Effective October 1st, Bank of America will administer Health Savings Accounts (HSA) for HSA-compatible Aetna Advantage Plans for Individuals, Families and the Self-Employed. There is no change to Aetna’s HSA-compatible AARP® Essential Premier Health Insurance Plans at this time.

HSAs are currently administered by JPMorgan Chase Bank. Existing members who currently have an HSA with JPMorgan will not be impacted by this change.

What’s New?

Through Bank of America, HSAs will automatically be set up for new members who enroll in an HSA-compatible plan effective on or after October 1st. If no action is taken on the HSA, it will automatically close after 90 days.

The new HSA website will be co-branded with Aetna and Bank of America logos and will provide more tools to help members manage and modify their account online. For example, members can issue payments to providers using an online bill-pay option. They can also set up automatic money transfers to their HSA from their checking or savings account. As another perk, members can view their cash and investment accounts on a single integrated statement.

How are Members Impacted?

• There is no impact to existing members who currently have an HSA with JPMorgan.
• For new members who enroll in an HSA-compatible plan effective on or after October 1st, an HSA will automatically be set up for them. Members will receive a debit card and a welcome package with information to get them started.
• New members can opt out of the HSA by calling Bank of America– or if they take no action, the account will automatically close after 90 days.
• New members will not be able to link to their Bank of America HSA from Aetna Navigator; however, there will still be a link to the JPMorgan website for existing members. Members must save the website link www.benefitsolutions.bankofamerica.com that’s provided in their welcome packet.
• Member customer service is provided by Bank of America from 8:00-11:00 PM EST. The dedicated phone number for Aetna HSA members is 1-866-791-0250; TTY is 1-866-867-0701.

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Tags: Aetna Bank of America HSAs, Aetna Health Savings Account Administrator, Aetna Health Savings Accounts, Aetna HSAs

New BlueEdgeSM HSA plan options for 2-150 groups are being introduced July 1, 2009. These additional plan designs offer $3,500 aggregate and embedded deductible options with either 100%/80% or 80%/60% coinsurance options, or a $5,000 aggregate or embedded deductible option with a 100%/80% coinsurance.

An aggregate deductible means the entire family deductible must be met before health plan benefits begin for any covered family member. An embedded deductible means each family member has an individual deductible amount; once it is satisfied,that member is eligible for health plan benefits.

The out-of-pocket maximum for in-network services is $5,800 for individual and $11,600 for family for the four $3,500 deductible options:

• $3,500 Embedded Deductible 100%/80% Option
• $3,500 Combined Deductible 100%/80% Option
• $3,500 Embedded Deductible 80%/60% Option
• $3,500 Combined Deductible 80%/60% Option

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Tags: BlueEdge HSA Plans

The Internal Revenue Service (IRS) on May 14 issued Revenue Procedure 2009-29 providing inflation-adjusted limits for health savings accounts (HSAs) for use in 2010.

The annual contribution limits have been increased to:

• $3,050 for those with self-only coverage (up $50 from 2009)
• $6,150 for those with family coverage (up $200 from 2009)

As in previous years, you must be covered under a High Deductible Health Plan (HDHP) to qualify to make an HSA contribution. The limits defining what qualifies as an HDHP have also been increased for 2010:

• Self-only coverage must have a deductible of at least $1,200 (up $50 from 2009)
• Family coverage must have a deductible of at least $2,400 (up $100 from 2009)

These updates for 2010 will allow you to shelter even more of your investment dollars from taxes since any contribution to an HSA counts as a full deduction at the end of the year in addition to the ability to pay for nearly any medical expense with tax-free distributions from the account.

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Tags: 2010 hsa contribution maximums, 2010 hsa limits, 2010 IRS Health Savings Account Guidelines, 2010 IRS HSA limits, Health Savings Accounts 2010 limits, Health Savings Accounts Limits

Health Savings Accounts (HSAs) are gaining popularity in the United States – in part because health care costs are rising, but also because consumers want to take charge and make the most of their health care dollars. HSAs can make a significant difference to your budget bottom line – at all stages of adult life.

What is an HSA?

An HSA is a personal, tax-advantaged saving account that works in conjunction with an HSA-qualified health plan – a high deductible health plan (HDHP) with a minimum deductible of $1,150 for single coverage, or $2,300 for family coverage. Maximum annual in-network out-of-pocket expenses are $5,800 for single coverage or $11,600 for family coverage. Through an HSA, you can save money to pay for qualified medical expenses as defined by the Internal Revenue Code.

HSAs can be effective because of their triple-tax advantage:

• Contributions are tax-free up to the IRS’ annual maximum limit.

• Interest and investment earnings are tax-free.

• Withdrawals used for qualified medical expenses are also tax-free.

