HSA

New Jersey Small Business Health Insurance -Top Five Ways To Get the Best Deal

August 6, 2011 By Mike Sheeran

For most New Jersey small businesses, health insurance can be one of the largest expenses they incur, second to employee payroll. It is also the one expense that seems to go up every year, without fault of the employer or its employees. Because of this, the most common question I get is, how can we get the price down?

Top Five Ways New Jersey Businesses Can Lower Their Medical Insurance Premiums

The first and easy answer is to shop around. This one is obvious, but make sure your broker quotes your insurance coverage with all of the major carriers. Insurance carriers will take a snapshot of your group about 60-90 days before your renewal, and base renewal rates on those demographics. If your census changes during that time period, you may find a much better deal by moving the coverage. As an example, a 64 year old employee turns 65 one month before the renewal and comes off the plan at renewal. Your current carrier won’t re-rate your group but another carrier may end up being 10% cheaper.
Network considerations – In NJ, most of the carriers sell a managed care network and some sort of PPO network or national network. Decide if you really need the national coverage and maybe consider the managed care(HMO network). In most cases the smaller network really isn’t small at all and you will have access to all the same doctors and hospitals as before. Savings can be anywhere from at least 4% to probably 20%. If you are eliminating out of network coverage, the savings are closer to the 20%. Keep in mind that emergencies are covered regardless of the network so that should not be a concern.
Deductibles and co-pays – This is usually one of first options for getting the cost down. Raise the deductible and raise the co-pays. Many times you can add a $1,000 deductible and have premium savings well over $1,000. A $2500 deductible may save you $3,000. The reason for this is that the insurance companies know that for every increase in deductible, there will be less claims.
Health Reimbursement Accounts – To piggyback on option 3, I think every small business should at least consider a health reimbursement acccount(HRA). Your business will purchase a very high deductible plan and than use the premium savings to reimburse employees for their services. Premium savings can be 50% or more and after reimbursing employees, your savings can still be up to 30% over your current rates. The HRA funds are tax deductible to the business and tax free to employees. *** Extra plan documents need to be created a third party administrator should be used.
Health Savings Accounts(HSA)- Along the same lines as the HRA, your business will purchase a high deductible, HSA plan, and see premium savings up to 50% in some cases. You have the option of funding each employees account and the employee may use the funds for anything they see fit. If it is for a qualified medical expense, like prescriptions, dental work etc… the money will come out tax free for the employee.

If you are a New Jersey small business and your insurance premiums have gone out of control, I guarantee you will see cost savings by using the techniques above. We have seen employers with 10 employees save over $30,000 with options 4 and 5.

Please contact me here for your New Jersey Small Business Health Insurance. Contact – NJ Health Insurance Quote

Health Savings Account Resources for New Jersey Businesses and Individuals

July 18, 2011 By Mike Sheeran

Sometimes it can be difficult to get the specific answers you need regarding the tax laws and exactly how HSA’s tie into your health insurance. I have put together a set of resources where you can find an answer to pretty much any question you can think of regarding, tax code, eligibility, and everything else that goes along with having and administering an HSA. I have everything from government resources to the resources through each New Jersey Health Insurance carrier.

Health Savings Account Resources for New Jersey Businesses and Individuals

Government Resources

1)IRS Publication 969 – Health Savings Accounts and Other Tax Favored Plans

2)Publication 502 – Medical and Dental Expenses – Including the Health Coverage Tax Credit

3)HSA Indexed Amounts for 2011

Contribution Levels for HSAs:

For calendar year 2011, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,050.
For calendar year 2011, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,150.

High deductible health plan.

For calendar year 2011, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,200 for self-only coverage or $2,400 for family coverage, and
the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,950 for self-only coverage or $11,900 for family coverage.

4)HSA Indexed Amounts for 2012

Annual contribution limitation. For calendar year 2012, the annual limitation on

deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high

deductible health plan is $3,100. For calendar year 2012, the annual limitation on

deductions under § 223(b)(2)(B) for an individual with family coverage under a high

deductible health plan is $6,250.

High deductible health plan. For calendar year 2012, a “high deductible health

plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,200 (no change from calendar year 2011) for self-only coverage or

$2,400 (no change from calendar year 2011) for family coverage, and the annual out-of pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do

not exceed $6,050 for self-only coverage or $12,100 for family coverage.

