Throw Me A Bone

 

Born and raised in Central Indiana, I'm excited to spread the word about Bernard Health to companies here in the Hoosier state. Our mission is lofty - to become the worlds most trusted advisor when it comes to helping people plan for expected and unexpected healthcare expenses - but with hard work, passion, and an unrelenting focus on our clients, we aim to succeed.          

 

I earned a BS from DePauw University and an MBA in Finance from Butler University's College of Business.

The tool was developed to help employers determine eligibility for the credit and help them estimate the potential credit amount.

Much to your surprise, I'm not reenacting an auction scene at your local county fairgrounds. I'm talking about a new and innovative way to purchase prescription drugs. Huh, you ask? Let me explain.

A new website, BidRX.com, has opened a free online exchange where pharmacies compete for YOUR business.  Only reputable US pharmacies can compete and many times the savings can amount to as much as 50% off the retail price.

If you cannot wait for your meds to arrive through the mail, the site allows you to condense the search to only local pharmacies in your area.  

If you or your family currently is enrolled in a Health Savings Account (HSA)- based health plan, the savings may be significant. 

Pretty cool, huh?

What's most frustrating for many small business owners is that they have no way of understanding the reasoning behind their company's increase, because the health insurance company is not obligated to disclose claims information to small groups (i.e. <50 employees).

So what's behind the rise in premiums for employer coverage and what factors determine your company's annual renewal?

Generally speaking, most health insurance companies determine your small group's rate increase, or decrease if you're lucky, based on four main factors:

It has been widely publicized that a major piece of the new Affordable Care Act, i.e. Healthcare Reform, entails that insurance carriers must offer preventive care for free (no cost-share, copays, etc) for all health insurance plans beginning after September 23, 2010, if such care is provided by an in-network provider.  

This is good news for people currently on a traditional health plan with copays and old news for those that are enrolled in a Health Savings Account (generally speaking, preventive care was already a free benefit for many HSA plans). Whenever I meet with a Bernard Health client and mention this new mandate two things typically happen:

It's a good question and one not readily found, nor known.  Probably the easiest way to learn what constitutes as preventive care under the new law is to follow the link above to Healthcare.gov (the government's newly developed healthcare website).

The detailed list states the following:

If you still can't find your answer, you can read more detailed information on these preventive services on the website, too. 

Please see below for a summary of the definition change, or visit this recent press release from Anthem.

"Eligible employee" now means:

With this said, I recently received the following question from an employer:

I have an employee currently enrolled in our company's Indiana medical insurance plan, which is HSA-eligible.  I have been told that because his wife has an FSA through her employer, this employee is disqualified from contributing to his HSA.  He hasn't been making contributions to his account because of this fact.  Is this true?

No, this is not true.  Unfortunately, this employer was given poor advise, which has ultimately cost the employee months of tax free savings.

Generally speaking, HSA qualification is based around the individual.  As long as the employee is not additionally covered under a non-HSA qualified health plan through his spouse, he is not disqualified from contributing to his HSA.  In other words, even though the employee's spouse has an FSA, this fact does not automatically disqualify him to contribute to an HSA.

Understanding all the rules and regulations centered around Health Savings Accounts and group health insurance can be a daunting task for a health plan administrator, especially if it's just one of the many hats you wear throughout the course of a day.  For this reason, it's important to partner with a health plan advisor you can trust to provide you with the right information you need to best support your employees.

A recent study by Fidelity Investment concluded that employees who participate in a company HSA - based health plan tend to invest more than twice as much in a 401(k) retirement plan.  Even more, the findings hold true across the entire income spectrum. 

Fidelity Vice President William Applegate said the findings should not be surprising.

“HSA participants understand the tax benefits offered over the long haul, so it’s not surprising they are some of the most active savers in tax-advantaged retirement accounts too...Providing an HSA with an employer contribution is a workplace benefit that can help employees stay on the right path to retirement, saving for their future qualified medical expenses just like they do for their future income needs in a 401(k).” 

Here's to savings.  Here's to health.

I recently received the following question from an employee during an open enrollment meeting:  Can I have more than one Health Savings Account (HSA)?  

