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___________________________________
Our
Website
Our
website is designed to educate consumers and employers
about Health Savings Accounts and Consumer
Driven Health Plans. A great place to start learning
about HSAs is at our HSA Learning Center. It contains
everything you need to know about Health Savings
Account health plans.
_______________________
Did You Know......
Great
Lakes HSA has been advising companies from the first
day HSAs were available. Few companies can make
that claim.
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Great Lakes HSA
- Special Report
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Wal-Mart's
HSA Plan - Trick or Treat?
Cleveland,
October 31, 2005 - The Wal-Mart HSA plan
is a interesting example for companies who are considering
a HSA option for 2006.
If
your company's goal is to minimize the cost of insurance
and offer a health plan with with the lowest possible
premium, then Wal-Mart's HSA is a great model. However,
if your goal is attracting the highest number of
employees away from a traditional health plan with
low deductibles and high premiums to a HSA style
plan, which contain higher deductibles and typically
lower premiums, then the Wal-Mart HSA is a great
example of what not to do.
Most of the companies we work with ask us the same
question, How can be reduce our healthcare expense
without lowering the quality of healthcare? One
way is to have employees enroll in a HSA plan, away
from a traditional, low deductible plan. Based on
our analysis of Wal-Mart's plan design and pricing
structure, it appears that their goal is to increase
the total number of employees enrolled in healthcare
at Wal-Mart.. This is no trick and should be viewed
as a good thing if you work at Wal-Mart. However,
if Wal-Mart is trying to motivate workers already
covered under their traditional plan, they certainly
didn't design a plan that will accomplish this goal.
Let's see where Wal-Mart's HSA plan falls to deliver.
HSA
Plan Design - What to avoid
-
Waiting
period -
Wal-Mart's HSAs are only available for Wal-Mart
employees who have been covered by the company
plan for at least 12 consecutive months. If you
really want to maximize enrollment, offer a HSA
to any employee that is currently eligible for
health benefits.
-
Deductibles
-
HSA plans work best when a higher-deductible is
offered. If we worked with Wal-Mart, we would
recommend a $2500/$5000. The HSA plans with $1000/$2000
deductibles have not been priced as competitively
as those with higher deductibles. They might be
a harder sell to employees, but they will save
the employer the most money.
-
80/20 Copay - We
never recommend any HSA plan that does not pay
100% after the deductible is met. Obviously, a
80/20 plan is cheaper, but ultimately, it will
cost your firm money because fewer employees will
enroll in a 80/20 plan. The "after deductible"
drug and office visit copay of the Wal-Mart plan
are also something to avoid. Adding these types
of copays do little to lower the overall cost
of the plan and just confuse the employees.
-
Matching - employer
contributions are a must, but matching them to employee
contributions can be difficult to administer and
doesn't do much to increase employee participation.
Wal-Mart's matching contribution could amount to
20% of the lower deductible plan and up to 16% for
the high deductible plan. Our experience has shown
that a contribute equal to 50% of the annual deductible,
which is not tied to matching employee contributions
will greatly enhance employee participation.
Breaking down Wal-Mart's HSA plan design, they are
matching employee contributions up to $250 (single)
and $500 (family) if the employee selects the ($1250/$2500)
or $500 (single) $1000 (family) if they select the
($3000/$6000) plan.
- Preventive
Services
- HSA plans typically do not offer copays or benefits
before the deductible is met. However, the regulations
do allow HSA plans to cover
"Preventive
Car Benefits"
100% before the deductible is met.
These can include physicals, lab work, cancer screening
and well-baby care. Not all HSA plans offer these
benefits, and it was unclear if Wal-Mart's plan
had this coverage. However, if you want healthy
employees, look for a plan that contains these benefits
100% pre-deductible.
Wal-Mart's HSA - What is good
-
Wal-Mart's HSA is not all bad, the premium is very
reasonable given the benefits being offered. In
addition they are contributing money to the HSA
accounts and lastly, they are not charging their
employees any extra fees for the HSA offered through
Mellon Financial. Fees for HSAs typically run from
$25 to $80 per year / per employee. I am not sure
if Mellon is waiving the fees or Wal-Mart is paying
for them, but the employees are not being charged.
HSA fees can be high, but competition for your dollars
is heating up! Any client we have with 50 or more
HSAs does not pay any fees for their HSA, nor should
your company. As we ask everyone, Are you paying
for your checking account? If you are being asked
to pay a fee for your HSA. its time to find a new
provider.
DETAILS:
EXPLAINATION OF WAL-MART HEALTH SAVINGS ACCOUNTS
-
Health Savings Account:
The “HSA Qualified Plans” provide
Wal-Mart employees with a “tax-exempt savings
account used to pay medical expenses.” HSAs
are available for WalMart employees who have been
covered by the company plan for at least 12 consecutive
months. The savings accounts are matched $1 by
WalMart for each $1 contributed by employees through
payroll deductions up to $250 for a single,
$500 for a family if they select the
$1250/$2500 plan. They will match up to
$500 or $1000 if the
$1000/$3000 plan is selected.[Wal-Mart OE Magazine,
Page 13-14, January 2006]
They do note that "Payroll Contributions
can Charge at any Time" I am not sure what
the means - but it doesn't sound positive.
-
Deductibles:
The HSAs are paired with high-deductible insurance
plans. After an employee has reached the deductible,
employee expenses are “generally payable
at 80% of covered charges.” Deductibles
for individuals range from $1,250 to $3,000 for
single coverage. For families the deductible range
is $2,500 - $6,000. [Wal-Mart OE Magazine, Page
13, January 2006]
Great
Lakes HSA has been educating employers and individuals
how to save money by adopting a HSA plan, while
still providing their employees with quality coverage.
When a high profile company like Wal-Mart offers
a HSA that is so poorly designed, it tends to reinforce
the belief that HSAs are a reduction of benefits
instead of a benefit enhancement. In addition, many
companies might look to this design to model their
own HSA plan. HSAs are not for everyone, but with
the right plan design, education and pricing , they
can benefit employees and employers in the short
and long-term.
Founded
in 2003, and headquartered in Cleveland, Ohio, Great
Lakes HSA is a full-service HSA provider dedicated
to advising and supporting individuals, companies
and brokers in HSA education, implementation and
administration. As one of the first providers of
Health Savings Accounts in America, Great Lakes
HSA has the experience and expertise to provide
customized plan designs, HSA education, enrollment
assistance and plan administration.
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