•  Employee Q&A
  •  HSABank Information
  •  HSABank Enrollment

A Review of the Opportunities from Offering HSAs to Employees

At present over eleven million Americans have Health Savings Accounts (HSAs) The explosion of interest in HSAs will provide employers with an opportunity to offer more options to employees and to save money.

For more information on the specifics of HSAs and High Deductible Health Plans, see the answer to the question in the section Employee Q&A: What is a Health Savings Account and how can it help me?

This review will outline the opportunity to an employer, in a Q&A format, with a look at questions that employers might have. That is supplemented with answers to questions that employees might have. This review will also discuss the assistance McNeil Benefits Insurance Services can provide.

The opportunities to employers includes the following:

  •  Offer employees more options than they currently have, which       generally is what employees want.

  •  Save money; to take out an HSA, the employee must select a       High Deductible Health Plan (HDHP), which generally costs       much less than a traditional plan. The employer can choose       to keep some or all of that
      savings in premium.

  •  Contributions to HSAs are pre-tax or tax deductible,
      even for owners who have maxed out on their retirement
      plan contributions.

HSA Primer

ELIGIBILITY
Must be covered by a High Deductible Health Plan and not covered elsewhere. Must not be over age 65 in order to make contributions into the HSA.

DEFINITION
Equivalent to a medical IRA, with contributions deemed tax deductible (for federal taxes only in California at this time), and withdrawals income tax free if used for eligible medical expenses (i.e., most medical, dental, and vision expenses), COBRA premiums or most Long Term Care premiums.

 
MAXIMUM CONTRIBUTIONS
In 2011 the single coverage amount is $3,150 and that is increased to $3,100 in 2012. For a family the amount is $6,150 in 2011, and this is increased to $6,250 in 2012. The amount is no longer tied to the deductible. Additional contributions may be made for those age 55-64.		 ADVANTAGES TO AN EMPLOYER
More options to employees and the ability to save money.

Q&A For Employers
____________________________________________________________________________________

How complicated is
Health Saving Account
administration?		 From the employer’s perspective, they are fairly easy. Once the
employee selects an HDHP, the employer can sponsor an HSA,
but that is not required, since each employee can elect his/her
own HSA. The employer can facilitate the process by transmitting
the HSA contributions from the employees to the HSA
vendor, similar to other payroll deductions.
_____________________________________________________________________________________

What is involved in
communicating the
plan?
McNeil Benefits Insurance Services can help provide the explanation
of the HDHP benefits and also explain the tax aspects
of HSAs and the pros and cons of this concept for employees.
_____________________________________________________________________________________ 

What are typical fees
charged by HSA vendors?
The fees tend to be in the $3-$8/month range. See the pricing
from such HSA vendors as HSA Bank, Sterling HSA, Chase
HSA, and Wells Fargo HSA.
_____________________________________________________________________________________ 

Does the employer
have to contribute to
the HSAs of the employees?
No, but to encourage participation, most employers that offer
HSAs will pay into the HSA some percentage of the premium
savings received because the employee elected the usually
lower-cost HDHP.
_____________________________________________________________________________________ 

Are there discrimination
tests with HSAs?
HSAs have some comparability discrimination tests, to make
sure any employer contributions are evenly provided, BUT the
comparability tests do not apply if the contributions are made
through a Section 125 cafeteria plan. That solves the problem
of discrimination issues in most cases, even though the pre-tax
payments would come under cafeteria plan rules.
_____________________________________________________________________________________ 

How does the HDHP
work?
A typical HDHP has a deductible of about $1,500 to $3,000 or
more, and nothing may be paid under that deductible other
than preventive care such as annual physicals. Prescriptions
come under the deductible as well. This provides less coverage
but also results in a much lower premium normally. The Out of
Pocket limits under HDHPs are sometimes lower than other
PPO plans.
_____________________________________________________________________________________ 

What web-based technology
is available to help explain
the HDHP and HSAs and
support the process?

 Keith McNeil, the CEO of McNeil Benefits Insurance Services,
is the co-founder of Enwisen, an award-winning web-based
employee benefits communication company (now owned by Lawson Software) with clients such as Yahoo!, L.L. Bean, Twentieth Century Fox, Zion’s Bank, and Jergens (see www.enwisen.com). He is able to offer a Web-based portal
that will allow employees to see a summary of their benefits,
etc. The separate version of the portal for HR departments
was sold by Enwisen to PlanSource (which we work with) and includes an extraordinary amount of HR information from CCH, a leader in such HR information, as well as a Life Events section and a vast amount of health information that
can be very helpful to anyone with health questions or problems.
_____________________________________________________________________________________ 

Employee Q&A

  
7200 Redwood Blvd., Suite 400 Novato, CA 94945
ph: 415.892.8575 | f: 415.899.8668 | tf: 800-798-5897 | info@mcneilbenefits.com