Group Benefits Resource Center

1.1 What is a Health Maintenance Organization (HMO) and how does it work?

A Health Maintenance Organization ( HMO) provides health care services to enrolled members through a panel of HMO providers. When you enroll in an HMO, you select a participating PCP for each enrolled family member. You may select any participating PCP from you HMO’s provider directory. Your PCP coordinates your medical care, either by providing that care or by issuing a referral to another provider. With an HMO plan, you generally pay a fixed amount each time you receive care coinsurance typically does not apply with an HMO. Except in an emergency as defined by the plan, or with previous approval through the plan’s authorization procedures, only services provided by or referred by your PCP will be covered under an HMO.

1.2 What is a primary care physician (PCP)?

With some HMOs, you are asked to select a primary care physician (PCP) to be the personal doctor for each enrolled family member. If you are asked to select a PCP, you may select any participating PCP from your HMO’s provider directory.

1.3 What are the advantages of an HMO plan?

There are several advantages when you belong to an HMO, Generally you don’t need to submit claim forms and wait to be reimbursed by your plan. Your HMO provider obtains any needed precertification for you. In most cases, you only pay a co payment (fixed dollar amount) at the time you receive covered services, after you pay your co payment, you owe no more payments for the covered services. HMO plans typically cover certain preventive care service.

1.4 How does an HMO work when I obtain care outside the HMO?

Generally, HMO plans do not cover services provided outside the HMO except in certain emergency situations.

1.5 My plan requires me to select a PCP when I enroll. How do I do so?

When you enroll, you may select any PCP (primary care physician) from your HMO’s network provider directory for each covered family member. Your enrollment materials will request your PCP’s name, or a code for that PCP from the network provider directory. You will generally find PCP’s in the areas of family practice, general practice internal medicine, or pediatrics. Some plans allow a woman to name one PCP for her primary care and second specialist in obstetrics and gynecology for services such as pelvic exams and pap smears. It’s a good idea to check with your HMO before you select a PCP. Some PCP’s have “full” practices and cannot accept new patients, and others may not longer be participating in the network.

1.6 Can I change my PCP?

Yes. You or a covered family member may change PCP’s for any reason. Just call the member services number on your ID card.

1.7 Do I ever need to file a claim form with an HMO?

You generally don’t need to file a claim form when you see your PCP, just show your ID card when you receive services so the office knows to charge you a co-payment and bill your HMO plan for the balance. The plan works the same way when your PCP refers you to another HMO doctor or hospital for care. Just show your ID card and pay your co-payment. In a true emergency, your eligible expenses may be covered even if you had to go outside the HMO as long as you follow the HMO plan’s rules. In this case, the provider will bill you directly. You then need to submit a claim form to be reimbursed. You will be reimbursed for part of the bill. To file a claim, follow the instructions on the claim form. If you received an explanation of Benefits (EOB) statement from another health care company, be sure to include a copy with your claim form. http://www.dol.gov/esa/regs/statutes/ofccp/ada.htm Americas With Disabilities Act (ADA).

1.8 What happens if I need specialty care that is not available from my HMO?

You may be referred to a non-HMO provider if you need specialized care that your HMO determines to be medically necessary and the care is not available through the HMO in your area. As long as you use the provider you’re referred to by your HMO and follow your HMO’s rules, you’ll be covered for that care.

1.9 What happens in an emergency?

In a true emergency, get the care you need as quickly as you can. Assuming you are able, try to contact your HMO, even in an emergency. However, even if you are unable to contact your HMO , get the care you need. Even if you need to seek from a non-HMO provider, your plan will cover emergency care as long as you follow the plans rules.

Check to see how your plan defines a true emergency. Examples typically include severe bleeding, chest pain and unconsciousness. Also check to see how soon after the onset of the emergency you must notify your HMO in order to be covered.

1.10 What happens if I need care while traveling?

If it’s not an emergency and you need care while traveling, call your HMO and your HMO can help you arrange a referral. In a true emergency, get the care you need as quickly as you can. If you are able, contact your HMO, even in an emergency. . However, even if you are unable to contact your HMO , get the care you need. Even if you need to seek from a non-HMO provider, your plan will cover emergency care as long as you follow the plans rules. Check to see how your plan defines a true emergency. Examples typically include severe bleeding, chest pain and unconsciousness. Also check to see how soon after the onset of the emergency you must notify your HMO in order to be covered.

1.11 Do I pay a deductible?

A deductible is the part of our eligible expenses you pay each year before the plan begins to pay benefits. Check your benefits summary for details.

1.12 Do I pay coinsurance?

Coinsurance is the percentage of eligible expenses you pay after you meet any deductible required by your plan. Check your benefits summary for details.

1.13 What is a co-payment?

Co-payment is a fixed amount you pay at the time you receive services.

1.14 What is preauthorization?

Preauthorization is the process by which an HMO reviews the proposed treatment and tells you and your doctor how benefits may be paid. Generally, preauthorized care is paid at the highest level of coverage.

You must obtain preauthorization for certain covered expenses such as a hospital stay. If you don’t get the required preauthorization, your cost will be higher because the benefits payable by the plan will be reduced or the expenses will not be covered at all.

1.15 What’s the amount known as the “allowable amount,” the “U&C amount” or the “R&C amount”?

The terms “allowable amount,” “U&C amount” or “R&C amount” vary by plan but refer to the same thing. The allowable, usual and customary or reasonable and customary amount is the amount usually charged for a given service by most providers in your area. This amount is determined by your health care plan if your doctor charges you more than this amount, you will not only be responsible for your deductible and coinsurance, but also for the entire difference between the U&C amount and the amount your provider charged. This concept only applies to out-of-network care, because in-network providers have agreed to negotiated fees that are by definition allowable amounts.

For example, suppose you receive a service for which the “U&C amount” is $100 but your doctor charges you $110. The health care company will multiply the percentage the plan pays for that service by $100. So even if the service where covered at 100%, you would pay the $10 difference($110 charge minus $100 U&C).

1.16 What is covered services?

Covered services are services covered by the plan, no medical plan covers everything. If you obtain services that are not covered services, you pay the full cost for those services.

