updated to meet annual requirements - Should the employer offer more than one option?
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How can Employee Pay?
- Health FSA B Employee can pay pre- tax through a
S125 Cafeteria Plan - HRA B Employee does not pay into HRA portion,
however employee can pre-tax the HDHP - HSA B Employee can pre-tax both the HDHP and the
HSA contribution through a S125 Cafeteria Plan
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What will Employer Pay?
- Health FSA B should employer make a
contribution? - HDHP B will employer increase contribution
towards HDHP? - HRA B How much does employer want to put into
the account? - HSA B Does employer want to make a contribution
B warning, money will belong to employee!
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How will Unused Amounts be Handled?
- Health FSA B will employer allow 2 2 month
extension to pay claims? - HRA B will employer allow employee to take money
with them? Will there be a limit placed on the
liability? - HSA B if employer money is deposited, will
employer have problem over loss of control of
funds?
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What Type of Expenses will Be Eligible?
- Health FSA B should be limited scope or full FSA
or both? - HRA B should be limited scope?
- HSA B employer has no control here
- Coordination if all three are present
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Company Culture
- How will plan design be viewed by employees?
- What is normal communication process used?
- What goals are being set by Corporation?
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Case Study 1
- Small Employer under 100 lives
- Did not have HDHP that qualified for HSA
- Goal was to minimize rate increases (2005 has
23 rate increase)
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Case Study 1
- Went with PPO plan with 3,000/5,500 Deductible
and 5,000/10,000 OOP - Had general purpose FSA and Dental Plan
- Wanted more control over money, did not want to
contribute to HSA
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Case Study 1
- Lets Look at Single Coverage Design
- Health FSA B Employee can contribute up to 1800
B FSA pays first - HRA B Employer contributes 1200
- HDHP B Expenses covered by Insurance
- OOP B Employee exposure 2,000
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Case Study 2
- 1500 employees, multiple locations located
nationwide - Went from self-funded PPO HMO option to HDHP
- 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
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Case Study 2
- Offered 2 FSA Plans, Limited Scope Full FSA
- Had S125 Plan including HDHP, FSA, Dental and
Vision - Added HSA in 2005 Plan Year
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Case Study 2
- Slight Drop in FSA Participation
- 63 Elected to Participate in HSA with average
monthly contribution of 75 - Majority elected High Option, even though
premium was higher - Claims decreased by 43
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Case Study 2
- 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 - Corporate concerned that employees are not
getting healthcare when needed
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Case Study 2
- In 2006, added a third option to plan that did
not qualify for HSA (500 Deductible) - Premium did not increase for 2006
- Employees did not go to lower deductible plan B
most stayed with what they had in 2005
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Caution B Avoid These Potholes!
- Mid-Year Changes
- HSA can be added mid-plan year, but this can be
messy and some options are still being discussed
by IRS (i.e. changing to a limited scope FSA,
may not be valid) - Non-Discrimination
- Before making contributions to an HSA, an
employer should be sure to review the
comparability rules...if it is not part of a
S125 Cafeteria Plan
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Caution B Avoid These Potholes
- COBRA applies to HRA's
- 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
- Make sure that all plan documents, SPD's and
employee communications are accurate---watch for
ERISA wording that can make a non-ERISA HSA and
ERISA plan by inference
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Questions?
- For more information, contact
- Rob Thurston, HR Consulting Group, Inc.
- (801) 765-4417
- hrconsultinggroup_at_msn.com
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