A High Deductible Health Plan (HDHP) is an in-network medical plan design. Features of this plan include:
- In-network preventive care exams are covered at 100%. Therefore, those who enroll in the HDHP are encouraged to take an active role in their health care decisions and ask detailed questions of their health care providers, such as, “will this test be coded as preventive or diagnostic?"
- All eligible medical and pharmacy expenses, for the employee plus his/her covered dependents, contribute toward the calendar year deductible and out-of-pocket maximum.
- For non-preventative services, coverage begins after a calendar year collective deductible ($1250 individual, $2,500 for employee +1 or family) has been met.
- After the calendar year deductible has been met, the participant then pays co-insurance (10% for medical and 20% / 30% / 40% for pharmacy depending upon tier) on eligible expenses until the calendar year out-of-pocket maximum ($2,500 individual, $5,000 for employee + 1 or family) has been satisfied.
- Once the calendar year out-of-pocket maximum has been met, covered expenses are paid at 100% for the remainder of the calendar year.
HDHP Per Paycheck Premiums (July 1, 2013 through June 30, 2014)
For those interested in this plan, we encourage you to utilize the Advanced HDHP Calculator. This calculator allows you to model by date and by healthcare expense, your potential costs. The calculator also has a tab that shows the example used in the HDHP/HSA FAQs. To use the calculator, you need first to select your coverage level. Then enter the date of the service, and the type of service. You will have an opportunity to override the cost. If you're not sure what to do, review the second tab where an example is shown.
A Health Savings Account (HSA) is a tax-advantaged account for participants enrolled in a HDHP. J P Morgan Chase is the administrator for CIGNA’s HDHP/HSA account (CIGNA Choice Fund).
- Only qualified expenses, as allowed by the IRS, are eligible for reimbursement from an HSA on a tax-free basis.
- Unlike the Flexible Spending Account, unused HSA funds rollover from plan year to plan year.
- To be eligible, the employee must be enrolled in a HDHP and must not be covered by any other health insurance that is not a HDHP.
- The funds in the HSA are owned and controlled by the employee/account owner. It is his/her responsibility to keep track of all deposits and expenditures and to retain all receipts. The employee is responsible for determining whether or not a particular expense is considered to be a qualified medical expense.
- The funds can be used for any person treated as a qualified dependent on the employee’s federal tax form, even if the dependent is not enrolled in the HDHP.
- In addition to pre-tax contributions via payroll deduction, contributions can also be made to an employee’s HSA by others (e.g., relatives). However, the employee receives the benefit of the tax deduction. The maximum contribution for 2013 is $3,250 if an employee elects individual HDHP coverage and $6,450 if he/she elects employee + 1 or family HDHPcoverage.
- Employees aged 55+ during the July 1, 2013 – June 30, 2014 plan year may elect to contribute an additional $1,000 to the HSA. (Please contact the University Benefits office, after you have made the HDHP/HSA plan election during Open Enrollment, if you are interested in taking advantage of this option.)
- The HSA earns interest, much like a regular interest-bearing bank account. Interest is calculated daily and posted to the account monthly.
- Once the HSA balance reaches $2,000, the employee may elect to invest the additional amount (in excess of $2,000) in options available through J P Morgan Chase (fees and charges may apply).
- Withdrawals forineligible expenses are taxed and assessed a 20% tax penalty.
- HSA account owners must file IRS Form 8889 (updated for 2013 and 2014) with their federal tax returns.
Once the participant has enrolled in the HDHP during the annual Open Enrollment period, we will send an e-mail which includes a link for opening an HSA account with J P Morgan Chase. The HSA can only be used to pay for eligible expenses incurred after the HSA bank account has been opened.
An interested employee should consult his/her tax advisor to determine the tax advantages and potential consequences associated with an HSA.
Employees who enroll in the HDHP/HSA and separate as a qualified retiree during the plan year will be required to elect a different plan option (with a higher monthly premium) in retirement. The HDHP/HSA plan is not offered to qualified retirees.