1.17 What is an out-of-pocket maximum?

An out-of-pocket maximum is the most you would have to pay out of your own pocket for eligible expenses. Most HMO’s do not have an out-of-pocket maximum. Check your benefits summary for details. With a plan that has an out-of-pocket maximum, once you reach the covered services until any lifetime maximum benefit is reached.

Not all expenses count toward an out-of-pocket maximum. Expenses for services that are not covered under the plan, amounts over any allowable amount limit, and penalties for not preauthorizing care when needed would not count toward your out-of –pocket maximum.

1.18 What is a lifetime maximum?

A lifetime maximum is the most that will be paid by the plan for covered services for a given plan member. Not all plans apply a lifetime maximum, and some plans have different lifetime maximums for different services. Once you reach the lifetime maximum, you pay all expenses over that amount.

1.19 How do I mail order for prescriptions?

Mail order is an inexpensive and convenient way to get maintenance prescriptions, next time you are receiving a prescription refill from your doctor, ask for a 30 day supply script that you can fill now, and 90 day supply scrip that you can send in for mail order refill.

1.20 What is a dental preferred provider organization (dental PPO) plan , and how does it work?
A dental preferred provider organization (dental PPO) plan works for you in two ways:
Through a panel or network of participating dentists, or through dentists you select that re not in the network. Each time you or a covered family member needs dental care, you choose whether to see an in-network or an out-of-network dentist.

In-network dentists are listed in your plan’s provider directory. When you use an in-network dentist, also called obtaining dental services in-network, your costs tend to be lower, because the dentists and the network have negotiated to have the dentists accept certain fees for certain services.

1.21 With a dental PPO plan, do I name a primary dentist?

The dental PPO plan does not require you to name a primary care dentist or coordinate your care through a particular dentist. However, you are free to choose a primary dentist, whether or not that dentist participates in the network.

1.22 What are the advantages of obtaining my care from in-network dentists?

There are several advantages when you go in-network. Generally:
You don’t need to pay a deductible, or your deductible is lower than when you go out-of-network.

You don’t need to submit claim forms and wait to be reimbursed by your plan. With some plans, you pay a smaller percentage of coinsurance when you go in-network. With other plans, you only pay a co-payment (fixed dollar amount) at the time you receive covered services. With these plans, after you pay your co-payment, you owe no more payments for the covered services.

1.23 How does dental PPO plan work when I go out-of-network?

Generally, you may use any covered dentist you choose. However, your cost will generally be higher and you have certain added responsibilities, for example:

Each year, you must pay part of your eligible out-of-network expenses before the plan begins to pay benefits. This amount is called the deductible. After you satisfy the deductible, the plan will reimburse you for a percentage of your eligible expenses an you will pay the balance. The percentage you pay is called your coinsurance percentage, and may be higher than for in-network services. You must complete claim forms and file claims with the dental plan to receive payment of benefits. The plan will not cover any charges above the allowable amount.

1.24 When do I need to file a claim form?

You may not need to file a claim form when you see in-network providers.

When you do need to a file a claim form, as you need to do in most cases when you go out-of-network, your dentist may handle your expense in one of two ways. Most dentists require you to pay the bill right away. In this case, get a receipt and file it with a claim form to be reimbursed. If the expense is covered, you will be reimbursed for part of the bill. To file a claim, follow the instructions on the claim form. If you have more than one health or dental insurance plan and have received an explanation of benefits(EOB) form from another plan, be sure to include a copy with your claim.

1.25 What happens if I need dental care while I’m traveling?

If you need dental care while traveling, call member services for your dental plan at the number on your ID card. Member services can refer you to an in-network dentist. In a dental emergency such as an accident in which you lose teeth or extreme dental pain, contact member services if you are able and dental plan can help you decide where to go for care. However, even if you are unable to contact member services, get the care you need. Even if you need to go out-of-network, your plan may cover emergency care an in-network benefit levels a s long as you follow the plan rules.

1.26 What is a deductible?

A deductible may only apply, or be higher, when you obtain care out-of-network. A deductible is the part of eligible expenses you must pay before the plan begins to pa percentage of your eligible expenses.

1.27 Are there expenses that don’t count toward my deductible?

Yes. Some of your expenses will not count toward your deductible. For example, amounts your
dentist charges above the plan’s allowable amount for a given service will not count toward your deductible.

1.28 What is coinsurance?

Coinsurance may only apply to out-of-network care. After you satisfy the deductible, the plan will reimburse your for a percentage of your eligible expenses for out-of-network care and you will pay the balance. The percentage you pay is called your coinsurance percentage.

1.29 What is a co-payment?

If your plan has co-payment, the co-payment generally applies to in-network care. With this type of plan, when you obtain care form an in-network provider, you pay only a fixed amount at the time you reliever services. That amount is called co-payment.

1.30 What is predetermination of benefits?

Predetermination of benefits is the process by which a dental care company reviews the proposed treatment and tells you and your dentist how benefits may be paid. It’s a good idea to obtain a predetermination of benefits before expensive services are performed. Have your dentist complete a form showing the proposed treatment and submit it to your dental care company. The dental care company will send your dentist an explanation of what befits would be covered and what you would have to pay out of your own pocket. You can then discuss your treatment options with your dentist.

1.31 What’s the amount known as the “allowable amount,” the “U&C amount” or the “R&C amount”?

The terms “allowable amount,” “U&C amount” or “R&C amount” vary by plan but refer to the same thing. The allowable, usual and customary or reasonable and customary amount is the amount usually charged for a given service by most providers in your area. This amount is determined by your dental care plan. If your dentist charges you more than this amount, you will not only be responsible for your deductible and coinsurance, but also for the entire difference between the U&C amount and the amount your provider charged. This concept only applies to out-of-network care, because PPO dentists providers have agreed to accept negotiated fees, which are by definition allowable amounts.

For example, suppose you receive a service for which the “U&C amount” is $100 but your dentist charges you $110. The dental care company will multiply the percentage the plan pays for that service by $100. So even if the service where covered at 100%, you would pay the $10 difference($110 charge minus $100 U&C).

1.32 What are covered services?

Covered services are services covered by the plan. No dental plan covers everything. If you obtain services that are not covered services, you pay the full cost for those services.

