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2013 Purdue Choice Fund Medical Plan With Health Savings Account

Here's how the Purdue Choice Fund with a health savings account works.

Step 1: You Pay a Portion of the Cost for Coverage

With the Purdue Choice Fund, you pay a portion of your coverage through convenient pre-tax payroll contributions, with Purdue paying the majority of the cost. Your cost for coverage is significantly less than for the Purdue Incentive plan and the Purdue Copay plan.

Step 2: Health Savings Account Is Set Up In Your Name

A bank account – called a health savings account, or HSA – is set up in your name.

Step 3: You Contribute to Your Account

You can elect to set aside dollars on a pre-tax basis through payroll deductions. You can make contributions to your account as long as the total contributions to your account in 2013 (both Purdue contributions and your contributions) do not exceed $3,250 for single coverage and $6,450 for family coverage.

Federal rules also allow what are called “catch-up” contributions to a health savings account — which means you can contribute additional pre-tax dollars if you are age 55 or older, or if you will turn 55 any time during 2013. In 2013, you can contribute an additional $1,000 to your account if you are eligible for the “catch-up” contribution.

You may change your HSA payroll deductions at any time during 2013. A change in family status event is not required. To make a change, log into EBenefits, and then click Change Your HSA Election under the Take Action! heading. 

You are responsible for assuring that total contributions to your account -- from all sources combined -- do not exceed the allowed limits.  

Step 4: Purdue Contributes to Your HSA

For 2013, Purdue will contribute the following amounts to your account:  

  • $650 for employee only coverage
  • $1,300 for family coverage (employee plus one or more dependents)

These annual contributions will be deposited in equal installments each pay period over the course of the year. New employees receive a prorated amount.

For employees who selected 2013 Choice Fund with HSA coverage prior to January 1, 2013, Purdue will provide an additional contribution of $100 for employee-only coverage and $200 when you cover one or more dependents. Purdue will make this contribution in early January.

Interest and Investment Opportunities

The funds in your health savings account are invested in an interest bearing savings account. When your account balance reaches $1,000, you have additional investment options, such as a money market fund. Any earnings on those investments are tax-free if you use them to pay for eligible health care expenses.

Step 5: You Use Your HSA Dollars to Pay for Eligible Health Care Expenses

Money you withdraw from your HSA is completely tax-free as long as the money is used to pay for eligible health care expenses as defined by the IRS (known as Section 213 expenses). You can get a list of eligible expenses from the IRS at www.irs.gov. These expenses include:

  • Your medical plan annual deductible and coinsurance,
  • Dental and vision expenses,
  • Prescription drug expenses, and
  • Over-the-counter drugs, with doctor's prescription.

An employee cannot be covered under the Purdue Choice Fund plan if the person has other health insurance coverage – unless that other coverage is also an HSA-qualified medical plan. Employees who are covered by Medicare or TRICARE are not eligible for Purdue Choice Fund coverage. Employees who are not qualified for the Purdue Choice Fund coverage because they have other health insurance outside of Purdue for themselves or family, are eligible to choose a health plan with the same coverage as the Choice Fund, but that does not feature a health savings account. Contact Staff Benefits for additional information.

Employees can use the funds in their HSA to pay for the medical expenses of dependents covered by another health plan, even if it is not an HSA-qualified plan, as long as they are eligible dependents as defined by the IRS. If you use health savings account funds for non-eligible expenses, that money is taxable as ordinary income and subject to a 20 percent tax penalty.

Step 6: You Pay 100 Percent of the Cost Up to the Annual Deductible

When you need care, you pay 100 percent for all eligible medical and non-preventive prescription drug expenses up to the plan's annual deductible.

In-Network Annual Deductible:
  • $1,400 employee only
  • $2,800 family
Out-of-Network Annual Deductible:
  • $2,800 employee only
  • $5,600 family

If you choose, you can use money from your health savings account to pay for expenses that went toward your deductible. You determine how and when to use your health savings account dollars.

Step 7: You Pay Coinsurance After Meeting the Annual Deductible

Once you have met your annual deductible, you pay only 20 percent of your medical charges when using Cigna network providers, or 50 percent of the cost when using providers outside of Cigna's network. Non-preventive prescription drugs are covered through Express Scripts at the usual prescription drug coinsurance once the deductible has been met.

Step 8: You Are Protected Against Catastrophic Expenses

To protect you from catastrophic out-of-pocket expenses, the plan pays 100 percent of your medical and prescription drug costs once you meet the annual out-of-pocket maximum.

In-Network Annual Out-of-Pocket Maximum:
  • $3,400 employee only
  • $6,800 family
Out-of-Network Annual Out-of-Pocket Maximum:
  • $6,800 employee only
  • $13,600 family

The out-of-pocket maximum is the most you will pay for medical and prescription drugs during any year.

Step 9: Preventive Care is Covered 100 Percent

Keep in mind that preventive medical care, according to Cigna's preventive care guidelines, is always covered at 100 percent when using network providers. Preventive care includes services such as annual physicals, cancer screenings, and adult and child immunizations.

In addition, eligible generic preventive prescription drugs are covered at 100 percent without a deductible. Brand-name preventive prescriptions through a retail pharmacy are covered without deductible at 35 percent or 55 percent coinsurance, depending on the drug's tier. Brand-name preventive prescriptions through mail order are covered without deductible at 25 percent or 45 percent coinsurance, again depending on the drug's tier.

Member Pays the Difference: If a generic equivalent drug is available, but you choose to use a brand name drug, you'll pay the difference between the cost of the brand name drug and the generic drug. You'll also pay your plan's generic drug coinsurance. The difference you pay between the prices of the generic and brand name drugs is an ineligible expense, so it will not count toward your deductible or your out-of-pocket maximum.

Express Scripts uses Internal Revenue Service (IRS) guidance to determine which kinds of prescription drugs are considered preventive. Generally speaking, preventive drugs are those prescribed to prevent the occurrence of disease in someone who has developed risk factors, or to prevent the reoccurrence of a disease from which a patient has recovered. 

Step 10: HSA Funds Remaining At End of Year Roll Over

Any HSA funds remaining at the end of the year will stay in your account for future use. There is no limit to the amount you can roll over from year to year, and you can even take your account dollars with you if you leave Purdue.

Save money using a Tier 1 lab

The next time you need a lab test, talk with your doctor about choosing a Purdue medical plan Tier 1 lab to help save money. Most doctors are willing to use the lab that best meets your needs.

Generally, the cost for a lab test at a Tier 1 lab will be less than if you had the test done at a hospital or the doctor's office, even if the hospital or doctor participates in Cigna's network. You can compare specific lab costs through Castlight, the health care shopping tool that Purdue provides to all employees covered by a Purdue health plan.

You can also compare costs for lab tests by using the Treatment Cost Calculator available at myCigna.com. Click the Estimate Health Care Costs tab at the top of the page. Then, under Medical Cost Estimator, click "estimate your average medical costs." Under the Find Procedures & Medical Costs column is a link to compare lab tests.

Tier 1 labs