Putting the Pieces Putting the Pieces TogetherTogether

HDHP, HRA, HSA & FSAHDHP, HRA, HSA & FSAResults & StatisticsResults & Statistics

Presented byPresented byRob Thurston of HR Rob Thurston of HR

ConsultingConsulting

Putting the Pieces TogetherPutting the Pieces Together

Basic Plan DesignsBasic Plan Designs Case Study ReviewCase Study Review Pitfalls in Plan DesignPitfalls in Plan Design Where do we go from Here?Where do we go from Here?

Who loves CDHC?Who loves CDHC?

Large ERs love HRAs- Over 40% will offer Large ERs love HRAs- Over 40% will offer in 2008 (who have 2500+ EEs)in 2008 (who have 2500+ EEs)

33% of these Large ERs offered HRAs in 33% of these Large ERs offered HRAs in 20072007

7% offered HRAs in 2006, 20057% offered HRAs in 2006, 2005

Only 5-11% of smaller ERs have offered or Only 5-11% of smaller ERs have offered or will offer HRAs since 2005will offer HRAs since 2005

Who loves HSAs/HDHP?Who loves HSAs/HDHP?

In 2005 & 2006- smaller ERs underIn 2005 & 2006- smaller ERs under2500 lives- 4% offered HSAs2500 lives- 4% offered HSAsOnly 3% of large ERs offered HSAsOnly 3% of large ERs offered HSAs

- In 2007, 7% of smaller ERs offered HSAs In 2007, 7% of smaller ERs offered HSAs versus 14.5% of larger ERsversus 14.5% of larger ERs

- In 2008, 10% of smaller and 24% of larger - In 2008, 10% of smaller and 24% of larger ERs will offer HSAs YET did that happen?ERs will offer HSAs YET did that happen?

Actual Statistics for 2008Actual Statistics for 20087% of total Health Care7% of total Health Care

1/04 1/06 1/07 1/081/04 1/06 1/07 1/08 In millions:In millions:

HRA 1.3 5.1 6.0 7.4HRA 1.3 5.1 6.0 7.4

HSA\HSA\ HDHP 100k 2.9 7.5 7.6HDHP 100k 2.9 7.5 7.6

Totals 1.4 8.0 13.5 15.0Totals 1.4 8.0 13.5 15.0

Democrats v. RepublicansDemocrats v. Republicans

11/2007 Consultants Survey-11/2007 Consultants Survey- If Democrats win, then:If Democrats win, then:

- only 7% feel Govt/single payor Plan- only 7% feel Govt/single payor Plan

- 40% see Strong CDHC growth- 40% see Strong CDHC growth- 19% see less popularity19% see less popularity- 19% see new Health Care Strategy19% see new Health Care Strategy- 15% Other15% Other

If Republicans win:If Republicans win:

Consultants Survey 11/07-Consultants Survey 11/07-

- Strong growth of HRAs continuesStrong growth of HRAs continues- Stronger growth of HSAs/HDHPStronger growth of HSAs/HDHP- Tax credits for individual healthTax credits for individual health- Move to remove tax deductions for Move to remove tax deductions for

ER provided healthER provided health- Could mean move to tax all benefits?Could mean move to tax all benefits?

Democrats v. RepublicansDemocrats v. Republicans

What do they really believe? Kaiser-What do they really believe? Kaiser-

www.health08.org/analysiswww.health08.org/analysis- McCain would tax ER provided health McCain would tax ER provided health

benefits. No mandatesbenefits. No mandates- Clinton would mandate with penalties Clinton would mandate with penalties

that all be covered. Single Payorthat all be covered. Single Payor- Obama would mix private and GovtObama would mix private and Govt

with mandates for children.with mandates for children.

ContinuedContinued

Hillary Care- would cost $100 billion Hillary Care- would cost $100 billion a year; could decrease over timea year; could decrease over time

Obama- $65 billion a year when fully Obama- $65 billion a year when fully fundedfunded

McCain- no estimate given- same as McCain- no estimate given- same as current plans HOWEVER current plans HOWEVER

McCain HealthMcCain Health

168,000,000 covered under 168,000,000 covered under employer plans in 2008employer plans in 2008

Removing tax deductions to Removing tax deductions to Corporations would cause 10%+ in Corporations would cause 10%+ in additional costs: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 - Would state tax health benefits

too? How soon?too? How soon?

