September 2, 2009

Staff Benefits proposes adding account-based medical plan for 2010

Choice Fund HSA, a new type of medical plan for Purdue, will be introduced for 2010 pending Board of Trustees approval in October.

Staff Benefits in Human Resource Services would offer Choice Fund HSA, an account-based plan, as one of three medical plan choices available to benefit-eligible employees on all campuses.

The plan would include a health savings account feature, or HSA. Employees electing the Choice Fund HSA would receive an HSA contribution from Purdue, which the employee could use to pay for eligible health care expenses throughout the year.

"The proposed Choice Fund HSA would work like a traditional PPO in many ways," says John Beelke, director of human resource services. "But it also comes with some unique features."  

Choice Fund HSA would share the following characteristics with a traditional PPO plan:

* Provide 100 percent coverage for in-network preventive care services according to CIGNA's preventive care guidelines.

* Have an annual deductible, although it would be higher than a traditional PPO's deductible.

* Begin paying a portion of expenses once the annual deductible has been met.

* Allow use of any provider, but pay more when network providers were used.

* Limit the amount the employee would pay each year in out-of-pocket costs, although the maximum would be higher than a traditional PPO's maximum.

Special features of the Choice Fund HSA medical plan would include:

* A bank account — called a health savings account (HSA) — would be set up in the employee's name with Chase bank, CIGNA's health savings account banking partner. Employees would be able to reimburse themselves for eligible health care expenses.

* Purdue would contribute to the employee's HSA based on whether or not the employee covered dependents on the plan. If the employee choose to do so, the employee also could contribute to the HSA on a pre-tax basis, up to IRS limits.

* Employees would own the money in their HSA (including Purdue's contributions), and their account would be portable,
meaning employees could take their account dollars with them if they left the University for any reason.

* Each employee would determine when and how to use his or her account dollars; however, the funds could be used only to pay for eligible health care expenses.

* Any money left over at the end of the year would roll over to the next year for the employee's use. There would be no limit on the amount of dollars that could roll over.

* The Choice Fund HSA medical plan would cost significantly less in payroll contributions than other Purdue plans.

Interest and investment opportunities

The funds in the employee's health savings account would be invested in an interest-bearing account, such as a money market fund. The employee would have additional investment options when his or her account balance reached $2,000.

Any earnings on those investments would be tax-free if used to pay for eligible health care expenses.

Medical coverage under the Choice Fund HSA plan

Preventive medical care would be covered at 100 percent in-network according to CIGNA's preventive care guidelines.

Eligible generic preventive prescription drugs would be covered 100 percent without a deductible. Brand-name preventive prescriptions through a retail pharmacy would be covered without deductible at 30 percent or 50 percent coinsurance, depending on the drug's tier.

Brand-name preventive prescriptions through mail order would be covered without deductible at 25 percent or 45 percent coinsurance, depending on the drug's tier. 

Non-preventive prescription drugs would fall under the HSA plan deductible and be covered at the usual prescription drug coinsurance after the deductible was met.

Employees would pay 100 percent for all other medical services, up to the plan's annual deductible.

Medical charges above the annual deductible would be covered at 80 percent when using CIGNA network providers (50 percent out-of-network).

The plan would pay 100 percent of costs once the annual out-of-pocket maximum was reached.

Using health savings account

Money withdrawn from an HSA would be completely tax-free as long as it was used to pay for eligible health care expenses as defined by the IRS (known as Section 213 expenses). A list of eligible expenses is available at www.irs.gov.

Eligible expenses include:

* Medical plan deductible and coinsurance.

* Dental and vision expenses.

* Prescription drug expenses.

* Over-the-counter drugs.

For more information on health savings accounts

* View the online tutorial offered at www.purdue.edu/benefits.

* Attend a Staff Benefits presentation. Register at www.purdue.edu/worklife.

* Read the September issue of Choose Well, Live Well, a joint publication of Staff Benefits and WorkLife Programs.

Other changes for 2010

Because of Purdue's move to CIGNA in 2010, the medical plan names are changing.

The UnitedHealthcare plan will be called the Purdue Copay plan, and the Incentive PPO will be called the Purdue Incentive plan.

Plans are to eliminate the Purdue 500 for 2010. Generally, the Purdue 500 has proven to be a more expensive overall medical plan for employees and their families. The plan has had decreasing enrollment over past years.

Watch for more details about 2010 benefit offerings after the board meets in October.