The answer is Yes.  

If you are an eligible individual, you may establish and contribute to more than one individual HSA in any given year; however, the same rules that govern HSAs apply.  For example, if you do own more than one HSA, the sum of your annual contribution to all accounts must not exceed the maximum contribution amount allowable by the IRS ($3,050/individuals, $6,150/families).

A while back, I wrote about how a Bernard Health group health insurance client in Indianapolis achieved a first-year savings of over $30,000 after implementing a company Health Savings Account (HSA)-based health plan strategy.

For this 8 person business, which was spending $105,000 on health insurance premiums and historically seeing a 20% annual increase on those premiums, this was a HUGE WIN.

But the savings doesn't stop after the first year.  I'll use this company as a real life example to show just how an HSA strategy can pay dividends for years to come.

In 2010, this company achieved a savings of $30,000 with the new HSA strategy.  This reduced the company's health plan costs from $105,000 to $75,000 (including a $10,000 contribution to employees HSAs). 

Had the company continueed with the status quo (its old traditional plan) it would have most likely received another 20% premium increase. That would have increased its 2011 premiums from $105,000 to $126,000. Instead, with its new HSA-based plan strategy, the company only received a 9% premium increase at renewal, Which is about half of what it historically averaged.  This took its 2011 health plan cost from $75,000 to just north of $80,000.  Comparing this year's health plan cost of $80,000 with what it would have spent under the status quo ($126,000), the company saved another $46,000 this year.  

Bringing this small businesses two-year savings total to $76,000!  And the savings will keep adding up year after year...

Gernerally speaking, the coverage period for a Flexible Spending Account (FSA) must be 12 months.  The reason for this rule is to prevent employees from contributing to the account simply when they anticipate having a medical expense.  As the IRS puts it, "FSAs must exhibit the risk-shifting and risk-distribution characteristics of insurance."  

With that said, an employer with group health insurance in Indiana recently asked me if they could offer a short-term FSA that only lasted 6 months as opposed to a full year.  Some of you WSJ readers may be thinking, "why would the group only want a 6 month FSA?"  Well, in this employer's case, they desired to move to a Health Savings Account (HSA) plan on July 1 and were also moving their renewal date from January to July, but they wanted to make sure employees still had access to an FSA from January-June.

As other WSJ contributers have noted, an employee is not allowed to have both a medical FSA and a HSA at the same time, so if they started the FSA in January then employees who enrolled in it would not be able to open an HSA in July. The answer to their question is YES, they are allowed to have a short-term FSA that lasts only 6 months.  This would allow them to better align their FSA year to their new plan year.  

After resolving this question, the group then asked, "Can we offer another short-term FSA after the current one expires?" The answer to this question is NO.  An employer can only offer one short-term FSA plan year during the course of a calendar year.  After the short-term FSA plan year has expired, the employer must then enter into a standard 12 month plan year. 

2011: Individuals ($3,050), Families ($6,150)

2012: Individuals ($3,100), Families ($6,250)

2011: Individual ($5,950), Families ($11,900)

2012: Individual ($6,050), Families ($12,100)

Mercer also predicts that the minimum annual deductible for an HSA-Compatible Health Plan will remain at its current $1,200 level.  The $1,000 HSA catch-up amount for individuals over the age of 55 will likely not change, as well.  

There's no greater joy for Bernard Health than to help an individual, company, or non-profit organization save money on healthcare expenses, whether those expenses are in the form of health insurance premiums or simply the cost of a prescription drug.  

If you're a Bernard Health InsurAdvise client or an employee of a Bernard Health group health insurance client, chances are good that you've already achieved significant cost savings by enrolling in a Health Savings Account-based health insurance plan.  But what about your prescription drugs?  Are you achieving the maximum savings potential for these expenses?  If you've worked with a Bernard Health nurse to price shop your drugs, then you probably are reaching your full savings potential, but if not, let me give you a helpful tip:

To help you find the best deals on your drugs (I'm talking free or as low as $4 for generic drugs) check out the links below for a store, and deal, near you.  You'll be amazed at the savings potential!!!