Future of Benefits?Future of Benefits? 60% of all health benefits paid for by the 60% of all health benefits paid for by the

Fed/State Govts now in 2008Fed/State Govts now in 2008

Removing ER tax deductions for health will Removing ER tax deductions for health will result in dropping coverage by Employersresult in dropping coverage by Employers

States will create more offerings but States will create more offerings but impose mandates and requirementsimpose mandates and requirements

Taxing Health is first step to tax all Taxing Health is first step to tax all employer provided benefitsemployer provided benefits

State Plans/MandatesState Plans/Mandates

Mandates- forces uninsured, middle Mandates- forces uninsured, middle income families to divert money from income families to divert money from other expenses toward medical other expenses toward medical coverage whose price/quality/plan coverage whose price/quality/plan features they cannot control.features they cannot control.

Mandates are opposed by unions, Mandates are opposed by unions, fiscal conservatives, Obama (except fiscal conservatives, Obama (except for children), and most Republicans.for children), and most Republicans.

Statistics (Cont)Statistics (Cont)

Hewitt Assoc Survey 2007:Hewitt Assoc Survey 2007:

1- 30% of employers offering HSAs/1- 30% of employers offering HSAs/

HDHP in 2007HDHP in 2007

2- Hewitt estimates only 3% select2- Hewitt estimates only 3% select

HSAs, but will grow to 20% by 2011HSAs, but will grow to 20% by 2011

Statistics (Cont)Statistics (Cont)

Re-enrollments in HSAs-Re-enrollments in HSAs-

A-Fidelity: 95% re-enroll versusA-Fidelity: 95% re-enroll versus 75% for PPOs, lower for HMOs75% for PPOs, lower for HMOs

B- 85% of employers plan to helpB- 85% of employers plan to help fund HSAs- about $500/singlefund HSAs- about $500/single And $1000/family And $1000/family

Statistics- (Cont)Statistics- (Cont)

69% of accounts are families/kids69% of accounts are families/kids 62% are over age 4062% are over age 40 28%- households 4+28%- households 4+ 39% have high school/tech school39% have high school/tech school 29% earn less than $50,00029% earn less than $50,000 20% earn less than $40,00020% earn less than $40,000 20% have less than $25,000 in net 20% have less than $25,000 in net

worthworth

Statistics- (Cont)Statistics- (Cont)

HDHP statistics:HDHP statistics: 1- Carriers make less $1- Carriers make less $ 2- Lower premiums/revenue/profits2- Lower premiums/revenue/profits 3-Actuaries using “trend Averaging”3-Actuaries using “trend Averaging” 4- Avg price/claim & utilization4- Avg price/claim & utilization 5- OOP costs should be lower, 5- OOP costs should be lower,

accounts will cover OOP in future accounts will cover OOP in future yearsyears

Statistics- (Cont)Statistics- (Cont)

National Health Care?National Health Care? -37-40% is paid by private insurance -37-40% is paid by private insurance

(37% in 2003)(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 EE’s (2005)-$250 billion OOP for EE’s (2005) - Drugs are 20% of OOP (2005)- Drugs are 20% of OOP (2005)

Statistics- (Cont)Statistics- (Cont)

HDHP Savings:HDHP Savings:

1- Employers keeping savings1- Employers keeping savings 2- Avg Premium Savings (AHIP)2- Avg Premium Savings (AHIP) in 2006 was $7,529 for HDHPin 2006 was $7,529 for HDHP 3- That’s a 60% drop in premium3- That’s a 60% drop in premium 4- 1/2006- 4- 1/2006- www.VIMO.comwww.VIMO.com there were 2.3 there were 2.3

million HDHP more than Funded HSAsmillion HDHP more than Funded HSAs 5- Only 33% open funded HSAs 5- Only 33% open funded HSAs

New WebsitesNew Websites

www.vimo.comwww.vimo.com www.WebMD.comwww.WebMD.com www.WorldDoc.comwww.WorldDoc.com www.TelaDoc.comwww.TelaDoc.com www.eHealthinsurance.comwww.eHealthinsurance.com www.drugstore.comwww.drugstore.com www.DestinationRX.comwww.DestinationRX.com

Tela-Doc Consultation ProcessTela-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.

