Health Savings Accounts: News…Bank of America Still Old School, but learing? HRA…Anyone?

Health Savings Accounts with a Health Reimbursement Arrangement (New School for the old Flexible Spending Accounts or Cafeteria Plans)…When are they going to learn…or get up to speed?

Featured Story May 29, 2008

Bank of America to ‘Walk the Walk’ by Offering Its Own Employees Health Care Account for Expenses

Reprinted from INSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results.

Account for Expenses Charlotte, N.C.-based Bank of America (BoA) is sweetening its transition to consumer-directed health care (CDH) by offering some employees extra money to help defray out-of-pocket health care expenses. Beginning in 2009, employees who earn less than $100,000 per year will be eligible to receive up to $100 a month in a “health care account” to use at their discretion, according to company spokesperson Kelly Sapp.

In January, BoA consolidated its health and insurance benefits under one carrier — Aetna Inc. — replacing a hodgepodge of plans from more than a dozen carriers. Bank employees can choose from a traditional PPO-HMO blended plan with a flexible spending account (FSA), or a high-deductible health plan with an HSA.

In addition, BoA will place $600 to $1,200 per year into a health care account that employees can use for copayments and other expenses. The amount of funds deposited on the health care account is based on an employee’s annual salary. The money can be rolled over from year to year and saved into retirement, Sapp explains.

“Employees can take the health care account into retirement,” she says. “But if they leave Bank of America before retirement, they can’t take the money with them.”

Account Is Similar to HSA or HRA

Although neither an HSA nor a health reimbursement arrangement (HRA), the health care account has characteristics of both. Like an HRA, the money nominally belongs to the employer. However, it rolls over from year to year, and like an HSA eventually belongs to the employee.

The health care accounts are a dividend from the savings expected to result from streamlining the company’s health benefits. “Going to a primary provider of health benefits allowed us to gain some operational efficiencies with which we were able to enhance and offer some additional programs to our associates, the health care account being one of them,” Sapp says.

At the Consumer Health World conference in Arlington, Va., last December, Thomas Joseph, senior vice president and business development executive for benefit solutions at BoA, described the difficulty of “selling” CDH to its own employees when the plan was introduced in 2006.

Sapp says that there are no immediate plans for BoA to discontinue the PPO HMO blended plan and fully replace the benefit with CDH. However, the health care account will give employees more control over their money and help them cope with rising health care costs, she says.

Several other financial institutions and HSA administrators are introducing CDH to their work force or replacing their traditional health benefits plans. Daryl P. Richard, spokesman for OptumHealth Bank, Inc., parent UnitedHealth Group, Inc., says that it is important for a company that markets CDH to practice what it preaches.

“Given that we sell CDH plans ourselves, and having one of the largest enrollments, we thought it was critically important to walk the walk,” Richard says. “If we’re going to be talking about the increased need for consumers to be engaged, we thought we should start with our own employees so they understand what these changes in the health care system are.”

Richard says that working with its own employees allows UnitedHealth Group an opportunity to take new systems for a shakedown cruise before being rolled out to customers. “It’s been helpful to test with our own employees some of the tools and resources that we make available broadly to our millions of members enrolled in CDH plans,” he says.

About 150,000 Bank of America employees in the U.S. will be eligible for health care accounts, according to Sapp. With dependents, the benefit will include about 500,000 lives, she says.

Health Saving Accounts: Are they really A Win-Win Situation?

Health reform is the topic of conversation on a daily basis. More people are demanding health insurance policies that place an emphasis on the consumer. With escalating health care cost it is nearly impossible to come out on top. While savings and health care seem like polar opposites, Health Savings Accounts make saving for your health care needs a reality. Increasing in popularity, Health Savings Accounts are becoming more and more mainstream.

The basis of a Health Savings Account is that under a high deductible health plan you are able to open a Health Savings Account. Deposits can be made into your Health Savings Account up to the amount of your deductible. Health Savings Accounts can be used to cover medically qualified expenses. Often time these expenses are not covered by your typical insurance plan, giving Health Savings Accounts an edge over it’s competition. Similar to IRA’s, Health Savings Accounts are tax-free accounts.

Health Savings Accounts advantages include:

• Health care costs including deductibles and co-payment can be paid with your Health Savings Account.

• Health Savings Accounts put the policyholder in the driver’s seat. You choose where your money is spent. Eye care, dental care, and over the counter medications are all considered medically qualified expenses.

• At the end of each year the money left in your account will be rolled over year after year.

• Health individuals can accumulate a large sum of money that can be used to pay for medical expenses in the future. You can also use the money in your Health Savings Account to cover medical expenses of family members.

Health Savings Accounts might not be for everyone, but if you fit the qualifications this could be a wonderful option.