1.33 What is an out-of-pocket maximum?

An out-of-pocket maximum is the most you would have to pay out of your own pocket for eligible expenses. Not all plans have an out-of-pocket maximum. Check your benefits summary for details. With a plan that has an out-of-pocket maximum, once you reach the out-of-pocket maximum for a given year, the plan would pay all eligible expenses for covered services until any lifetime maximum benefit is reached.

Not all expenses count toward an out-of-pocket maximum. Expenses for services that are not covered under the plan and amounts over any allowable amount limit would not count toward your out-of-pocket maximum.

1.34 What is a lifetime maximum?

A lifetime maximum is the most that will be paid by the plan for covered services for a given plan member. Not all plans apply a lifetime maximum, and some plans have different lifetime maximums for different services or for in-network and out-of-network services. Once you reach the lifetime maximum, you pay all expenses over that amount.

1.35 When are life insurance benefits paid?

Life insurance benefits are paid to your beneficiary if you die while coverage is in effect. Some plans do not provide benefits if you die from certain causes, such as a war or injury while your are committing a felony.

1.36 When are accidental death and dismemberment (AD&D) insurance benefits paid?

Accidental death and dismemberment (AD&D) benefits are paid to your beneficiary if you die as the direct result of a covered accident that occurs while coverage is in effect. AD&D insurance benefits are paid to you if you suffer certain severe injuries as the direct result of a covered accident that occurs while coverage is in effect. Such benefits are often expressed as a percentage of the total death benefit payable. If you suffer several covered injuries as direct result of the same accident, the plan will typically pay 100% of the total death benefit payable, but no more. Some plans do not provide benefits if you die from certain types of accidents.

1.37 Does enrolling for life and AD&D insurance require me to provide evidence of insurability?

Whether or not you must provide evidence of insurability depends on your plan. Your plan may require evidence of insurability for any of the following:

Insurance over certain dollar amounts.
Enrollment at any time after insurance was first offered.
Increases in insurance amounts.
Dependent insurance.

1.38 How do I name or change my beneficiary?

For many people, the largest inheritance they leave is the life insurance through their employers. It’s important to name a beneficiary(ies) to receive this insurance if your die, and to keep this designation up to date. If you name multiple beneficiaries, be sure to indicate the percentage or fraction of benefits payable to each, or indicate that the benefit is to be paid equally among survivors. To name your beneficiaries, most plans require you to complete and sign a beneficiary form, or to name your beneficiaries on your enrollment form. You may wish to consult an attorney before you name your beneficiaries, especially if you are naming dependents children or a trust.

It’s a good idea to name a primary beneficiary(ies) to receive benefits if you die as well as a secondary beneficiary(ies) to receive benefits if your primary beneficiaries are not alive to receive your benefits. You can generally change your designation at any time.

1.39 What is a primary beneficiary?

A primary beneficiary(ies) receives benefits from your life insurance if you die before the primary beneficiary(ies). If all primary beneficiaries die before your do, benefits are paid to your secondary beneficiaries.

1.40 What is a secondary beneficiary?

A secondary beneficiary(ies) receives benefits from your life insurance if all primary beneficiary(ies) die before you do

1.41 What happens if there is no beneficiary?

If you don’t name a beneficiary, or if no named beneficiaries survive you, your death benefits will be paid under the rules of your plan and applicable regulations.

1.42 Can I get any of my life insurance benefit benefits before death?

Some plans allow access to part of your life insurance benefits if you become terminally ill. This type of benefit has various names including living benefit and accelerated benefit option. Check with your company to see if this benefit is available.

1.43 Is it true I can be taxed on life insurance protection?

Yes. The IRS requires your employer to report the value of any company-paid basic life insurance coverage over $50,000 on your W-2. this is not the same as being taxed on the amount of your coverage. This “imputed income” is not subject to federal income tax withholding, but is subject to FICA tax withholding.

You aren’t taxed on the actual amount of your company-paid coverage. Instead, your employer reports the amount the IRS considers an appropriate premium for the portion of your company-paid basic life insurance over $50,000. the IRS publishes these rates in tables based on your age.

1.44 What is assignment of insurance?

If your plan allows, you may assign your life insurance and AD&D insurance as an irrevocable gift to someone else. You may name that person to own your insurance, even though it is on your life.

If you make an assignment, you give up all your rights, and you cannot revoke the assignment at a later date. The person to whom you assign your insurance has the right to name beneficiaries, to change the amount of coverage or to exercise any other privileges under the insurance.

1.45 What is a short-term disability (STD) plan?

A short-term disability(STD) plan replaces part of your income if you become disbled as defined by the plan, benefits generally begin after an elimination period and end at the earliest of:

When you are no longer disabled as defined by the plan
When you stop working
When you reach the limit for receiving STD benefits, or
Your death.

1.46 What is an elimination period?

An elimination period (also known as a waiting period) is the length of time that must pass after you become disabled as defined by the plan and before STD plan benefits begin.

1.47 Are there special rules for an STD claim?

Your company probably has rules, including reporting the disability to your supervisor on your first day of absence, obtaining proof of disability following plan rules(often using a physician designated by your company or the insurance company), and following the recommended treatment or therapy. You may need to provide proof of continued disability from time to time.

1.48 What is a long-term disability (LTD) plan?

A long-term disability (LTD) plan is designed to work with other sources of disability income to replace part of your income if you become disabled as defined by the plan.

LTD plan benefits generally begin after an elimination period, and end at the earliest of:

When you are no longer disabled as defined by the plan, or
You leave your employer for any reason other than a covered disability
When you reach the limit for receiving LTD benefits, which for many plans is an age limit, or
Your death.

1.49 How does the LTD plan work with other sources of disability income?

The LTD plan is designed to replace a percentage of your eligible pay up to a dollar maximum. Other sources of disability income, including benefits you are eligible to receive from Social Security Disability Insurance Benefits and Social Security Old Age Insurance Benefits, typically count toward that percentage.

1.50 What is an elimination period?

An elimination period (also known as a waiting period) is the length of time that must pass after you become disabled as defined by the plan and before STD plan benefits begin. Sometimes LTD benefits begin after benefits under a short-term disability(STD) plan end.

1.51 Are there any special rules for an LTD claim?

1.52 Does the LTD plan cover disabilities from any cause?

Your plan probably excludes disabilities resulting from certain causes, such as your committing of a felony, military service, war and self-inflicted injuries. It may also exclude job-related injuries, which may be covered by another program.