What Benefits Do TelaDocMembers enjoy?

AccessAffordabilityConvenience

• 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

Hewitt Report- 2007Hewitt Report- 2007

1- Drugs can be Preventative:1- Drugs can be Preventative:

Hypertension, cholesterol, diabetes, Hypertension, cholesterol, diabetes, osteoporosis, strokes, pediatric and osteoporosis, strokes, pediatric and neonatal vitamins, etc..neonatal vitamins, etc..

2- Preventative Care:2- Preventative Care:

Tests, screening, smoking, obesity Tests, screening, smoking, obesity weight loss, etc..weight loss, etc..

3- Wellness/disease management3- Wellness/disease management

Case Study 1Case Study 1

1500 employees, multiple locations 1500 employees, multiple locations located nationwidelocated nationwide

Went from self-funded PPO & HMO Went from self-funded PPO & HMO option to HDHPoption to HDHP

Offered 2 Self-funded HDHP designs:Offered 2 Self-funded HDHP designs:– High Option has $1000/$2000 High Option has $1000/$2000

Deductible and $3000/$6000 OOP MaxDeductible and $3000/$6000 OOP Max– Low Option has $2000/$3000 Deductible Low Option has $2000/$3000 Deductible

and $5100/$10200 OOP Maxand $5100/$10200 OOP Max

Case Study 1Case Study 1

Offered 2 FSA Plans, Limited Scope & Offered 2 FSA Plans, Limited Scope & Full FSAFull FSA

Had S125 Plan including HDHP, FSA, Had S125 Plan including HDHP, FSA, Dental and VisionDental and Vision

Added HSA in 2005 Plan YearAdded HSA in 2005 Plan Year

Case Study 1 ResultsCase Study 1 Results

Slight Drop in FSA ParticipationSlight Drop in FSA Participation 63% Elected to Participate in HSA 63% Elected to Participate in HSA

with average monthly contribution of with average monthly contribution of $75$75

Majority elected High Option, even Majority elected High Option, even though premium was higherthough premium was higher

Claims decreased by 43%Claims decreased by 43%

Case Study 1Case Study 1

Employer exceeded goal of reducing claim Employer exceeded goal of reducing claim cost and minimizing premium increasescost and minimizing premium increases

Installation was not without problems: Installation was not without problems: Employee view, HSA Trustee Issues & Employee view, HSA Trustee Issues & Increased workload for HR StaffIncreased workload for HR Staff

Corporate concerned that employees are Corporate concerned that employees are not getting healthcare when needednot getting healthcare when needed

Case Study 1Case Study 1

In 2006, added a third option to plan In 2006, added a third option to plan that did not qualify for HSA ($500 that did not qualify for HSA ($500 Deductible)Deductible)

Premium did not increase for 2006Premium did not increase for 2006 Employees did not go to lower Employees did not go to lower

deductible plan – most stayed with deductible plan – most stayed with what they had in 2005what they had in 2005

Caution – Avoid These PotholesCaution – Avoid These Potholes

COBRA applies to HRA’sCOBRA applies to HRA’s– This can increase liability in case of divorce as This can increase liability in case of divorce as

the full balance of the account must be the full balance of the account must be available to both the employee and ex-spouseavailable to both the employee and ex-spouse

ERISAERISA– Make sure that all plan documents, SPD’s and Make sure that all plan documents, SPD’s and

employee communications are accurate---employee communications are accurate---watch for ERISA wording that can make a non-watch for ERISA wording that can make a non-ERISA HSA and ERISA plan by inferenceERISA HSA and ERISA plan by inference

Questions?Questions?

For more information, contact:For more information, contact:

– Rob Thurston (801) 765-4417 Rob Thurston (801) 765-4417 – hrcg@relia.nethrcg@relia.net– www.hrconsultinggroup.comwww.hrconsultinggroup.com