HSAs

WOCO Frank

I've invited our Sec. 125 TPA to a meeting next week to discuss implementing HSAs. I'd be interested in your thoughts on HSAs - as a replacement for FSAs, and in conjunction with FSAs. Are there potential pitfalls I need to be aware of?

TIA

mwild31

Six things off the top of my head:

1. HSAs are new - rollout of the plans are set for 2004. Have all the bugs been worked out?
2. Experts suggest you offer HSA's in combination with a HRA or FSA plan as well.
3. There may be some difficulty with ee's that leave your company (after participating in your company's HSA) and go to work for a company that offers a HMO or traditional plan.
4. It may reduce health care costs now, but no one knows for sure if it will reduce costs in the future - remember how HMO's were the wave of the future at containing costs?
5. HSAs are more geared towards self-employed individuals - HRA's are geared towards employees.
6. Rollover of only $500 bucks a year - if you put in more than that & don't use it - it's gone.

stilldazed

Surely, adopting an HSA is a decision an employer gets to make, right??? I have just spent more than an hour searching for relevant information because our payroll staff is asking me, the HR director/benefits administrator/local expert, what we should do between now and 1/1/04. My canned answer so far is to give me time to research the subject. In short, I'm not finding exactly what I think I need. We are currently in the middle of our benefit year, which ends 6/30. My presumption is that we do nothing 1/1/04 except watch the news closely??? If we make plans to offer HSAs, we revise our SPD in time for the 7/1/04 new benefit year start date??? Seems logical to me, but it is an available option?

We do offer Sect 125 cafeteria plan benefits, including premium pretax options for portions of premiums that employees pay as well as MSAs in our current employee benefit plan. As an employer, we help fund insurance premiums for employees who enroll, but employees make all contributions to their MSAs. Do you know if we'll be forced to convert MSAs to HSAs? and when, 1/1/04 or 7/1/04 after an appropriate SPD update?

It seems to me that if we offer HSAs or must convert MSAs to HSAs, our employees may be disadvantaged by the change. We're nonprofit with generally low wages. One of the ultimate consequences is also a relatively low compentency base among employees when it comes to complex benefits issues. Our current health insurance premiums are around $270 for single policies and $690 for family policies (HMO and PPO, $500 deductibles/person on the PPO). We pay from 50% to 70% of monthly premiums for many employees, depending on whether the employee has chosen single coverage (70%) or family coverage (50%). We pay 100% of single policy premiums for management folks. My elementary brain is telling me right now that if we redirect those expenditures to HSAs, our employees may find themselves paying more than they currently are required to pay.

Thanks,