(January 1, 2023 through December 31, 2023)
A High Deductible Health Plan (HDHP) is an in-network medical plan design.
The 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?"
- Once the Family Deductible is met, all family members will be considered as having met their Deductible. There is no Individual Deductible to satisfy within the Family Deductible.
- For non-preventative services, coverage begins after a calendar year collective deductible ($1,500 individual, $3,000 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.
- Coverage for acupuncture – coverage is limited to 10 visits per calendar year; member pays 10% coinsurance after the calendar year deductible has been satisfied.
- Coverage for hearing aids (for medical plans sitused in NY) – coverage is limited to 1 hearing aid per ear every 3 years; member pays 10% coinsurance after the calendar year deductible has been satisfied.
Here’s how the HDHP deductible works
Let’s say Jill has a family of five and elects the HDHP/HSA Plan for herself only. She has $1,550 in medical expenses for the year. Since the individual deductible is $1,500, she would be responsible for that amount, with the remaining $50 being eligible for 90% coverage from Aetna. She is responsible for 10% coinsurance on the $50 amount over the deductible and any expenses incurred for the remainder of the year (until the Out-of-Pocket Maximum is satisfied).
Let’s say Jill has a family of five and elects the HDHP/HSA Plan for herself and her family. She has $1,700 in medical expenses, her husband has $1,000 and two of her children have a total of $300 in covered expenses. As a family, they have cumulatively incurred $3,000 in expenses. Any expense incurred by any family member (including Jill) for the remainder of the year is eligible for 90% coverage from Aetna. Jill or any of her covered family members are responsible for 10% coinsurance on the amount over the $3,000 family deductible for the remainder of the year (until the Out-of-Pocket Maximum is satisfied).
Another example of the family deductible:
Let’s say Jill has a family of five and elects the HDHP/HSA Plan for herself and her family. She has $2,400 in medical expenses. Since she has not met the $3,000 family deductible, Jill is responsible for the full $2,400 expense. Her husband later incurs an expense of $800. The first $600 is paid by her husband toward the cumulate family deductible of $3,000 and the remaining $200 is covered by Aetna at 90% (her husband pays 10% coinsurance). Any expense incurred by any family member (including Jill) for the remainder of the year is eligible for 90% coverage from Aetna. Jill or any of her covered family members are responsible for 10% coinsurance the amount over the $3,000 family deductible for the remainder of the year (until the Out-of-Pocket Maximum is satisfied).
A Health Savings Account (HSA) is a tax-advantaged account for participants enrolled in a HDHP. PayFlex HSA is the administrator for Aetna’s Consumer Core HDHP/HSA account.
- 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 (PDF) 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 calendar year 2023 is $3,850 if an employee elects individual HDHP coverage and $7,750 if he/she elects employee + 1 or family HDHP coverage.
- Employees aged 55+ during the January 1, 2023 to December 31, 2023 plan year may elect to contribute an additional $1,000 to the HSA. (Please contact the University Benefits office, after you have made the Consumer Core 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 $1,000, the employee may elect to invest the additional amount (in excess of $1,000) in an HSA Investment account (fees and charges may apply).
- Withdrawals for ineligible expenses are taxed and assessed a 20% tax penalty.
- HSA account owners must file IRS Form 8889 (PDF) with their federal tax returns.
Pace will send your enrollment to Aetna.
An interested employee should consult their tax advisor to determine the tax advantages and potential consequences associated with an HSA.
The IRS does allow employees, who begin the HSA after January 1st, to contribute the full amount to the HSA under the “last month rule;” however, the individual must satisfy the testing period rules. A new participant (electing individual HDHP coverage) who becomes eligible to enroll in the HSA on February 1, for example, is technically only eligible to contribute 11/12 of the maximum ($320.83 X 11 months or $160.42 X 22 pay periods) which is approximately $3,529 for the 2023 calendar year. The rules also state that if an employee begins the HSA after January 1 of a given year and contributes the entire IRS maximum for that year (rather than a prorated amount based on the month in which they begin contributions), then they must stay enrolled in an HSA for all 12 months of the following calendar year in order to avoid tax penalties.
Employees who enroll in the Consumer Core 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.