Consumer Core HDHP/HSA
A High Deductible Health Plan (HDHP) is an in-network medical plan design.
Features of the Consumer Core HDHP plan for the 2017-2018 plan year 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 ($1300 individual, $2,600 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.
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 $1,400 in medical expenses for the year. Since the individual deductible is $1,300, she would be responsible for that amount, with the remaining $100 being eligible for 90% coverage from CIGNA. She is responsible for 10% coinsurance on the $100 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 $1,400 in medical expenses, her husband has $1,000 and two of her children have a total of $200 in covered expenses. As a family, they have cumulatively incurred $2,600 in expenses. Any expense incurred by any family member (including Jill) for the remainder of the year is eligible for 90% coverage from CIGNA. Jill or any of her covered family members are responsible for 10% coinsurance on the amount over the $2,600 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 $2,600 family deductible, Jill is responsible for the full $2,400 expense. Her husband later incurs an expense of $400. The first $200 is paid by her husband toward the cumulate family deductible of $2,600 and the remaining $200 is covered by CIGNA 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 CIGNA. Jill or any of her covered family members are responsible for 10% coinsurance the amount over the $2,600 family deductible for the remainder of the year (until the Out-of-Pocket Maximum is satisfied).
Here’s how the family Out-of-Pocket Maximum works:
Let’s say Jill has a family of five and elects the HDHP/HSA Plan for herself only. She incurs $13,300 in expenses. The first $1,300 is paid by Jill toward the deductible leaving a balance of $12,000. Jill then pays 10% of the remaining balance, not to exceed a total of $2,500, including the deductible amount of $1,300 already paid. As such, after $13,300 of expenses, Jill has paid $1,300 towards the deductible and an additional $1,200 in coinsurance and thus has met the Out-of-Pocket Maximum of $2,500 for the calendar year. The plan will now pay 100% of covered charges for the remainder of the calendar year.
Let’s say Jill has a family of five and elects the HDHP/HSA Plan for herself and her family. She incurs $13,300 in expenses. The first $2,600 is paid by Jill toward the family (cumulative) deductible leaving a balance of $10,700. Jill then pays 10% of the remaining balance but not to exceed a total of $5,000 including the deductible amount of $2,600 already paid. As such, she will have to pay $1,070 (10% of the $10,700). Jill and her family’s year to date Out-of-Pocket amount is $3,670 ($2,600 deductible plus $1,070 coinsurance). Her husband then incurs an expense of $2,200. Her husband will pay 10% coinsurance of $220 bringing Jill and her family’s year to date Out-of-Pocket amount to $3,900. ($2,600 deductible plus $1,300 coinsurance). Jill and all her family members will continue to pay the 10% coinsurance on the remaining expenses since they are response for the 10% coinsurance until they cumulatively reach the family Out-of-Pocket Maximum of $5,000. Once the $5,000 Out-of-Pocket Maximum is reached, the plan will pay 100% of eligible expenses.
A Health Savings Account (HSA) is a tax-advantaged account for participants enrolled in a HDHP. HSA Bank is the administrator for CIGNA’s Consumer Core 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 2017 is $3,400 if an employee elects individual HDHP coverage and $6,750 if he/she elects employee + 1 or family HDHP coverage.
- Employees aged 55+ during the July 1, 2017 – June 30, 2018 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 $2,000, the employee may elect to invest the additional amount (in excess of $2,000) in options available through HSA Bank (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 with their federal tax returns.
Pace will send your enrollment to Cigna. Upon receipt, Cigna will enroll you and your family (if applicable) in the HDHP and forward your eligibility to HSA Bank. HSA Bank opens accounts for all complete enrollment records received, deposits $.01 into each employee account and performs the Customer Identification Program (CIP).
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 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.