1.53 What is a health care flexible spending account (FSA) and how does it work?

A health care flexible spending account (FSA) allows you to get aside pre-tax dollars from your pay to cover eligible health care expenses (medical, dental, vision and hearing) for you and your eligible dependents.

Your company may call an FSA by another name, such as a reimbursement account.

1.54 What are pre-tax contributions?

Contributions you make to an FSA are made on a pre-tax basis. This means your contributions are taken from your paycheck before federal, FICA, and most state and local taxes are withheld. You also get an immediate advantage from contributing pre-tax dollars right in your paycheck. Each pre-tax dollar you contribute lowers your current taxable income, so you end up reducing the current federal income tax and FICA tax that you pay. In most cases, you’ll also pay lower state and local income taxes.

Although pre-tax contributions reduce your current income for tax purposes, they don’t lower it for determining your company benefits that are based on pay.

1.55 Do I need to enroll to participate in an FSA?

Yes, you must enroll if you want to participate in an FSA. To continue participating after your initial enrollment, most plans require you to re-enroll each year during open enrollment. Your elections do not automatically continue from one year to the next.

1.56 How can I contribute to an FSA?

You fund your FSA(s) with pre-tax dollars that are deducted from our pay in equal installments throughout the year. Your plan will define minimum and maximum contribution amounts.

1.57 How do I estimate my health care FSA contributions?

To estimate your future expenses, first review similar expenses you’ve had over the last couple of years. Also consider any eligible health care expenses (medical, dental, vision or hearing) that you expect may occur during the year.

it’s important to carefully estimate your expenses before you decide how much you want to contribute to the health care FSA each year. Be conservative in you estimate since you forfeit (lose) any balance that isn’t used by the end of the year. On the other hand, if your expenses dramatically exceed the amount you contribute to the FSA, you miss out on some tax savings.

1.58 What are eligible expenses for the health care FSA?

To be an eligible expense for the health care FSA, it must be for a service that:

Medically necessary
For you, your lawful spouse, or anyone you claim as a dependent on your tax return
Not reimbursed or is only partially reimbursed elsewhere, such as through an insurance plan covering you or your spouse
Considered tax deductible by IRS

In addition, these rules apply to health care FSA:

You cannot claim reimbursed expenses on your tax return as well
If both you and your spouse are eligible for health care FSA, you can each contribute up to the maximum to separate accounts

1.59 When may I change my FSA contributions?

You may change your FSA contributions each year during open enrollment. Your plan may also allow you to change your contributions mid-year if you have a change such as marriage or becoming a parent.

1.60 How do I file a health care FSA claim?

To file a health care FSA claim:
Obtain a claim form.
If expenses were partially covered by you or your eligible dependent’s medical, dental, vision or hearing plan, attach the explanation of benefits (EOB) you received from the health care company to your claim form.

If expenses are not covered by insurance, include an itemized bill or receipt from the provider showing the:

Patients name,
Name of the provider,
Type of service or product provided,
Date the expense was incurred,
Amount of the ex, and
Provider’s signature

Submit the completed claim form and documentation as instructed on the form.

1.61 When am I reimbursed for health care FSA expenses?

When you file a claim, you are reimbursed for the amount of eligible expenses in you claim up to the amount of your annual election, minus any previous reimbursements. Here’s an example. Sue elects to set aside $480 each calendar year ($40 a month) for her health care FSA. In January, she files a claim for a $50 prescription and is reimbursed for the $50. in February she buys trifocal glasses and has a surgical procedure. Her share of

1.62 What if I have an expense late in the year, and don’t get the bill until the following year? How do I file the claim?

An FSA claim is eligible for reimbursement in the year in which it is “incurred.” An eligible expense is considered “incurred” on the date the service or treatment is provided, not on the day you pay for it. If the service or treatment will extend beyond the end of the year, only expenses incurred during the plan year for which you are contributing to your account will be eligible for reimbursement in that plan year. If you have FSA accounts in both years, you will file part of the claim against one year’s account and part against the next year’s account

1.63 What happens to contributions left at the end of the year because I didn’t spend all the money in the account?

Because of the favorable tax treatment provided by the FSA, government regulations require that the money you contribute to your FSA only be used for eligible expenses incurred during that same year. Any money not spent by the end of the year is forfeited. You cannot use one year’s contribution for the next year’s expenses.

Here’s an example. Joseph enrolls for an FSA and elects to set aside $500 a year. By the end of the year he has only spent (that is, incurred expenses) of $450. he forfeits the $50 difference, but does not lose the tax savings on that $50. he can submit claims for that year up to the claims filing deadline in the following year.

Five steps to understanding HIPAA

Understand the different types of health insurance and group health plan coverage that are affected by the health insurance portability & accountability act of 1996 (HIPAA.)

Generally, HIPAA applies to three types of coverage. Group health plans, individual health insurance and comparable coverage through a high-risk pool.

Evaluate the impact of a pre-existing condition that you have which may trigger the need for HIPAA’s limited protections. Traditionally, many employer-sponsored group health plans and health insurance issuers in both the group and individual markets limited or denied coverage of health conditions in exclusions known as pre-existing condition exclusions.

Determine how much-if- any-creditable coverage you have. Under HIPAA’s group market rules, creditable coverage can be used to reduce or eliminate pre-existing condition exclusions that might be applied to you under a future plan or policy.

Understand the other HIPAA coverage protections you have. You should obtain general information about special enrollment rights to other coverage, how your health status can affect your access to care, other coverage choices that may help you take advantage of HIPAA protections, and your rights to renew group and individual coverage.

Know where to go for more information if you have questions.

1.64 What HIPAA does and does not do?

The health insurance portability and accountability act of 1996, (HIPAA) includes important but limited – protections for millions of working Americans and their families, HIPAA may:

Increase your ability to get health coverage for yourself and your dependents if you start a new job;
Lower your chance of losing existing health care coverage, whether you have that coverage through a job, or through individual health insurance;
Help you maintain continuous health coverage for yourself or your dependents when you change jobs; and
Help you buy health insurance coverage on your own if you lose coverage under an employer’s group health plan and have no other health coverage available.