5)Preventive Care Services Covered Under the Affordable Care Act – Use this to see what services you can get with zero copayment or deuctible

New Jersey Health Insurance Carrier Resources

1)Aetna

http://www.aetna.com/members/individuals/health/plan_details/hsa.html

http://www.aetna.com/hsa/welcome_video01.html

2)Amerihealth

http://www.amerihealth.com/health_plans/de/over_50/hsa.html

List of services covered 100%- http://www.amerihealth.com/health_care_reform/for_providers/preventive_care.html

3)Horizon Blue Cross Blue Shield

http://www.horizonnjhealth.com/HRA_HSA_demo/index.html HSA/HRA Demo

http://www.horizon-bcbsnj.com/myway/members/mychoices_hsa.aspx

List of services covered 100%

http://www.horizon-bcbsnj.com/SiteGen/Uploads/Public/horizon_bcbsnj/pdf/Health_Reform/Preventive_Care_Guide.pdf

4)Oxford Health Plans

https://www.oxhp.com/secure/materials/brokers/recent_comm/ohp_hsa_fact_sheet_7508.pdf

Miscellaneous Resources

1)ACS/BNY Mellon HSA – Horizon Blue Cross banking partner for HSA’s.

This website is one of the best I have found for the resources on HSA’s.

https://hsamember.com/ Main Site

https://hsamember.com/faq.html FAQ Section for Health Savings Accounts

https://hsamember.com/resources.html Additional Resources

https://hsamember.com/calculator2.shtml Tax Calculator to see how much you will save in taxes by using an HSA.

Summary

If there are any unanswered questions you still have or cannot find what you are looking for in these resources, please contact me and I will try my best to help you out.

Consumer Directed Healthcare 101: Health Reimbursement Accounts – HRA

July 7, 2011 By Mike Sheeran

Health Reimbursement Accounts are another tool that most businesses can use to save up to 20-30% on their health insurance expenses.

In most cases, the HRA will involve two parts, a high deductible health plan and an employer owned and funded reimbursement account. Instead of purchasing a “premium” health insurance plan each year, the employer will purchase a more affordable high deductible plan and use the savings to reimburse employees for certain medical related expenses.

Premiums Savings

Depending on the current plan design, and the new offering, the premium savings can be up to 50%. (Greatest savings are seen when moving from a 100% plan to high deductible plan such as an HSA Qualified insurance plan)

Reimbursement

Employers can set reimbursement levels at their discretion as long as it does not discriminate between employees. A common technique is for the employer to fund the hospital deductible for single employees and families.

Any unused monies that has been set aside by the employer are retained by the employer year to year.

Employees are either reimbursed by submitting claim forms, or they are issued a debit card that allows direct payment from the employer HRA fund.

Taxes

When properly set up, the HRA monies are tax deductible to the business and are received tax free to employees. There are a few key issues that must be addressed though. Because of this, I recommend using a third party administrator to assist.

The HRA is considered a health plan so proper plan documents must be in place and signed off on by key company personnel.
All reimbursements must be substantiated by receipts to show that they are approved health expenses. The expenses must also be listed in Section 213(d) of the IRS Code
The person administering the plan may not have hiring or firing rights at your company. In addition there needs to be a backup administrator in case the main administrator is out for any reason.
There are more issues that need to be addressed but you get the picture. —- get a proper administrator. I have several that are very good to work with.

HRA In Action – Based on a Real Case

Employer Side

Small business with 10 employees facing another 25% increase. The new annual premium was going to be $110,000. On the current plan, the employees had a $1,000 single deductible for hospital inpatient and families had a $2,000 deductible

In this company, the employer felt that most of the employees rarely used the coverage so that most of the premium was being wasted unnecessarily. I agreed and suggested a high deductible health plan coupled with a HRA. This way, the employer would only pay for claims as they are incurred and money wouldn’t be wasted on people that never used the insurance plan.

The new plan we chose had an upfront deductible of $2500 per single and $5,000 per family. The new annual premium for all employees is now $50,000.

Premium Savings = $60,000

With the premium savings of $60,000, the employer has agreed to fund everyone’s full deductible. Based on their census of employees, the employer could potentially pay out $50,000 if everyone uses 100% of the money they have been allotted. With that in mind, he will have a guaranteed savings of at least $10,000 and likely much more depending on claims.

At the end of the year, the employer will retain any unused money and can even roll it over if he chooses to. That way employees who have not used the plan, can increase their HRA balance for coming years.

Employee Side

Each employee has been given a debit card provided by the third party administrator to pay for medical expenses covered by the plan. When they visit their doctor, they present their insurance card and pay their bill with the debit card. The money will come from the employer’s account and the employee’s net cost is now $0.

The employee will continue on like this until he has spent all of the money that the employer has allotted. Employees will then pay for their claims out of their own pocket.

My Opinion

The HRA set-up should be considered by all employers and I welcome the opportunity to present it. The HRA has a few more requirements and some educational issues that need to be worked through but in the end, both employers and employees win. In my opinion, it is probably the best way to make small business health insurance more affordable for everyone.