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2018 Amounts for HSAs; Retroactive Medicare Coverage Effect on Contributions | Ohio Benefit Advisors

Categories: Benefits, Blog, Employee Communication, Employees, HRA, HSA, UBA News
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IRS Releases 2018 Amounts for HSAs

The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018.

For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. How much should an employer contribute to an HSA? Read our latest news release for information on modest contribution strategies that are still driving enrollment in HSA and HRA plans.

For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.

Retroactive Medicare Coverage Effect on HSA Contributions

The Internal Revenue Service (IRS) recently released a letter regarding retroactive Medicare coverage and health savings account (HSA) contributions.

As background, Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.

Individuals who delayed applying for Medicare and were later covered by Medicare retroactively to the month they turned 65 (or six months, if later) cannot make contributions to the HSA for the period of retroactive coverage. There are no exceptions to this rule.

However, if they contributed to an HSA during the months that were retroactively covered by Medicare and, as a result, had contributions in excess of the annual limitation, they may withdraw the excess contributions (and any net income attributable to the excess contribution) from the HSA.

They can make the withdrawal without penalty if they do so by the due date for the return (with extensions). Further, an individual generally may withdraw amounts from an HSA after reaching Medicare eligibility age without penalty. (However, the individual must include both types of withdrawals in income for federal tax purposes to the extent the amounts were previously excluded from taxable income.)

If an excess contribution is not withdrawn by the due date of the federal tax return for the taxable year, it is subject to an excise tax under the Internal Revenue Code. This tax is intended to recapture the benefits of any tax-free earning on the excess contribution.

By Danielle Capilla
Originally Posted By www.ubabenefits.com

The Latest UBA Survey data shows employers are flocking to two strategies to control rising prescription drug costs: moving to blended copay/coinsurance models vs. copay only, and adding tiers to the prescription drug plans. Almost half (48.9%) of prescription drug plans utilize three tiers (generic, formulary brand, and non-formulary brand), 4.3% retain a two-tier plan, and 44.1% offer four tiers or more. The number of employers offering drug plans with four tiers or more increased 34% from 2014 to 2015. The fourth tier (and additional tiers) pays for biotech drugs, which are the most expensive. By segmenting these drugs into another category with significantly higher copays, employers are able to pass along a little more of the cost of these drugs to employees. Over the last two years, the number of plans with four or more tiers grew 58.1%, making this a rapidly growing strategy to control costs.

Employers with 1 to 99 employees have been driving the trend to adopt prescription drug plans with four or more tiers. In three years, plans with four or more tiers increased approximately 60% among these groups, making this the top cost-containment strategy for small employers, who make up the backbone of America.

Even the largest employers (1,000+ employees), 81% of which historically have offered plans with two or three tiers, have seen a 12.9% decrease in these plans as they, too, migrate to plans with four or more tiers (albeit more slowly).

The construction, mining and retail industries have also been steadily leading the migration to plans with four or more tiers over the last three years, and in the latest UBA survey, 47.5%, 53.2% and 46.3% of their respective plans fall in this category. But this year, the utilities industry has made a more sudden switch, with 58.3% of those plans now consisting of four or more tiers, leapfrogging its perennial tier-climbing peers. This is a significant jump, considering nearly 20% of plans in the utilities industry were still two-tier plans just three years ago—far more two-tier plans than any other industry group at that time. However, this wasn’t a total surprise since, in the 2014 survey year, the industry had an above-average amount of three-tier plans (65.9% vs. an average of 57.1%).

The education and manufacturing industries are more reluctant to shift to plans with four or more tiers. Over the last three years those industries have maintained the highest amounts of three-tier plans, and in the latest survey, 52.8% of their plans remain at three tiers.

Two-tier plans are becoming nearly as rare as single-tier plans, shrinking 45% to 4.3% of all prescription plans in three years. Agriculture has the most holdouts, with 14.8% of plans still comprised of one or two tiers.

Regionally, the East Central U.S. has been leading the migration to plans with four or more tiers for the last three years, followed by North Central and Southeast employers. In the 2015 survey year, Southeast employers eclipsed East Central employers with 60.7% of their plans with four or more tiers.

Strangely enough, East Central and Southeast employers have the lowest percentage of three-tier plans (34.3% and 34.1%, respectively) but the highest percentage of single-tier plans (4.7% and 4.2%, respectively). Other Western employers (excluding California) also have below-average three-tier plans (40.6%), above-average four-tier plans (49.1%) and above-average (10.2%) one- to two-tier plans.

Groups increasing tiers most aggressively for cost savings

California employers have the most two-tier plans (22.9% vs. the average of 4.3%) which, although still off the charts, represents a 20% decline from the previous survey year.

Mid-Atlantic and New England employers have had the most three-tier plans for the last three years, making them the top resisters of plans with four or more tiers over time.

Groups resisting 4+ tier plans

For more information on prescription drug trends, including the companies making an early leap to five-tier plans, download UBA’s free (no form!) publication: Special Report: Trends in Prescription Drug Benefits.

