Eagle Eye Contents — Spring 2007

(I now have one too)

We here at A.B. Gile, Inc & Degnan Hough now have a consumer-
driven health plan for our employees and I participate in it. Let me explain to you how it works in case you are an employer looking to offer a comprehensive medical plan for your employees at a reduced cost to you or you are an employee whose employer is contemplating going to one.

HSA’s are basically high deductible health plans with a savings component that is designed to pay for those medical costs under the deductible with pre tax dollars and for those costs that are medical in nature not covered by the health plan. Medical expenses include “ordinary medical expenses” as defined by the insurance company AND “other” expenses as defined by IRS Publication 502 (Example: Dental, Vision, Acupuncture, etc…) The savings component of this product is portable so the employee can take it with them if they change jobs and the funds in the account can grow tax deferred year after year if the funds are not depleted for payment of medical expenses. The HSA can be funded either by the employer, the employee or a combination of the two. The maximum annual contribution for 2007 is $ 2,850 for a single and $ 5,650 for a family. The IRS also allows an $ 800 additional contribution for those 55 or older.

The plan we have utilizes a Preferred Provider Network (PPO) with a major health insurer. Most of the health insurance companies in Vermont and New Hampshire offer some form of an HSA. We have a $2000 per person / $4000 per family deductible that has to be met before benefits are paid by the plan. The company generously contributes a significant portion of the deductible to my health savings account and I contribute the rest myself. After my payments towards the medical deductible reaches the maximum, the insurance company pays 100% of approved medical expenses for the remainder of the year.

The quick math suggests that I will have to come up with some money if I exceed the amount the company has contributed this year and that is correct. However, this isn’t new, as the company always paid a significant percentage of the premium pre-HSA, and I paid the rest. The part of the math not seen quickly is that the resulting premium is much less, so the portion of the premium that I pay is also much less. Ultimately, if I have to contribute my own dollars to meet the deductible beyond what has been put in the savings plan for me by my employer, I will still personally be paying less for my health insurance than last year when the premium was much higher. In fact, both employer and employees will pay less this year... a true win-win situation.

A word about that savings account. It is set up with a local bank, providing me with a checking account and debit card for my usage. My provider bills are sent to the health insurance company first for their review and repricing, and then I am billed from the provider; I pay that bill directly. I present the debit card or write a check when I get prescription drugs, which are priced immediately at the health insurer’s preferred rate.

It has been years since I have seen a medical bill. I am interested to see what things cost and expect to be shocked, but for the first time as a health care consumer I will now have a financial reason to exercise choice in my health care decisions.

This is still a new process for me, and the basic ( and I mean basic) information I have given you in this article is a brief description of how this works. I felt it was important to convey to you that both the employers and employees reading this should check out these new plans. They are the wave of the future, and I think I’ll be working harder at this, but it will make me a better consumer of a very important service. If you’d like more information, please give us a call. I will in a later issue give you an update on how it is working for me.