|
HSA &/OR ERISA
"95% of HSA Are Still ERISA's"
© 2004 - 2005 Jin Zhou, ERISAclaim.com
In order to make HSA's (Health
Savings Accounts) &/or ERISA understandable, as easy as 1-2-3, and a
no-brainer for dummies, we present the official guide from the IRS,
Treasury Department, DOL, Department Of Labor, Federal ERISA Enforcement
Agency, with some experts views and industry news, to show the basic
idea and a picture of the latest storm in healthcare market mixed with
the most complicated ERISA law for 80% of US health care claims.
HSA &/OR ERISA, What's
the Big Deal & Who Cares?
$5,000 to $10,000
deductibles for you and your family are and will be the way of your life
this year and next year for the most and as popular insurance plans
around the country.
If $10,000 or more
is not a big deal to you, then
HSA &/OR ERISA
won't matter.
|
|
Plan 1 |
Plan 2 |
Plan 3 |
Plan 4 |
|
In-network |
Out-of-network |
In-network |
Out-of-network |
In-network |
Out-of-network |
In-network |
Out-of-network |
|
Individual Deductible |
$2,500 |
$5,000 |
$2,500 |
$5,000 |
$2,500 |
$5,000 |
$2,500 |
$5,000 |
|
Family Deductible |
$5,000 |
$10,000 |
$5,000 |
$10,000 |
$5,000 |
$10,000 |
$5,000 |
$10,000 |
|
Maximum Annual HSA
Contribution |
$2,500 ($5,000 for
families) |
|
Do
you know 95% of HSA May Still Be ERISA's by HSA Set up and Fund
Distribution (Fund Used for)?
HSA can be set up with or
without ERISA exemption and HSA fund can be used with or without High
Deductible Health Plan (HDHP) ERISA jurisdiction for employer-sponsored
health plans in private sector.
Predicting the Future of Health Savings Accounts
(PDF) (International
Society of Certified Employee Benefit Specialists)
"The Department of Labor (DOL) has issued
guidance as to the circumstances under which HSAs
will or will not be subject to ERISA.
In order to avoid ERISA, employer involvement with HSAs must be
limited. While 58% of survey
participants indicated that it would be somewhat or very likely that
their organization would choose to avoid ERISA, a sizable minority
(35%) said it was not very likely they would structure an HSA so as
to avoid ERISA."
As HSA can only be set up on top of HDHP,
and is mainly designed to offset and supplement high deductibles of
ERISA plans, among other functions, the practical,
legal and financial significance of ERISA compliance and risks of HSA
have to be determined not only
by HSA's design and set up but also more importantly by HSA's fund
distribution, fund used to pay for ERISA health plan covered medical
expenses in satisfying high deductibles and co-payments, for more than
$2,500 to $10,000 deductibles, such as in
HSA
Blue Eligible Plans.
Blue Options - HSA Blue With HSA
Blue, you get... (www.bcbsnc.com)
"Control of your
health care budget
HSA Blue is an
innovative, tax-free way for your employees to pay for current and
future out-of-pocket health care expenses. HSA Blue pairs our most
popular plan, the Blue Options PPO, with a health savings account
(HSA). HSAs work like IRAs for qualified medical expenses.
Funds can be used to pay
for deductibles, over-the-counter medications, medical supplies
and more. Get details about
using HSA funds
or review our
list of FAQs."
Although HSA can be set up by anyone in
addition to or other than employer, an individual covered under HSA must
be covered by a HDHP and can not be covered by any other health plan
that is not HDHP. Subject to certain requirements under ERISA
regulation as explained in
DOL Bulletin 2004-1, a HSA can
be set up by design subject to ERISA regulation and jurisdiction.
Even if a HSA is set up with exemption of ERISA jurisdiction under HDHP of
an ERISA plan, when such HSA fund distribution, money spent and used to pay
for covered medical expenses in satisfying high deductibles and
co-payments from ERISA HDHP, regardless who sponsored HSA or
whether a HSA (account) itself constitutes an ERISA
plan, such HSA fund
distribution, by claiming and satisfying or applying to high
deductibles in an ERISA HDHP,
has triggered ERISA jurisdiction
and obligations of the plan administrator of the employer-sponsored,
ERISA regulated, high deductible health plan.
Therefore a non-ERISA HSA
distribution can be an ERISA claim if HSA distribution is used to pay for covered
medical expenses to satisfy and supplement deductibles and copayments of
an ERISA plan, HDHP, which is the prerequisite for a HSA,
as HSA was mainly designed to do by the
President and Congress .
