Choosing the Right Plan

Choosing the right plan makes a difference in both an employer’s bottom line and employee satisfaction.

If your customer is looking for less expensive health care plan options and is interested in motivating their employees to take a more active role in their health care decision-making and funding, you can ask these questions to help them choose the right plan.

Questions to ask your customers:

These questions will help you determine which health plan(s) and savings account options meet your customers’ needs.

  1. How important is it to you to maintain office visit copayments in your benefit plan?
  2. How comfortable are you moving to a high deductible plan?
  3. How important is it to you to be able to offer various benefit combinations?
  4. How important is it that you contribute to employee savings accounts, and/or that employees can contribute to a savings account?
  5. How important is it that you control savings account dollars and limit cost exposure?
  6. How much flexibility do you want in savings account design?
  7. How important is it that you reduce your taxes? Your employees’ taxes?
  8. Is there a fairly high turnover in your workforce?
  9. How important is it that you have a standalone prescription drug plan (i.e., rider)?

1. How important is it to you to maintain office visit copayments in your benefit plan?
Employers can maintain first dollar coverage for office visits and transition into a Consumerism plan with a Flex Copay or Flex Deductible program. These plans are good transition options because they allow an employer to maintain predictable, first-dollar coverage with copayments for office visits while at the same time introducing higher cost-sharing for certain services (e.g., durable medical equipment and private duty nursing.)

In contrast, Personal Choice High Deductible Health Plan (HDHP) options eliminate copayments. Until employees meet their deductible, they’ll be responsible for the total cost of any care they receive. Employees in these plans will still receive the benefit of Independence Blue Cross’ negotiated discounts when they use participating providers and after the deductible is met, they’ll be responsible for coinsurance until they reach the total out-of-pocket maximum amount.

2. How comfortable are you moving to a high deductible plan?
An employer can transition into a high deductible plan by offering a Flex Deductible program and an employer funded BlueSaver Health Reimbursement Account (HRA). BlueSaver HRAs are available to groups of 2+ employees.¹ Employers can choose from four levels of deductibles for the Flex Deductible program and create an HRA that employees can use to minimize out-of-pocket expenses.

Employers can realize the highest premium savings, however, by offering a Personal Choice High Deductible Health Plan (HDHP). In these plans, all services, except preventive services, are subject to a deductible. To ease the introduction of a high deductible plan, employers can offer and contribute to a Health Savings Accounts (HSA) for employees that enroll in an HSA-qualified HDHP. The HSA can be funded with the employer’s premium savings and employer contributions are not subject to taxes. A Personal Choice HSA-qualified HDHP and HSA combination can be offered to groups of 2+ employees.

3. How important is it to you to be able to offer various benefit combinations?
This is important because the level of flexibility your customer wants determines the health plan and savings account combination he or she will be able to offer:

A BlueSaver Health Reimbursement Account (HRA) can be provided regardless of the medical and prescription drug coverage offered, and pairing an HRA with a high deductible plan such as a Flex Deductible program provides the additional advantages of lowering an employer’s cost of providing medical coverage and providing a transition into Consumerism — which can reduce cost trends. BlueSaver HRAs are available to groups of 2+ employees.¹

In contrast, a Health Savings Accounts (HSA) can only be paired with a high deductible health plan that meets IRS-defined standards. Pairing an HSA with a Personal Choice HSA-qualified high deductible plan provides the advantages of lowering an employer’s cost of providing medical coverage and providing a transition into Consumerism – which will reduce future cost trends. HSAs and Personal Choice HDHPs are available to groups of 2+ employees. Learn more about federal HDHP requirements.

4. How important is it that you contribute to employee savings accounts, and/or that employees can contribute to a savings account?
This is important because regulations specify differences in who can contribute to Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs).

HRAs must be set up by an employer on behalf of its employees and only the employer can contribute to an HRA.

Both employers and employees can contribute to an HSA (up to the maximum annual contribution allowed by the IRS), however to contribute to an HSA, employees must be enrolled in an IRS-qualified high-deductible health plan such as a Personal Choice HSA-qualified High Deductible Health Plan (HDHP).

Review a PDF icondetailed comparison chart of BlueSaver Health Account Solutions.

5. How important is it that you control savings account dollars and limit cost exposure?
Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs) differ in the level of employer control of the use of savings account dollars.

With an HRA, employers can design a benefit program that gives them the greatest amount of control.

  • Employers can limit annual contribution amount.
  • Employers can limit allowed expenses. To limit cost exposure, employers should limit the HRA to medical expenses allowed by the health plan coverage (deductibles, coinsurance and copayments).
  • Employers can limit the maximum amount that can accumulate in the HRA.
  • Employers can design a plan with no rollover.
  • Employers can choose the plan design to pair with the HRA.
  • Employers keep HRA funds if an employee leaves their company.