Among its specific protections, HIPAA

Limits the use of pre-existing condition exclusions;
prohibits group health plans from discriminating by denying you coverage or charging you extra for coverage based on you or your family member’s past or present poor health;
Guarantees, in most cases, that employers or individuals who purchase health insurance can renew the coverage regardless of any health conditions of individuals covered under the insurance policy.
In short, HIPAA may lower your chance of losing existing coverage, ease your ability to switch health plans and/or help you buy coverage on your own if you lose your employer’s plan and have no other coverage available.

Misunderstandings about HIPPA

Although HIPAA helps protect you and your family in many ways, you should understand what it does not do,

HIPAA does NOT require employers to offer or pay for health coverage for employees or family coverage for their spouses and dependent;
HIPAA does NOT guarantee health coverage for all workers;
HIPAA does NOT control the amount an insurer may charge for coverage;
HIPAA does NOT require group health plans to offer specific benefits;
HIPAA does NOT permit people to keep the same health coverage they had in their old job when they move to a new job;
HIPAA does NOT eliminate all use of pre-existing condition exclusions; and
HIPAA does NOT replace the state as the primary regulator of health insurance.

COBRA

1.65 What is a COBRA continuation health coverage?

Congress passed the land mark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. the law amends the Employee Retirement Income security act, the Internal Revenue Code and the Public Health Service act to provide continuation of group—health coverage that other wise might be terminated.

1.66 What does cobra do?

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

1.67 Who is entitled to benefits under COBRA?

There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:

Plan Coverage- group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

Qualified Beneficiaries- A qualified beneficiary generally is an individual covered by a group health plan on the day before a qualifying event who is either an employee, the employee’s spouse, or an employer’s dependent child. In certain cases, a retired employee, the retired employee’s spouse, and the retired employee’s dependent children may be qualified beneficiaries. In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualified beneficiary. Agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.

Qualifying Events- qualifying events are certain events that would cause an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage.

Qualifying Events for Employees:

Voluntary or involuntary termination of employment for reasons other than gross misconduct
Reduction in the number of hours of employment

Qualifying Events for Spouses:

Voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct
Reduction in the hours worked by the covered employee
Covered employee’s becoming entitled to Medicare
Divorce or legal separation of the covered employee
Death of the covered employee

1.68 How does a person become eligible for cobra continuation coverage?

To be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the cobra continuation coverage, cause an individual to lose his or her health care coverage.

1.69 What group health plans are subject to COBRA?

The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments.

1.70 What process must individuals follow to elect COBRA continuation coverage?

Employers must notify plan administrators of a qualifying event within 30 days after employee’s death, termination, reduced hours of employment or entitlement to Medicare. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child’s ceasing to be covered as a dependent under plan rules.

Days after divorce or legal separation or a child’s ceasing to be covered as a dependent under plan rules.

Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that qualifying event has occurred. The individual then has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium.

1.71 How long after a qualifying event do I have to elect COBRA coverage?

Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Each qualified beneficiary may independently elect COBRA coverage. A covered employee or the covered employee’s spouse may elect COBRA coverage on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.

1.72 How do I file COBRA claim for benefits?

Health plan rules must explain how to obtain benefits and must include written procedures for processing claims. Claims procedures must be described in the summary plan description.

You should submit a claim for benefits in accordance with the plan’s rules for filing claims. If the claim is denied, you must be given notice of the denial in writing generally within 90 days after the claim filed. The notice should state the reasons for the denial, any additional information needed to support the claim, and procedures for appealing the denial. You will have at least 60 days to appeal a denial and you must receive a decision on the appeal generally within 60 days after that.

Contact the plan administrator for more information on filing a claims for benefits. Complete plan rules are available form employers or benefits office. There can be charges up to 25 cents a page for copies of plan rules.

1.73 Can individuals qualify for longer periods of COBRA continuation coverage?

Yes, disability can extend the 18 month period of continuation coverage for a qualifying event that is a termination of employment or reduction of hours. To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must:

Have a ruling from the Social Security Administration that he or sh became disabled within the 60 days of COBRA continuation coverage
Send the plan a copy of the Social Security ruling letter within 60 days of receipt, but prior to expiration of the 18-month period coverage.

If these requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage. Plans can charge 150% of the premium cost for the extended period of coverage.

1.74 Is a divorced spouse entitled to COBRA coverage from their former spouses group health plan?

Under COBRA, participants, covered spouses and dependent children may continue their plan coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation). A covered employee’s spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation. After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage.

Divorced spouses may call their plan administrator or the EBSA Toll-Free number, 1866-444-EBSA (3272) if they have questions about COBRA continuation coverage or their rights under ERISA.

1.75 If I waive COBRA coverage during the election period, can I still get coverage at a later date?

If a qualified beneficiary waives COBRA coverage during the election period, he or she may revoke the waiver of coverage before the end of the election period. A beneficiary may then elect cobra coverage. Then, the plan need only provide continuation coverage beginning on the date the waiver is revoked.

1.76 Under COBRA, what benefits must be covered?

Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the continuation coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.

1.77 When does COBRA coverage begin?

COBRA coverage begins on the date that health care coverage would otherwise have been lost by reason of a qualifying event.

1.78 How long does COBRA coverage last?

COBRA establishes required period of coverage for continuation health benefits. A plan, however, may provide longer periods of coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage.

Coverage begins on the date that coverage would otherwise have been lost by reason of a qualifying event and will end at the end of the maximum period. It may end earlier if:

Premiums are not paid on a timely basis
The employer ceases to maintain any group health plan
After the COBRA election, coverage is obtained with another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of such beneficiary. However, if other group health coverage is obtained prior to the COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election.

Although COBRA specifies certain periods of time that continued health coverage must be offered to qualified beneficiaries, COBRA does not prohibit plans from offering continuation health coverage that goes beyond the COBRA period.

Some plans allow participants and beneficiaries to convert group health coverage to an individual policy. If this option is generally available from the plan, a qualified beneficiary who pays for COBRA coverage must be given the option of converting to an individual policy. If this option is generally available from the plan, a qualified beneficiary who pay for COBRA coverage must be given the option of converting to an individual policy at the end of the COBRA continuation coverage period. The option must be given to enroll in a conversion health plan within 180 days before COBRA coverage ends. The premium for conversion policy may provide a lower level of coverage. The conversion option, however, is not available if the beneficiary ends COBRA coverage before reaching the end of the maximum period of COBRA coverage.

