Introduction of High-Deductible Health-Plan Option

Posted April 7th, 2011 at 12:56 pm.

From Benefits Manager Martin Mastascusa:

More Information:

Information sessions will be held in the Gateway conference room:

  • Wednesday, April 13, 3-4:30 p.m.
  • Tuesday, April 26, 9-10:30 a.m.

The College Committee to Review Benefits has approved the addition of a high-deductible healthcare plan (HDHP) option effective on the next medical plan renewal of November 1, 2011.  The HDHP will be a second Personal Choice PPO plan option and will use the same network as the existing Personal Choice plan.  A calendar year deductible of $1,500 ($3,000 if coverage is greater than single) must be met before in-network services will be paid.  However, once the deductible is met, all in-network expenses except prescriptions are covered at 100%.

The annual deductible on the HDHP does not apply to in-network preventive services, which are covered at 100% under the new health care reform requirements, or services provided through Davis Vision. Prescriptions will be covered above the deductible subject to a $5 generic, $20< brand name formulary and $45 brand name non-formulary co-pay.  There are very limited benefits for out-of-network services, which are payable at 50% of reasonable & customary charges after a $5,000 deductible ($10,000 if coverage is greater than single).

The HDHP comes with a health savings account (HSA) feature, which allows for the establishment of a tax-deferred savings account that can be used to be pay for the same medical, dental, vision and prescription expenses that are currently reimbursable under the College flexible spending account (FSA).  However, unlike an FSA, the HSA has no set plan year in which expenses must be used and has no “use it or lose it” forfeiture provision.  Unlike the College FSA, the HSA does have a debit card feature and there is no waiting period in order to participate.  The HSA is also available to part-time employees who are not eligible to receive a College medical subsidy and who elect to participate in the HDHP through payroll deduction.  The HSA component is optional, however, you cannot enroll in the HSA unless you are enrolled in the HDHP.  The College will continue to offer the FSA, however, you also cannot enroll in the HSA and the FSA at the same time.

The result of the high upfront charges on the HDHP is a lower and more affordable premium.  While rates for the fall of 2011 are currently not known, it is expected that the HDHP will be less expensive than the any of the other three medical plans offered through the College.  The medical subsidy for Flexible Benefit Plan participants will continue to be a percentage of the Keystone HMO single premium, with the expectation that the College contribution for single Keystone HMO coverage will remain at 100%.  I have attached a rate sheet for illustration purposes only, which indicates what the rates would be if current rates and contributions for Flexible Benefit Plan participants were continued into the next plan year.  Since the HDHP will be priced at less than the HMO rate, this means that HDHP enrollees with single coverage will receive additional money in their pay.  This will be after-tax money, but tax savings can be achieved if the additional monies are deposited into the HSA.

Because the HDHP and the HSA feature are such a different way of providing medical insurance and reimbursement, informational sessions will be provided by the PAISIG broker, Armstrong, Doyle & Carroll.  The intent is to have each enrollee participate in an informational session in the spring or summer of 2011. Spring informational sessions have been scheduled in the Gateway Conference Room on the following dates:

Wednesday,  April 13th 3:00 –  4:30 PM

Tuesday, April 26th 9:00 – 10:30 AM

Please send me an e-mail if you plan to attend one of these sessions. Each person who is still interested in the HDHP plan after attending an informational session will then be scheduled to meet with a representative from Armstrong, Doyle & Carroll during the annual Open Enrollment period in September.

The payroll savings on enrollment in the HDHP are considerable, however, any person enrolling in this plan has to consider the loss of upfront medical coverage. I anticipate that the greatest level of interest will be from current Personal Choice enrollees, but also from enrollees with family coverage in the Keystone plans, since these are the individuals who will experience the greatest premium savings. Since the out-of-network benefits are so limited, the HDHP should not be of interest to anyone with high out-of-network utilization.

If you are interested in the HDHP but cannot attend a spring session, additional informational sessions during the summer will be scheduled at a later date.

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