With an HSA, employers have limited control.

  • Employers can determine how much they’ll contribute (if at all).
  • If an employer does contribute to an employee’s HSA, they must make the same dollar amount or percentage of deductible contribution for each employee.
  • Employers cannot limit allowed expenses.²
  • Employers cannot limit HSA rollover.
  • Employers cannot limit the amount that accumulates in an employee’s HSA (annual maximums are determined by Federal regulations).
  • Employers cannot choose the plan design to pair with an HSA. HSAs can only be offered with a qualified high deductible health plan. Learn about federal HDHP requirements.
  • Employers cannot keep HSA funds they contribute to an employee’s HSA. HSA contributions belong to the employee even if they leave the employer’s company.

6. How much flexibility do you want in savings account design?
Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) differ in the level of employer flexibility.

Because an HRA is totally employer funded, employers have a great deal of flexibility.¹ HRAs allow employers to:

  • choose the contribution amount;
  • choose allowed expenses;
  • choose a design with or without rollover of funds;
  • choose the maximum amount that can accumulate in the HRA;
  • design an HRA so that healthy behaviors are rewarded by offering additional HRA credits for completing health risk assessments or participating in wellness programs.

Because HSA rules are determined by Federal regulations, employers do not have the same level of flexibility with an HSA.

  • Employers cannot limit allowed expenses.
  • Employers cannot limit HSA rollover.
  • Employers cannot limit the amount that accumulates in an employee’s HSA (annual maximums are determined by Federal regulations).
  • Employers cannot choose the plan design to pair with an HSA. HSAs can only be offered with a qualified high deductible health plan. Learn about federal HDHP requirements.
  • Employers cannot keep HSA funds they contribute to an employee’s HSA. HSA contributions belong to the employee even if they leave the employer’s company.

Review a PDF icondetailed comparison chart of BlueSaver Health Account Solutions.

7. How important is it that you reduce your taxes? Your employees’ taxes?
Both Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) can help to offset an employer’s and/or employee’s taxes.

Employers can deduct the amount of their HRA contribution. If they fund the HRA with actual dollars, they can take an immediate deduction. However, if the account is funded on a “notional” basis like a line of credit, the employer can take the deduction only when the amounts are actually paid out. Employer contributions to an HRA are not treated as taxable income to the employee.

Employer contributions to an HSA are exempt from payroll taxes, providing an instant ROI for employers. To make it easier for employers to make contributions through payroll deduction, our preferred HSA administrator, The Bancorp Bank³, offers a direct-deposit tool.

Employees enjoy a triple tax advantage when they contribute to an HSA:

  1. Contributions are tax deductible.
  2. All earnings are tax-free.
  3. Withdrawals for qualified medical expenses are tax free.

Review a PDF icondetailed comparison chart of BlueSaver Health Account Solutions.

8. Is there a fairly high turnover in your workforce?
This is important because Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) differ greatly in when money is available and portability:

An HRA is a good option if there is high employee turnover, because employers are not required to prefund the HRA. Employers determine whether employees have access to their entire HRA contribution or only a portion of the funds at any given time. Employers can establish HRAs with unfunded “credits” rather than actual dollars. Similar to a line of credit, employee expenses are paid with employer funds when and if they occur.

HRA funds are available only as long as an employee remains with the employer. HRA balances will be forfeited if an employee leaves the job or changes health plans.

Depending on the employer’s point of view, an HSA may be an advantage or disadvantage in a company where there is high turnover.

An employer-funded HSA may attract and retain employees. Yet, because an HSA is completely portable, an employer risks losing not only the employee, but any funds they contributed to the HSA. Employees can take HSA funds with them when they retire or change jobs and can designate a beneficiary to receive the funds upon their death.

Review a PDF icondetailed comparison chart of BlueSaver Health Account Solutions.

9. How important is it that you have a standalone prescription drug plan (i.e., rider)?
This is important because Health Savings Account (HSA) regulations have distinct requirements for prescription drug coverage.

Federal HDHP requirements do not allow a separate prescription drug plan (or rider) to provide benefits before the HDHP annual deductible is satisfied. If an employer wants to provide prescription drug coverage with an HSA-qualified HDHP, prescription drug expenses must be subject to the annual deductible.

A Health Reimbursement Account (HRA) can be provided regardless of the prescription drug coverage offered.

¹ Available for quoting 1/1/2009 for 3/1/2009 and later effective dates. Not all variability is offered with small group BlueSaver HRA options.
² HSA funds not used for qualified medical expenses are subject to income tax and a 10% tax penalty.
³ The Bancorp Bank of Wilmington, DE, is a federally qualified bank offering HSA trustee services. It is not affiliated with Independence Blue Cross.

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