A family of four was recently hit with the shocking news that the company health plan will now essentially leave them without any health coverage because they simply can not afford the high deductible and copays. The medical plan is the only safety net for a self employed spouse and two young children.
Premiums will go up a mere $8.00 per pay period. Good news right? The only problem is they were denied pay raises this year and the medical benefits have been gutted.
Their Aetna600 plan will now cover one yearly basic physical per family member at 100%, and excludes visits for illness. The deductible for the plan is $1, 500 and any other doctor visits ($200.00 - $230.00), hospital bills and tests, must be paid in full until the deductible is met. The insurance will then cover 80% all other costs.
Aetna has generously offered the option of enrolling the family in the 'Health Savings Account (HSA) and High Deductible Health Plan' at $50.00 per month, totaling $1,200 per year with the ability to save for health costs in the health savings account. Wow! They better not get sick and if they do they will die quickly for sure unless they go to some public health facility.
Below is the memo they received along with answers to frequently asked questions:
For 2010, our benefit plans and options will not change. However, as a result of increased employee claim costs, there are a few changes in the design of the medical plans. Over the past two years, 'Company A' employee medical claims have risen over 30%.
Last year alone, 'Company A' paid more than $12 million in medical and prescriptions costs. While the company did not increase premiums in 2009, with the hope that claim costs would decline, that did not occur. In addition, estimates are that employee claim costs will continue to rise in 2010. Thus, the 2010 plan design will include some new deductibles, co-insurance rates, or out-of-pocket maximums.
In an effort to lower future claim costs, increase preventative care and promote good health, office co-pays will be eliminated in 2010. To emphasize preventative care, each covered participant will receive his or her annual exam and associated lab charges covered at 100%. All other office visits will apply to the plan’s deductible.
FREQUENTLY ASKED QUESTIONS
Q. What is a network?
A. Networks are groups of doctors that have agreed to certain discounts. For 2010, our specific network is Aetna.
Q. What is a deductible?
A. A deductible is the amount of your out-of-pocket expense before the plan pays anything. It’s similar to car insurance, in that you pay your deductible before the insurance pays anything.
Q. What is coinsurance?
A. Once you have met your deductible, the next bills are split based on your plan. For example, if you were in the Aetna600 or HDHP plan, you would pay 20% and 'Company A' would pay 80% after you have met your deductible. Say your hospital bill is $700, you would pay 20% for coinsurance, which is $140. Protection One would pay the remaining $560.
Q. What does out-of-pocket mean?
A. This is the maximum amount you pay out-of-pocket before 'Company A' pays 100%. Once you pay up to that amount, all your medical bills are paid at 100% by the company.
Q. What is a 'Company A' High Deductible Health Plan(HDHP) with a Health Savings Account (HSA)?
A. A High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) provides traditional medical coverage and a tax-free way to help you build savings for future medical expenses. The HDHP/HSA gives you greater flexibility and discretion over how you use your health care benefits and dollars.
Q. What are the advantages of enrolling in an HSA?
A. HSAs offer the benefit of pre-tax savings account, which reduces your taxable income.Through this account, you will be able to set aside income that is tax-free, plan for future health expenses and build assets that can be used when you retire. The company also contributes a setamount into your HSA account depending on the plan option you choose. The account is set up in YOUR name and the funds that are in the account go with you if you leave the company.
Q. If I enroll in the HDHP, do I follow the same process I would go through if I were in the Aetna400 or Aetna600 plan?
A. Yes. Everything is the same in that your doctor will submit the bill to Aetna to review. Aetna will apply any discounts, and then pay the appropriate amount to the doctor. You will then receive a bill from the doctor, which you would pay using the credit card issued as part of the HSA account.
Q. Do I still have a medical ID card?
A. Yes. You will still have an ID card that you would use each time you visit the doctor or have a prescription filled. This allows you to receive the in-network discounts.
Q. How does an HSA differ from a Flexible Spending Account?
A. HSAs have certain features that are more favorable for participants than Flexible Spending Accounts (FSAs). You are immediately vested in your HSA account, which means the money that is in the HSA account belongs to you. You can’t lose it if it isn’t spent during a plan year, as is the case with an FSA. Unused balances can accumulate year to year, tax-free. HSA accounts can also earn interest tax free.
Q. How do I access funds from my HSA?
A. You will be provided an HSA Visa credit/debit card, which you may use to pay medical bills or to withdraw funds from your HSA account. An FDIC insured financial institution has been selected to serve as the qualified custodian for the HSA. The bank will be the holder of your HSA funds and will service the accounts.
Q. Can I still participate in a Flexible Spending Account (FSA) if I have an HSA?
A. You can still participate in the FSA, however, it is limited to benefits not covered by the HDHP. Expenses incurred for dental, vision and the dependent daycare plans would be eligible for the FSA. Medical expenses would not be covered by the FSA, however, because they would be covered by the HSA instead.
Q. How do I establish an HSA?
A. Employees who enroll in the HDHP will be required to open an account with HSA Bank online. Please note that this CANNOT be completed until after Dec. 15, 2009, and that you only will be eligible to establish a health savings account if:
- You are enrolled in the HDHP;
- You are not covered under any other health plan other than the HDHP;
- You are not eligible for Medicare benefits; and
- You are not claimed as a dependent on another person’s tax return.
Q. What if I already have an account open with HSA Bank? A. You’re all set! There is nothing you need to do for the 2010 plan year related to setting up this account.
Q. Am I charged a monthly fee for this account?
A. Yes. You will be charged $1.75 per month to have the account. The fee is deducted from the balance in your HSA, therefore you must ensure that you have funds available each month to cover the fee.
The family already has unpaid medical bills from last year because of an equally high deductible and are now contemplating joining a government run health program for the children or seeking help from a charity.