1.79 Who pays for COBRA coverage?

Beneficiaries may be required to pay for COBRA coverage. The premium cannot exceed 102 percent of the cost to the plan for similarly situated individuals who have not incurred a qualifying event, including both the portion paid by employees and any portion paid by the employer before the qualifying event, plus 2 percent for administrative costs.

For qualified beneficiaries receiving the 11 month disability extension of coverage, the premium for those additional months may be increased to 150 percent of the plan’s total cost of coverage.

COBRA premiums may be increased if the costs to plan increase but generally must be fixed in advance of each 12-month premium cycle. The plan must allow you to pay premiums on a monthly basis if you ask to do so, and the plan may allow you to make payments at other intervals (weekly or quarterly).

The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments. Payment is considered to be made on the date it is sent to the plan.

If premiums are not paid by the first day of the period of coverage, the plan has the option to cancel coverage until payment is received an then reinstate coverage retroactively to the beginning of the period of coverage.

If the amount of the payment made to the plan is made in error but is not significantly less than the amount due, the plan is required to notify you of the deficiency and grant a reasonable period ( for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not obligated to send monthly premium notices.

COBRA beneficiaries remain subject to the rules of the plan and therefore must satisfy all costs related to co-payments and deductibles, and are subject to catastrophic and other benefit limits.

1.80 If I elect COBRA, how much do I pay?

When you were an active employee, your employer may have paid all or part of your group health premiums. Under COBRA, as a former employee no longer receiving benefits, you will usually pay the entire premium amount , that is, the portion of the premium that you paid as an active employee and the amount of the contribution made by your employer. In addition, there may be a 2 percent administrative fee.

While COBRA rates may seem high, you will be paying group premium rates, which are usually lower than individual rates.

Since it is likely that there will be a lapse of a month or more between the date of layoff and the time you make the COBRA election decision, you may have to pay health premiums retroactively-from the time of separation from the company. The first premium, for instance, will cover the entire time since your last day of employment with your former employer.

You should also be aware that it is your responsibility to pay for COBRA even if you do not receive monthly statement.

Although they are not required to do so, some employers may subsidize COBRA coverage.

1.81 Can I receive COBRA benefits while on FMLA leave?

The Family and Medical Leave Act, effective August 5, 1993, requires an employer to maintain coverage under any group health plan for an employee on FMLA leave under the same conditions coverage would have been provided if the employee had continued working. Coverage provided under the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer’s obligation to maintain health benefits under FMLA ceases, such as when an employee notifies an employer of his or her intent not to return to work.

Further information on FMLA is available from the nearest office of the wage and hour division, listed in most telephone directories under the U.S. Government, U.S. Department of Labor, Employment Standards Administration.

1.82 What is the federal government’s role in COBRA?

COBRA continuation coverage laws are administered by several agencies. The Departments of Labor and Treasury have jurisdiction over private-sector health group health plans. The Department of Health and Human Services administers the continuation coverage law as it affects public-sector health plans.

The Labor Department’s interpretive and regulatory responsibility is limited to the disclosure and notification requirements of COBRA. If you need further information on your disclosure or notification rights under a private-sector plan, or about ERISA generally, telephone EBSA’s Toll-Free number at: 1.866.444.3272, or write to:

U.S. Department of Labor
Employee Benefits Security Administration
Division of Technical Assistance and Inquiries
200 Constitution Avenue NW, Suite N-5619
Washington, DC 20210

The Internal Revenue Service, Department of the Treasury, has issued regulations on COBRA provisions relating to eligibility, coverage and premiums in 26 CFR part 54, Continuation Coverage Requirements Applicable to Group Health Plans. Both the Department of Labor and Treasury share jurisdiction for enforcement of these provisions. The Center for Medicare and Medicaid Services offers information about cobra provisions for public-sector employees. You can write them at this address:

Centers for Medicare and Medicaid Services
7500 Security Boulevard
Mail Stop C1-22-06
Baltimore, MD 21244-1850
Tel 1.877.267.2323 x61565

1.83 I am a federal employee. Can I receive benefits under COBRA?

Federal employees are covered by a law similar to COBRA. Those employees should contact the personnel office serving their agency for more information on temporary extensions of health benefits.

1.84 Am I eligible for COBRA if my company closed or went bankrupt and there is no health plan?

If there is no longer a health plan, there is no COBRA coverage available. If, however, there is another plan offered by the company, you may be covered under that plan. Union members who are covered by a collective bargaining agreement that provides for a medical plan also may be entitled to continued coverage.

1.85 How do I find out about COBRA coverage and how do I elect to take it?

Employers or health plan administrators must provide an initial general notice if you are entitled to COBRA benefits. You probably received the initial notice about COBRA coverage when you were hired.

When you are no longer eligible for health coverage, your employer has to provide you with specific notice regarding your rights to COBRA continuation benefits.

Employers must notify their plan administrator within 30 days after an employee’s termination or after a reduction in hours that causes an employee to lose health benefits. The plan administrator must provide notice to individual employees of their right to elect COBRA coverage within 14 days after the administrator has received notice from the employer.

You must respond to this notice and elect COBRA coverage by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later. Otherwise, you will lose all rights to COBRA benefits.

Spouses and dependent children covered under your health plan have an independent right to elect COBRA coverage upon your termination or reduction in hours. If, for instance, you have a family member with an illness at the time you are laid off, that person alone can elect coverage.

Family Medical Leave Act

1.86 How much leave am I entitled to under FMLA?

If you are an “eligible” employee, you are entitled to 12 weeks of leave for certain family and medical reasons during a 12-month period under Federal Law. The number of weeks of leave may vary according to individual state laws.

1.87 How is the 12-month period calculated under FMLA?

Employers may select on of four options for determining the 12-month period:

The calendar year
any fixed 12-month “leave year” such as a fiscal year, a year required by state law, or a year starting on the employee’s “anniversary” date;
The 12-month period measured forward from the date any employee’s first FMLA leave begins; or

a “rolling” 12-month period measured forward from the date an employee uses FMLA leave.