In order to open and contribute to an HSA, you must be enrolled in an HDHP, cannot be enrolled in any non-HDHP plan, cannot be enrolled in Medicare, be a dependent on someone else’s tax return, or have received VA medical benefits in the past three months.

HSAs for 20-somethings

Parents understand how important health coverage is but their young adult children may not. If they are too old to be covered by your insurance, and not yet covered by their own, there are options.

The first step might be to obtain health care coverage in the form of an HDHP. According to the Center for Policy and Research think tank run by America’s Health Insurance Plans in Washington, D.C., the average premiums for a young adult are $1,500 per year. Once enrolled in an HDHP, and assuming other eligibility requirements are met, the young adult can open an HSA. He or she (or their loved ones) can then deposit money up to the maximum annual contribution limit as defined by the IRS, and use it for a variety of medical costs today and into the future.

Funds in an HSA can grow tax free. And, because there is no “use it or lose it” provision, the account stays with a person through their lifetime.

HSAs for middle age

Statistics from the American Medical Association show there are nearly 50 million individuals in families who spend more than 10 percent of their household income on medical care. Regular checkups, eyeglasses and braces can add up. HSAs can help stretch buying power because you are using pre-tax dollars to pay for qualified medical expenses.

These accounts also can help save money for healthcare costs during retirement. Financial advisers often characterize an HSA during this stage of life as a medical emergency fund and suggest it be part of your retirement planning strategy. One possible strategy suggested is to meet your company match for 401(k), then contribute the maximum to your HSA and put the remaining retirement saving dollars into your Individual Retirement Account or 401(k).

Contribution limits to an HSA change annually. In 2009, the maximum contribution limits are $3,000 for single coverage and $5,950 for family coverage.

HSAs for retirement age

Even if we take great care of ourselves today, we know that as we age we’ll inevitably require some form of health care, whether it’s a daily prescription or even long-term care in a nursing home. According to the Center for Retirement Research at Boston College, a couple retiring in the year 2030 can expect to spend nearly $400,000 during retirement on healthcare alone.

You can’t use HSA dollars to pay for “regular” medical insurance premiums, but the IRS allows you to use your HSA dollars to pay for Medicare premiums – that’s an average of $1,200 per year, according to the Centers for Medicare and Medicaid Services. And, if you are age 55 or older, you can make an additional catch-up contribution of up to $1,000.

An HSA in your health care tool box can help you better manage your healthcare costs. And that means you can save your retirement nest egg for the things you’ve been dreaming about – like spoiling your grandkids and traveling around the world.

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Health care consumerism continues to grow through both consumer-directed health plans and tools that provide all health care consumers with more information about their health care choices and costs. Here are some examples of their growth:

• The number of employers with 500 or more employees offering CDHPs increased from 14 percent in 2007 to 20 percent in 2008
• Thirty-one percent of new coverage issued in the Small Group market was for HSA/HDHPs
• Companies that offered an HSA for 3 years saw significant growth each year, reaching 29 percent in the third year
• In 2008, enrollment in CDHPs reached 7 percent of all covered employees, up from 5 percent the previous year
• In companies that offer CDHPs, employee enrollment also continues to rise – from 8 percent in 2006, to 10 percent in 2007 and 15 percent in 2008

The top two reasons that plan sponsors give for offering a consumer-directed health plan (CDHP) are lowering benefits costs and promoting consumerism. Both of these reasons are likely to become even more important as plan sponsors deal with the current economic situation.

During a recession, health care use tends to increase. Consumers get care they might otherwise delay because they’re concerned about losing their employer-provided health coverage. People paying for coverage under COBRA also tend to have higher usage than active employees. And there is a higher incidence of stress-related medical and behavioral health conditions.

How CDHPs can help plan sponsors with benefits costs

CDHPs save money. According to one survey, companies with at least half of their workforce enrolled in a CDHP had a 2-year median cost trend, almost half that of companies without a CDHP. Another study found that CDHPs cost 4.8 percent less than PPOs and HMOs.5 One explanation for this cost difference is the fact that CDHPs have higher deductibles than other medical plans. But they still cost more than $400 less per employee when compared to PPOs with $1,000 or higher deductibles.

High deductibles are a growing trend among non-CDHPs. Over the last 2 years, the percentage of covered workers in a plan with at least $1,000 for single coverage grew from 10 percent to 18 percent. The jump was even greater for smaller companies – 16 percent to 35 percent.6 Plus, a recent Mercer study found that the median deductible for more traditional health plans is also rising, from $500 in 2007 to $1,000 in 2008, possibly due to the influence of CDHPs. The minimum deductible for an HSA-qualifying high-deductible health plan (HDHP) is $1,150 in 2009.

Higher deductibles are just one way plan sponsors are cutting costs. In the next year, 40 percent of companies report that they’re likely to increase employee premium contribution amounts, 45 percent are likely to increase office visit cost sharing, and 41 percent are likely to increase the amount employees pay for prescription drugs.

