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What is a consumer-directed health plan?
How does a consumer-directed health plan work?
Why are consumer-directed health plans growing so quickly?
Why are consumer-directed health plans a good idea?
What's the difference between a Health Savings Account (HSA) and a Health Reimbursement Arrangement (HRA)?
What is an HSA?
Who is eligible for an HSA?
Who may contribute to an HSA fund?
What are qualified medical expenses?
Where can I find out about IRS-approved medical expenses?
What if an employee uses the money for nonqualified expenses?
How does anyone get money out of his/her HSA account?
How does the HSA fund earn interest? What about investment options?
What is the tax treatment of an HSA?
What is an HRA?
What kinds of expenses may an employee use HRA funds for?
Where can I find a list of IRS-approved 213(d) eligible expenses?
Who may contribute to an HRA?
How can an employee access his/her HRA funds?
What are Horizon MyWay plans?
What makes Horizon MyWay products different from competitors' plans?
Why should my company consider Horizon MyWay HRA?
Why should my company consider Horizon MyWay HSA?
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Q. What is a consumer-directed health plan?
A. A consumer-directed health plan combines a high-deductible health plan with an account to help pay for eligible medical expenses. There are several ways the account can be funded, depending on the specific plan. The member decides how and when to spend the money in the account and is provided with access to resources that help him/her become an informed health care consumer.
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Q. How does a consumer-directed health plan work?
A. An employee, employer, or both may make contributions to the account, depending on the specific plan. When a member has a medical expense, money is withdrawn from the account and is applied to the health-plan deductible. The member decides how to spend the account funds based on the IRS list of eligible expenses. When all the money in the account is used, the member pays the remaining deductible amount until the health-plan coverage goes into effect.
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Q. Why are consumer-directed health plans growing so quickly?
A. The growth of consumer-directed health plans is a response to multiple factors. Recent regulatory changes, increased consumer empowerment, continuing upward medical costs, reaction to managed care, aging of the population, and new procedures and pharmaceuticals are all contributing to the rising interest in consumer-directed health plans.
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Q. Why are consumer-directed health plans a good idea?
A. Consumer-directed health plans give individuals control of their health care dollars. Consumers become better informed about health care costs and are armed with the information and resources necessary to make wise health care decisions. Consumer-directed health plans are beneficial to employers because they help offset the rising costs of health care.
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Q. What's the difference between a Health Savings Account (HSA) and a Health Reimbursement Arrangement (HRA)?
A. Both HSAs and HRAs are tax-favored accounts used to pay for qualified medical expenses. Both employers and employees may fund HSAs, while only employers may fund HRAs. Unused funds in HSAs automatically roll over each year, but funds in HRAs roll over at the discretion of the employer. HSAs are portable: if the employee switches employers, the account goes with the employee. HRAs are not portable and funds are forfeited if an employee changes employers.
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Q. What is an HSA?
A. An HSA (Health Savings Account) is a tax-favored savings account used in conjunction with a high-deductible health insurance plan. HSAs allow employees to pay for current medical expenses and save for future medical and retiree health expenses on a tax-free basis. Employees own and control the funds in the account, giving them the freedom to decide how and when to spend the money. An HSA is portable, so it may be taken with them if they switch employers.
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Q. Who is eligible for an HSA?
A. To be eligible, employees must be covered by a qualified high-deductible health plan and may not be covered by other health insurance. In addition, employees may not be enrolled in Medicare or be claimed as a dependent on someone else's tax return. However, employees are still eligible if they have insurance for a specified illness or disease or accident, disability, dental care, vision care, or long-term care insurance.
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Q. Who may contribute to an HSA fund?
A. The employer, the employee, or both may make contributions to an HSA.
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Q. What are qualified medical expenses?
A. Qualified medical expenses are expenses paid for medical care as defined by section 213(d) of the Internal Revenue Code. Qualified medical expenses include, but are not limited to, deductibles, copayments and medications. Consult IRS Publication 502, Medical and Dental Expenses, for a complete list of eligible expenses Click here to learn more.
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Q. Where can I find out about IRS-approved medical expenses?
A. Information is available on the Internal Revenue Service Web site, www.irs.gov.
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Q. What if an employee uses the money for nonqualified expenses?
A. If funds are used for anything other than qualified medical expenses, the amount will be included in your gross income when you file your taxes. Prior to age 65, nonqualified withdrawals are subject to a 10-percent tax penalty.
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Q. How does an employee get money out of his/her HSA account?
A. Generally, employees can use a check or debit card issued by your insurer to pay for qualified medical expenses. Employees may also choose to submit a request for reimbursement to your plan.
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Q. How does the HSA fund earn interest? What about investment options?
A. Employees can choose from a variety of investment options for their HSA funds. Money earned through investments will earn tax-free interest. The Mellon account also earns interest.
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Q. What is the tax treatment of an HSA?
A. An HSA is generally exempt from tax. Earnings on amounts in an HSA are not included in gross income while held in the HSA. However, if an employee uses HSA funds for nonqualified expenses, the funds are taxable and are also subject to an additional penalty.
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Q. What is an HRA?
A. An HRA (Health Reimbursement Arrangement) is used by employees to pay for eligible health care expenses. It is offered in conjunction with a high-deductible health insurance plan. An HRA is owned and funded by the employer. At the end of the year, unused funds may be carried over to the next year at the employer's discretion. If an employee leaves the company, the HRA stays with the employer.
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Q. What kinds of expenses may an employee use HRA funds for?
A. HRA funds may be used to reimburse health insurance premiums, long-term care insurance premiums, and IRS-approved 213(d) eligible expenses that are not covered under another health plan.
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Q. Where can I find a list of IRS-approved 213(d) eligible expenses?
A. For a complete list of IRS-approved 213(d) eligible expenses, please click here.
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Q. Who may contribute to an HRA?
A. Only employers may make contributions to an HRA.
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Q. How can an employee access his/her HRA funds?
A. Money from an HRA can be accessed by using a debit card issued by your insurer or by submitting a claim.
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Q. What are Horizon MyWay plans?
A. Horizon MyWay plans are consumer-directed health plans. The Horizon MyWay plans include Horizon MyWay HRA and Horizon MyWay HSA. There are three components to Horizon MyWay plans:
- A comprehensive high-deductible health plan
- A personal savings account
- State-of-the-art tools, education and support to help members make informed health care decisions
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Q. What makes Horizon MyWay products different from competitors' plans?
A. Horizon MyWay plans provide health care cost control without sacrificing satisfaction. With Horizon MyWay products, members have access to a large provider network and a dedicated Horizon BCBSNJ Member Services team. Also, there are no network restrictions or required referrals. Horizon MyWay members can easily access their account funds to pay for health care expenses with bank-issued Visa debit cards and checkbooks.
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Q. Why should my company consider Horizon MyWay HRA?
A. Horizon MyWay HRA consists of a high-deductible health plan, an employer-funded Health Reimbursement Arrangement (HRA) and tools to help members make wise health care decisions. Since the account is employer-owned, your company has control over decisions concerning the account, including the amount to reimburse each year and the amount to roll over each year. The plan gives employees the freedom to choose how to spend their health-care dollars and helps them become informed health care consumers.
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Q. Why should my company consider Horizon MyWay HSA?
A. Horizon MyWay HSA helps offset rising health care costs. The plan consists of a high-deductible health plan, a Health Savings Account, and tools to help employees make wise health care decisions. The HSA is held in a money market fund and earns interest tax free. In addition to tax advantages, the plan gives employees the freedom to choose how to spend their health care dollars and helps them become informed health care consumers.
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