1.88 Does the law guarantee paid time off?

No. The FMLA only requires unpaid leave. However, the law permits an employee to elect, or the employer to require the employee, to use accrued paid leave, such as vacation or sick leave, for some or all of the FMLA leave period. When paid leave is substituted for unpaid FMLA leave, it may be counted against the 12-week FMLA leave entitlement if the employee is properly notified of the designation when the leave begins.

1.89 Does worker’s compensation leave count against an employee’s FMLA leave entitlement?

It can. FMLA leave and worker’s compensation leave can run together, provided the reason for the absence is due to a qualifying serious illness or injury and the employer properly notifies the employee in writing that the leave will be counted as FMLA leave.

1.90 Can the employer count leave taken due to pregnancy complications against the 12 weeks of FMLA leave for the birth and care of my child?

Yes. An eligible employee is entitled to a total of 12 weeks of FMLA leave in a 12-month period. If the employee has to use some of that leave for another reason, including a difficult pregnancy, it may be counted as part of the 12 week FMLA leave entitlement.

1.91 Can the employer count time on maternity leave or pregnancy disability as FMLA leave?

Yes. Pregnancy disability leave or maternity leave for the birth of a child would be considered qualifying FMLA leave for a serious health condition and may be counted in the 12 weeks of leave so long as the employer properly notifies the employee in writing of the designation.

1.92 If an employer fails to tell employees that the leave is FMLA leave, can the employer count the time they have already been off against the 12 weeks of FMLA leave?

In most situations, the employer cannot count leave as FMLA leave retroactively. Remember ,the employee must be notified in writing that an absence is being designated as FMLA leave. If the employer was not aware of the reason for the leave, leave may be designated as FMLA leave retroactively only while the leave is in progress or within two business days of the employee’s return to work.

1.93 Who is considered an immediate “family member” for purposes of taking FMLA leave?

An employee’s spouse, children (son or daughter), and parents are immediate family members for purposes of FMLA. The term “parent” does not include a parent “in law”. The terms son or daughter do not include individuals age 18 or over unless they are “incapable of self-care” because of mental or physical disability that limits one or more of the “major life activities” as those terms are defined in regulations issued by the Equal Employment Opportunity Commission (EEOC) at http://www.dol.gov/esa/regs/statutes/ofccp/ada.htm Americas With Disabilities Act (ADA).

1.94 May I take FMLA leave for visits to a physical therapist, if my doctor prescribes the therapy?

Yes. FMLA permits you to take leave to receive “continuing treatment by a health care provider,” which can include recurring absences for therapy treatments such as those ordered by a doctor for physical therapy after a hospital stay or for treatment of severe arthritis.

1.95 Which employees are eligible for FMLA leave?

Employees are eligible to take FMLA leave if they have worked for their employer for at least 12 months, and have worked for at least 1,250 hours over the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 miles.

1.96 Do the 12 months of service with the employer have to be continuous or consecutive?

No. The 12 months do not have to be continuous or consecutive; all time worked for the employer is counted.

1.97 Do the 1,250 hours include paid leave time or other absences from work?

No. the 1,250 hours include only those hours actually worked for the employer. Paid leave and unpaid leave, including FMLA leave, are not included.

1.98 How do I determine if I have worked 1,250 hours in a 12-month period?

Your individual record of hours worked would be used to determine whether 1,250 hours had been worked in the 12 months prior to the commencement of FMLA leave. As a rule of thumb, the following may be helpful for estimating whether this test for eligibility has been met;

24 hours worked in each of 52 weeks of the year; or
over 104 hours worked in each of the 12 months of the year; or
40 hours worked per week for more than 31 weeks (over seven months) of the year.

1.99 Do I have to give my employer my medical records for leave due to a serious health condition?

No. You do not have to provide medical records. The employer may, however, request that, for any leave taken due to a serious health condition, you provide a medical certification confirming that a serious health condition exists.

1.100 Can my employer require me to return to work before I exhaust my leave?

Subject to certain limitations, your employer may deny the continuation of FMLA leave due to a serious health condition if you fail to fulfill any obligations to provide supporting medical certification. The employer may not, however, require you to return to work early by offering you a light duty assignment.

1.101 Are there any restrictions on how I spend my time while on leave?

Employers with established policies regarding outside employment while on paid or unpaid leave may uniformly apply those policies to employees on FMLA leave. Otherwise, the employer may not restrict your activities. The protections of FMLA will not, however, cover situations where the reason for leave no longer exists, where the employee has not provided required notices or certifications, or where the employee has misrepresented the reason for leave.

1.102 Can my employer make inquiries about my leave during my absence?

Yes, but only to you. Your employer may ask you questions to confirm whether the leave needed or being taken qualifies for FMLA purposes, and may require periodic reports on your status and intent to return to work after leave. Also, if the employer wishes to obtain another opinion, you may be required to obtain additional medical certification a the employer’s expense, or rectification during a period of FMLA leave. The employer may have a health care provider representing the employer contact your health care provider. The inquiry may not seek additional information regarding your health condition or that of a family member.

1.103 Can my employer refuse to grant me FMLA leave?

If you are an “eligible” employee who has met FMLA’s notice and certification requirements (and you have not exhausted your FMLA leave entitlement for the year), you may not be denied FMLA leave.

1.104 Will I loose my job if I take FMLA leave?

Generally, no. it is unlawful for any employer to interfere with or restrain or deny the exercise of any right provided under this law. Employers cannot use the taking of FMLA leave as a negative factor in employment actions, such as hiring, promotions or disciplinary actions; nor can FMLA leave be counted under “no fault” attendance policies. Under limited circumstances, an employer may deny reinstatement to work – but not the use of FMLA leave to certain highly-paid, salaried (“key”) employees.

1.105 Are there other circumstances in which my employer can deny FMLA leave or reinstatement to my job?

in addition to denying reinstatement in certain circumstances to “key” employees, employers are not required to continue FMLA benefits or reinstate employees who would have been laid off or otherwise had their employment terminated had they continued to work during the FMLA leave period as, for example, due to a general layoff.

Employees who give unequivocal notice that they do not intend to return to work lose their entitlement to FMLA leave.

Employees who are unable to return to work and have exhausted their 12 weeks of FMLA leave in the designated “12 month period” no longer have FMLA protections of leave or job restoration.