Healthier employees also reduce costs

The increase of CDHPs is also tied to a more general increase in health care consumerism. A survey by the Employee Benefit Research Institute found that CDHP participants make better-informed health care decisions and are generally healthier. That’s because employers who offer CDHPs also provide more and better health information tools to their employees. In most cases, these companies promote healthy lifestyles to all their employees, not just those participating in CDHPs.

CDHPs are here to stay

As more plan sponsors of all sizes adopt consumer-directed health plans, their impact on the entire health benefits industry will continue to grow. In fact, current economic pressures are likely to accelerate the growth of CDHPs.

HSAs accounted for most of the CDHPs added in 2008. Unlike HRAs, HSAs don’t require an employer contribution. In fact, 29 percent of large HSA sponsors do not contribute. This makes these plans particularly attractive to plan sponsors struggling to offer health benefits to their employees. They also provide attractive tax incentives.

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Tags: CDHPs, consumer driven health plans, consumer driver health plan studies, HSA employer info

To capitalize on heightened consumer interest in higher deductible plans, Blue Cross and Blue Shield of Illinois is introducing a new deductible option to the BlueEdge Individual HSA (health savings account) plan. Along with the current deductible offerings of $1150, $1750, $2600 and $5000, a new deductible option of $3500 is being added beginning January 1, 2009.

The new $3500 deductible plan is available at both 80 percent and 100 percent coverage levels, with or without maternity benefits. Marketing of the $3500 deductible began November 15, 2008 with effective dates of January 1, 2009 or later.

Also, effective January 1, 2009, the deductible level for the $1100 plan increases to $1150, in keeping with the IRS HSA minimum deductible guidelines.

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Tags: BlueEdge, Health Savings Accounts

The majority of UnitedHealthcare customers with Health Savings Accounts (HSA) are depositing money into the accounts and accumulating balances, regardless of their income level, age or employer size.

UnitedHealthcare analyzed more than 200,000 of its 1.4 million members enrolled in an HSA-eligible health plan during the full year 2006 – the latest period for which full year data were available – and found that 68 percent of account holders contributed their own money to their HSAs, and 88 percent had an account balance at the end of the year, carrying over $900 on average for future use. Also, UnitedHealthcare found that enrollment rates were highest among employees of small businesses – defined as having one to 99 employees – and lower-income individuals – defined as earning less than $25,000 per year – at 74 percent and 64 percent, respectively.

HSAs deliver value across all consumer segments because individuals can take the money they save in lower premiums and use it to fund a health account. This activity is helping create more engaged consumers who better understand, and plan for, their health care expenses. Prior research from UnitedHealthcare found that members of a consumer-driven plan received preventive and evidence-based care at rates equivalent to, or in many cases higher than, members of traditional plans.

“This latest research affirms our belief that Health Savings Accounts have broad appeal for many health care consumers, regardless of income, age or employer environment,” said Meredith Baratz, vice president of Market Solutions at UnitedHealthcare. “More employers are realizing the value of health savings accounts as well, because HSAs enable businesses to help their employees play a more active role in their financial and physical well-being.”

According to UnitedHealthcare data, employer funding was a key driver in HSA enrollment rates. About two-thirds of employers provide funding to the HSA. Regardless of funding level, when an employer contributed to the HSA, 86 percent of consumers opened an account, compared with only 27 percent when the employer did not contribute. However, employee self-funding was strong regardless of employer size, especially among employees at mid-sized companies (defined as having 100 to 500 employees).

Additionally, UnitedHealthcare found that account-opening activity was consistent across age, gender and life status. Nearly 60 percent of customers eligible to enroll in an HSA plan were singles, families and younger couples. Also, 88 percent of account holders at the end of 2006 had account balances greater than zero, illustrating HSAs’ long-term savings potential.

UnitedHealthcare analyzed both health plan design and financing to assess whether all consumer segments are taking advantage of the opportunity HSAs present to plan, save and pay for health care. More complete findings and a study summary are available online at http://www.unitedhealthgroup.com/global/hsa-final.pdf. UnitedHealthcare’s affiliate, OptumHealth BankSM (www.optumhealthfinancial.com), Member FDIC, is one of the nation’s leading HSA administrators with more than $600 million in HSA balances, including $30 million in mutual fund investments, as of June 30, 2008.

Today, more UnitedHealth Group customers are enrolled in HSAs than are enrolled in health reimbursement accounts (HRAs). This reflects the continuing rise in popularity of HSAs, which have been available for four years, compared with HRAs, which have been available twice that long. UnitedHealthcare also offers HSAs to individuals and families not covered by employer-sponsored plans through its Golden Rule Insurance Company.

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Tags: Health Savings Accounts, United Healthcare, UnitedHealthcare