While an HSA helps save money for an employee, because premiums for CDHP-HSAs are lower than premiums for traditional health plans, it also saves taxpayers about $900 per enrollee in premium costs per year.
The CDHP is one of four health coverage options available through the Office of Group Benefits, which administers health coverage and life insurance for state employees and retirees. An employee who enrolls in the CDHP for 2013 and opens a health savings account can contribute to that HSA via payroll deductions using pre-tax dollars.
Health savings accounts are a smart way to provide for current medical needs and future medical expenses through the following ways:
- Lower Premiums: On average, HSAs require a beneficiary to pay lower premiums than with traditional health plan options.
- Tax-Deductible: The money put in a HSA is tax deductible, up to the legal limit.
- Completely Portable: The money in your HSA is always yours. All amounts in your HSA belong to you, and unspent balances in accounts remain in your account until spent.
At the start of the plan year in January, the state will contribute $200, up from $100 currently offered, to help jump-start the employee’s savings – and will match his or her tax-free HSA contributions dollar for dollar, up to an additional $575, up from $400 currently. The combination of the upfront state contribution, plus the state’s match and the employee’s annual contribution – a total of $1,350 – more than meets the deductible of the plan.
The employee then can use money in the HSA to pay eligible medical and pharmacy expenses for himself and all covered family members until the deductible is met and, after that, for any applicable co-payments. The HSA also gives the employee a tax-free way to save for future health care expenses. For 2013, total HSA contributions cannot exceed $3,250 for single coverage or $6,450 for family coverage.
Blue Cross and Blue Shield of Louisiana will administer the CDHP for 2013; the HSA will be offered through Bancorp Bank. As in 2012, enrollment is open only to active employees and rehired retirees who pay premiums through payroll deductions.
Retired state employees who have both Medicare Part A and Part B coverage also can reduce their OGB health plan premiums by choosing one of the Medicare Advantage plan options offered by OGB for 2013.
In addition to three Medicare Advantage plans OGB offers – insured by Vantage Health Plan and Peoples Health, OGB also is partnering with Extend Health to offer these retirees access to over 80 individual Medicare Advantage plans through the largest private Medicare exchange in the United States.
For the first time, retirees who enroll in a Medicare Advantage plan through Extend Health will be provided about $200 to $300 credit per month, up to $2,400 to $3,600 credit per year, through a Health Reimbursement Account (HRA) to pay for their Medicare Part B premiums, out-of-pocket co-pays or deductibles, plus eligible dental and vision expenses.
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