Under certain circumstances, employers who advise employees experiencing a serious health condition that they will require a medical certificate of fitness for duty to return to work may deny reinstatement to an employee who fails to provide the certification, or may delay reinstatement until the certification is submitted.

1.106 Can my employer fire me for complaining about a violation of FMLA?

No. Nor can the employer take any other adverse employment action on this basis, it is unlawful for any employer to discharge or otherwise discriminate against an employee for opposing a practice made unlawful under FMLA.

1.107 Does an employer have to pay bonuses to employees who have been on FMLA leave?

The FMLA requires that employees be restored to the same or an equivalent position. If an employee was eligible for a bonus before taking FMLA leave, the employee would be eligible for the bonus upon returning to work. The FMLA leave may not be counted against the employee. For example, if an employer offers a perfect attendance bonus, and the employee has not missed any time prior to taking FMLA leave, the employee would still be eligible for the bonus upon returning from FMLA leave.

On the other hand, FMLA does not require that employees on FMLA leave be allowed to accrue benefits or seniority. For example, an employee on FMLA leave might not have sufficient sales to qualify for a bonus. The employer is not required to make any special accommodation for this employee because of FMLA. The employer must, of course, treat an employee who has used FMLA leave at least as well as other employees on paid and unpaid leave (as appropriate) are treated.

1.108 Under what circumstances is leave designated as FMLA leave and counted against the employee’s total entitlement?

In all circumstances, it is the employer’s responsibility to designate leave taken for an FMLA reason as FMLA leave. The designation must be based upon information furnished by the employee. Leave may not be designated as FMLA after the leave has been completed and the employee has returned to work, except;

the employer is awaiting receipt of the medical certification to confirm the existence of serious health condition;
the employer was unaware that leave was for an FMLA reason, and subsequently acquires extensions of leave; or,

the employer was unaware that the leave was for an FMLA reason, and the employee notifies the employer within two days after return to work that the leave was FMLA leave.

1.109 Can my employer count FMLA leave I take against a no fault absentee policy?

No.

1.110 HRA-HSA

Health Reimbursement Arrangements (HRAs)

An HRA is a notational account funded by an employer for the benefit of an employee. Funds contributed to the HRA are deductible by the employer and tax-exempt to the employee. Unused funds can be rolled over by the employee for use in subsequent years.

Benefits of this approach to employers include:

Funds are held by the employer.
Employers can limit carryover amounts and portability.
An HRA provides greater flexibility in plan design.
Third-party claims adjudication assures appropriate use of funds.
Employers can limit the HRA to services covered under traditional health plans.

Health Savings Accounts (HSA)

HSAs are tax-advantaged accounts held by a bank or custodian. Employers and/or employees may contribute on a tax-exempt basis if the employee is covered by a qualified health plan. Unused balances roll over for use in subsequent years.

Benefits of this approach to employers include:

Employers are not required to contribute to the HSA.
Employer’s premium contribution may be reduced by adopting a high deductible.
Employee ownership of funds creates a more responsible customer.
Qualified plan requirements may result in more positive plan utilization.

HRA-HSA Comparison

Although similar, Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) have key differences:

Health plan benefit design HRA HSA

Health plan benefit design	HRA	HSA
Other health coverage	No specific requirements	Federally mandated minimum deductibles/ maximum out-of-pocket
Eligible medical expenses	No limitations	Only other qualified health plans allowed
Account earnings taxable to particiapnts	Unreimbursed Code 213 medical expenses, including premiums for health & long term care insurance	Unreimbursed Code 213 medical expenses, excluding health insurance premium except: COBRA premiums; health insurance premiums while unemployed: retiree health insurance
Portability	Not applicable	Tax-exempt
Carryover of unused amounts	Portability allowed but not required	Fully portable
Covered medical expense	Permitted but not required	Full carryover
Pretax funding	Ability to limit to the medical plan only	Covers all 213 medical expenses
Account type	Employer only	Employer and/ or employee
Cash-outs of unused amounts	Notational only	Qualified trust
Contribution limits	Not permitted	Permitted but taxable. 10% penalties also apply to under 65 non-disabled.
Third-party claims administration	No limits	Lesser of deductible amount or $2850 individual, $5650 family
Eligible Participants	Required	Not required
	Employees of Small Businesses	Employees of Small Businesses
	Employees of Large Businesses	Employees of Large Businesses
Account Ownership		Self Employed Individuals
Is Account Funded (i.e, held outside employer’s general assets?)	Employer	Employee
Who can contribute to account	Rarely	Yes
Basis of Contributions	Employer only	Employer, Employee, Family member (subject to gift tax)
Tax on Account Distributions	Pre-tax	Pre-tax
"Use It or Lose It" Rule	Disbursements for qualified expenses are not taxable	Disbursements for qualified expenses are not taxable
Rollovers Allowed	No	No
Insurance Plan	Yes	Yes
Maximum Account Contributuions	HRA can be offered with any type of insurance plan, although often paired with high deductible plans.	High Deductibe Plan" defined for 2009 as Minimum Deductible - Single $1,150 , Family $2,300 Maximum Out of Pocket Expenses - Single $5,800, Family $11,600. Amounts adjusted annually for inflation. Deductibles on preventive care not required. Insured cannot be covered by another health plan, and cannot be claimed as a dependent. Out of network coverage allowed with higher cost sharing provisions.
Medicare Eligible	No Maximums	Lesser of deductible amount or $2850 individual, $5650 family. Extra contributions for Age 55+ ($900 in 2007)
Qualified Expenses	No restrictions	No contributions allowed once an indiviudal is Medicare eligible.
	Defined by employer but subject to IRC 213(d)	Any IRC 213(d) qualified medical expense and premiums for the following types of health insurance:
		** Qualified LTC insurance
		** Medical premiums when paying under contribution of coverage provisions or during employment
Penalty for Non-Qualifed Expense Withdrawals		** Insurance during Medicare eligibility (except Medicare supplement)
Other Issues	N/A - withdrawals for non-qualified expenses not allowed	Income Tax + 10% (except after death, disability or medicare eligibility)
	----	** Cannot roll HSA balances into IRAs
		** Banks and life insurers (but not health insurers) are specifically designated as trustees