Originally published by UBABenefits.com

 

Case Study: Using Data to Identify Healthcare Savings for a Mid-size Manufacturer | Ohio Employee Health Insurance

Categories: Employee Wellness, Health Insurance, HSA, Team K Blog
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Historically, companies have struggled with the best way to package and deliver benefits to attract talent and retain staff. Today, companies understand that they need to leverage a variety of solutions to provide meaningful healthcare coverage, promote wellbeing and mitigate cost. UBA Partners offer innovative product and service solutions to identify medical spend waste and improve efficient spend, allowing employers to reinvest in the correct resources that will improve employee health. For one mid-sized manufacturer, UBA Partner LHD Benefit Advisors used Vital Incite risk scoring tools to coordinate efforts between the employer HR and C-suite, the advisor and the population health consultant.

Key information unique to this employer:

  • Japanese owned and multiple nationalities employed with little knowledge of the American health care system other than in the HR team
  • Manufacturing company with predominately male employees
  • Onsite clinic opened April 2014 with initial services including primary care, physical therapy, massage therapy, lab, nurse health coaching
  • Increase in medical plan participation due to growing workforce and rich medical plan offered at a low cost to employees.

Value of what was delivered:

  • Improved risk migration of high/very high risk members (total population and same cohort)
  • Improved efficiency of medical plan utilization and improved unit cost
  • Improved care coordination (decreased ER visits, decrease in multiple medications, increase in number of members with a primary care physician)
  • Targeted outreach from onsite clinic to improve overall health of members

Problem 1: Increase in medical plan spend

Prior to the clinic opening, the medical plan saw utilization of ER visits and imaging services along with associated costs above benchmark. The number of covered lives (employees and spouses) was also increasing as well as the average employer paid amount per member due to high cost utilization of an unmanaged workforce. Current medical plans were two low deductible, PPO plans with little consumerism and offered at low cost to employees.

Problem 2: Low onsite clinic utilization

The first six months the clinic was open showed low utilization for several services resulting in the employer reducing services effective January 1, 2015, through March 31, 2015, to help reduce costs. The suspended services included patient advocacy, evening clinic hours, reduced health coaching hours and physical therapy. In order to fully recognize the benefit of an onsite clinic, employees needed easier access to the clinic during working hours, a better understanding of services provided (i.e. labs, medications and nurse coaching) and targeted outreach to key members.

Problem 3: Increase in risk migration of member population

Data revealed employees carried the majority of the high/very high risk, and risk migration from 2013 to 2014 showed a neutral to slight increase (Figure 1). Further analysis showed a higher than average percentage of untreated chronic conditions, including diabetes, high cholesterol and high blood pressure. Cost information from a disease perspective showed the potential impact specific disease programs within the clinic could have on employee health and medical cost.

Risk Distribution - high to very high riskRisk distribution bar chart

Analysis of Avoided Costs

The data reported from the population health team was instrumental in developing a strategy to have an impact on the member population and a successful onsite clinic. Once there was an understanding of the prospective risk and impact of chronic disease management by the employer C-suite, the HR team gained support for the initiatives developed by the population health and HR teams. A key illustration (Figure 2) to this point was showing a cost avoidance calculation for key services provided by the onsite clinic.

Avoided cost calculation

To learn about the recommended solutions, the implementation strategies, and how data was used to measure results, download the full case study.
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UBA Survey Reveals Industry Differences in Health Savings Accounts | Ohio Employee Benefits

Categories: HSA
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We recently took a look nationwide at the best and worst health savings accounts (HSAs) for singles and families. Health care costWhen you slice the UBA survey data by industry, some big differences emerge there as well.

  • Singles/families in the accommodation/food services industries received virtually no support from employers, with average HSA contributions at $149 and $172 respectively.
  • Government employers, on the other hand, offer the most generous contributions at $834 for singles and $1,636 for families, on average.
  • While most industries have seen steady growth in HSA enrollment, the utilities industry not only has the lowest enrollment (3.2 percent), it is the only industry to see a decline from three years ago.

Another standout trend from our survey of more than 10,000 employer sponsored health plans is that while, overall, enrollment in these account-based plans is increasing, employer contributions, on average, are stagnant or decreasing. According to the survey, the average single contribution to HSA plans decreased 14.5 percent from three years ago, going from $574 to $491. Since 2014, HSA enrollment has increased 10.7 percent; since 2013, that number jumps to 53 percent, indicating significant employer and employee interest in these plans over time. See our breaking news release with all the commentary from UBA Partners on this trend.

For closer look information about how HSAs and HRAs are performing across the country, by industry, employer size, or region, download UBA’s special report, “HSAs and HRAs: How They’re Doing.” (no registration form needed!)

A health reimbursement arrangement (HRA) and a health savings account (HSA) have many things in common, but also several key differences that define their purpose and benefits. For a closer look at the differences and similarities, see the UBA document HRAs, HSAs, and Health FSAs – What’s the Difference?

 

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Best and Worst Health Savings Accounts for Singles, Families | Ohio Benefits Broker

Categories: HSA
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We’ve just released the latest findings from the UBA Health Plan Survey related to how health reimbursement arrangements (HRAs) and health savings accounts (HSAs) are being used among employers. (Spoiler alert: California employers lead the way with the most generous account-based plans.)

So which is faring better in the industry, HRAs or HSAs? The answer very much depends on where you are in the country, what industry you’re in, and how many employees you have. See our free special report for all the detailed findings.

At a glance, here are the winners and losers when it comes to HSA plans:

Best and worst HSA plans for singles, families

A health reimbursement arrangement (HRA) and a health savings account (HSA) have many things in common, but also several key differences that define their purpose and benefits. For a closer look at the differences and similarities, see the UBA document HRAs, HSAs, and Health FSAs – What’s the Difference?

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