Jessica Gallardini

Tuesday, 29 November 2005 06:54

HSA help

When employees can make their own health care decisions, they grow a greater appreciation for the benefits you offer. Employers who provide Health Savings Accounts (HSA) give employees voice and vote in the way their health insurance dollars are spent.

Individuals in your workplace who enroll in your HSA plan can use dollars to pay for out-of-pocket expenses, such as deductibles or coinsurance associated with high-deductible plans. HSAs also cover qualified medical expenses related to preventing or treating physical and mental health illnesses.

But before your staff can make educated decisions about health care expenditures, you must ensure that they truly understand how HSAs work. Here are some questions your employees might ask about HSA plans. You may choose to construct a FAQ sheet or address these concerns in a meeting.

Even the most robust benefits have little value if employees do not understand how to use them.

What expenses will HSA dollars cover?
Qualified medical expenses may seem like a foggy term. What exactly qualifies, and what additional insurance premiums may be reimbursed from an HSA?

As stated, qualified medical expenses relate to preventing or treating physical or mental illnesses. You can find a more complete summary in the IRS Section 213(d). Besides qualified medical expenses, HSAs will reimburse certain insurance premiums.

  • COBRA premiums

  • Health insurance premiums while receiving unemployment benefits

  • Qualified long-term care premiums

  • Health insurance premiums paid, other than for a Medicare supplemental policy, by individuals age 65 and over

  • Retirement and health care costs for eligible expenses

HSAs will not reimburse the following expenses.

  • Premiums for Medicare supplemental policies

  • Expenses covered by another insurance plan

  • Expenses incurred prior to the date the HSA was established

How do employees use HSAs to pay physicians at time of service?
First, employees should submit claims to the health plan; providers must have the most up-to-date insurance information. After medical claims are processed, out-of-pocket expenses will be billed and employees can use an HSA debit card or check to cover costs. Or, employees can choose to write a personal check and receive reimbursement at a later date.

When and how much can employees contribute to HSA accounts?
The employer, the employee and others can contribute to an HSA account once the employee enrolls. Contributions are made through payroll deductions or as lump-sum deposits. This will vary depending on your HSA and benefit plan.

Once enrolled, employees can immediately begin to use HSA dollars, and they can contribute to the account as often as they choose. Contribution limits must be equal to the lesser of 100 percent of the annual deductible, or $2,650 for individual coverage and $5,250 for family coverage. Employees over the age of 55 can make additional contributions.

How do HSA dollars work in conjunction with high-deductible health plans?
When HSA funds run out, employees are financially responsible for covering the cost of additional medical expenses. Yes — employees’ HSA dollars do apply toward out-of-pocket expenses for high-deducible health plan expenses. But if these expenses exceed the maximum, the employee must pick up the remainder of the tab.

What happens to extra dollars in an HSA account?
The money is the employee’s to keep. HSA accounts earn interest and automatically roll over into the next year’s HSA account.

If an employee leaves your organization, savings in HSA accounts still belong to that individual. They can choose to leave the funds in the account, transfer funds to an HSA with the new employer or transfer funds to another qualifying account within 60 days.

When employees have an option to enroll in an HSA account, the dollars are theirs to manage. Be sure to provide them with information so they can spend wisely. An employee benefits specialist can set up consultations with employees and provide you with useful tools to help them understand the advantages of HSAs.

Jessica Gallardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.