2005 amegy bank n.a. member fdic. tax-advantaged account solutions hsa, fsa, dcap, hra and how they...

Tax-Advantaged Account Solutions HSA, FSA, DCAP, HRA and How they

Impact the Bottom-line

2010 Amegy Bank N.A. Member FDIC.


Introduction


Introduction

Employers face unprecedented challenges in 2011

In March 2010, comprehensive federal health care reform, called the Patient Protection and Affordable Care Act (PPACA), became law.

It is intended to expand coverage while building upon and strengthening the private, employer- based health insurance system.

Passage of PPACA will have both short and long term effects!

The PPACA has many components-from new reporting mandates, taxes and fees to major structural changes such as insurance reforms, employer and Individual Mandates, and state insurance exchanges-phasing in over many years.

Every employer-sponsored health plan will be impacted.


Healthcare Reform Overview

This law will have significant impact on employers and the health care market over the coming decade and beyond

• Goals of reform are embedded in the law's voluminous provisions– Expand coverage relying on many existing mechanisms, including public

programs, employers, and the private insurance market– Remove perceived barriers to coverage– Address affordability issues

• Lack of detail and unknown consequences will require ongoing interpretation, monitoring and a flexible approach

– Various government agencies must develop regulations - likely to be a long and staggered process taking many years


There is a Partial Solution . . .

Utilize Tax-Advantaged HealthCare Accounts• Health Savings Accounts – HSAs• Flexible Spending Accounts – FSAs• Dependant Care Assistance Plans – DCAPs• Health Reimbursement Arrangements – HRAs

They provide Employer & Employee Meaningful Savings, Robust Benefits, Are Ease to Use and Comply with HCR


Tax-Advantaged Accounts


Health Savings Account

A HSA is like a 401(k) for healthcare. The funds can be used to pay for qualified medical expenses today or can be saved for future expenses. Account Advantages

• Interest and investments• Portable – it stays with you when

you leave your company or retire

You can spend your money on today’s expenses, or save and invest your HSA funds for future expenses or for retirement!


Flexible Spending Account

Contributions• Employees contribute – up to a limit of $2,500• Contributions are tax free and processed through payroll

Using The Account • Use the funds for qualified medical expenses of spouse & dependents – NOT

Over The Counter• Total funds for the year are available when the plan becomes effective (even

with no current year contributions)Funds Forfeiture

Unused amounts at year-end are NOT rolled over to the next plan year


Dependent Care Account

Contributions• Contributions are tax free, processed through payroll up to $5,000 annual

limitUsing The Account

• Use the funds for child or dependent care -- typical expenses include day care, before and after school care

• Funds become available as contributedFunds Forfeiture

Unused amounts at year-end are NOT rolled over to the next plan year


Health Reimbursement Arrangement

Contributions• Employers contributes funds into this account

Using The Account • Use the funds for qualified medical expenses - (may be limited by employer)• Use the funds for spouse or dependents qualified medical expense

Funds Forfeiture• Funds may roll over to the next plan year, depending on your employer’s

plan


Market Data


Enrollment in CDHP Continues to Grow


HDHPs Growth Rates


2012 Projected Growth by Market


Why? . . . Meaningful Savings


Case Study


ZIONS BANCORPORATION


Where We Were – 2004 Benefit Plans

•8 Health Care CarriersA Variety of Self-Funded & Fully-Insured Options Offered

•12 Plan OptionsVaried by Affiliate & included diverse HMO, PPO, EPO & Rx plans

•Benefits plansCost increased annually by 19%+


Tipping Point – ’07 Benefits Increase

The average increase for all HMOs was over 20% greater than the average for all CDHP options.


CDHP vs. HMO Costs

CDHP continues to trend long-term reductions and medical cost savings.6th Annual Aetna HealthFund Study March 2010


Transitions To 100% CDHPs

Phase One: Intro to HDHP Option

High Deductible Health Plan Introduction

• 33% of eligible employees enrolled in HDHP option, exceeding the industry average for HDHP enrollment by 6 times!

• Zions funded a $500 dollar contribution to all HDHP participant Health Savings Accounts.


CDHPs BRING DOWN PLAN COSTS

Zions & Our Employees Have Saved More Than $10 Million Since the CDHP was Introduced in 2005

From 2006-2011, the Annual Percentage Increase in Health Care Costs Fell From

Double Digit Levels to Below 5%.

Real Results . . .


What Could You Save?? Employer HSA Savings

Employer Information Small Mid-Size Large

Number of HSA Plan Participants 50 250 1,500

Average Cost for PPO/HMO/Month $800 $800 $800

Participant Contributions

Annual Per Participant Contribution $1,600 $1,600 $1,600

Total Annual Participant Contribution $80,000 $400,000 $2,400,000

Employer Savings

Employer Tax Savings (7.65% FICA) $6,120.00 $30,600.00 $183,600.00

Savings on Reduced Premiums $14,000.00 $70,000.00 $420,000.00

Total Savings $20,120.00 $100,600.00 $603,600.00

HSA Implementation Fee (One -time) $5 $1,500 $2,500

Annual HSA Administration Fees $2,700 $13,500 $81,000

Annual EMPLOYER Savings after HSA Fees* $ 17,420.00 $ 87,100.00 $ 522,600.00

ADDITIONAL ACCOUNTS $ 11,420.00 $ 57,100.00 $ 571,000.00

TOTAL $ 28,840.00 $ 144,200.00 $ 1,093,600.00

Assumptions

Premium Reduction % 35%

Monthly HSA Administration Fee (per acct) $ 4.50

*For Illustrative Purposes Only

For a SINGLE employee that moves from a traditional plan to a HDHP/HSA, the employer could realize a savings of over $300/year.


Conclusion


What’s It All Mean?

This is Complicated Stuff

Be Pro-active so You Can Control Costs

Find a Partner That Understands and Can Help

Even with HCR – Employers Can Still Provide Vital Benefits and Save Significant Amounts on Overall Healthcare Costs

A HDHP/HSA is One Good Mechanism


Thank You and Questions

2005 amegy bank n.a. member fdic. tax-advantaged account solutions hsa, fsa, dcap, hra and how they...

Documents

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introduction slide

plan year slide

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health care market

hsa funds

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