The
Honorable John W. Snow Prepared Remarks: Health Savings Accounts Events
(03/30/2004)
"Today we are issuing our next guidance in response
to those comments that we received. Issues covered by the new guidance
include a definition of “preventive care” and determining whether
prescription drugs can be covered on a first-dollar basis or be subject
to the high deductible under the high-deductible health plan that must
accompany an HSA."
If a HSA is set up with exemption of ERISA jurisdiction, and HSA fund
distribution is used to pay for qualified medical expenses under IRC 213
(d) without any interactions with an ERISA HDHP, such HSA will be
completely exempted from ERISA jurisdiction.
If a HSA is set up without exception of ERISA jurisdiction, and HSA fund
distribution can also be used for qualified medical expenses (QME),
instead of cover medical expenses of an ERISA HDHP, such HSA design and
set up will be subject to ERISA reporting and disclosure requirements,
but irrelevant to ERISA HDHP claim adjudication, as HSA fund
distribution adjudication is
"Between the Taxpayer, God, and the IRS".
However when such ERISA HSA fund distribution is used for covered medical
expenses of an ERISA HDHP, such HSA set up and distribution are
completely subject to ERISA regulation from beginning to the end.
HSA or ERISA, MORE EXPLANATIONS FROM DOL & IRS
IRS Notice 2004-2:
Q2 & A2 = HDHP & DOL
Bulletin 2004-1:
"The guidance makes clear that while
private-sector employer-sponsored HDHPs are group health plans
subject to ERISA’s reporting, disclosure, fiduciary
responsibility and other requirements,...."
How many
employers will offer HSA's without High Deductible Health Plans (HDHP)
for health-care costs savings and control?
How many insurers will offer HSA products without health-insurance
policies?
How many employees will set up their own HSA Accounts without their
employers contributions and want $0.00 of medical expenses applied to
their annual deductibles of their health insurance?
How many HSA trustees or custodians would risk ERISA fiduciary
liabilities and the lawsuits by employers and employees if HSA claims
are actually dual HSA and ERISA Claims?
Qualified Medical Expenses
under HSA v. Cover Medical Expenses under ERISA Plans
Eligible medical expenses under HSA are governed
under IRC §213 (d) as "qualified medical expenses" while covered
medical expenses under ERISA health plans are determined by individual
plans SPD (Summary Plan Description) under ERISA. A claim for incurred
medical expenses could be qualified medical expenses under HSA but
noncovered medical expenses under High Deductible Health Plan (HDHP)
or both qualified medical expenses and covered medical expenses for
each individual, and every individual is intended to be reimbursed
from HSA and to apply that expenses to satisfy high deductibles under
HDHP/ health-care plan under ERISA, regardless of future determination
and outcomes.
A Claim of Incurred
Medical Expenses in connection with HSA for benefits or satisfaction
of deductibles under HDHP Triggers ERISA Jurisdiction
Although DOL has provided the following safe
harbors for HSA claims to be exempted from ERISA regulations,
practically speaking, every employee or eligible individual covered
under high deductible health plans would have to satisfy such high
deductible before benefits reimbursement can be made from the plan:
"Accordingly, we
would not find that employer contributions to HSAs give rise to an
ERISA-covered plan where the establishment of the HSAs is completely
voluntary on the part of the employees and the employer does not:
(i)
limit the ability of eligible individuals to move their funds to
another HSA beyond restrictions imposed by the Code; (ii) impose
conditions on utilization of HSA funds beyond those permitted under
the Code; (iii) make or influence the investment decisions with
respect to funds contributed to an HSA; (iv) represent that the HSAs
are an employee welfare benefit plan established or maintained by
the employer; or (v) receive any payment or compensation in
connection with an HSA.
(Field
Assistance Bulletin 2004-1)
Regardless whether a qualified medical expense
under HSA will ultimately qualify for covered medical expenses in
satisfying the plan's deductible in accordance with individual plan's
SPD (Summary Plan Description) under ERISA, a claim submitted to and
denied by an ERISA plan triggers ERISA jurisdiction under
DOL
FAQ C12:
"C-12: If a claimant submits medical bills to
a plan for reimbursement or payment, and the plan, applying the
plan’s limits on co-payment, deductibles, etc., pays less than 100%
of the medical bills, must the plan treat its decision as an adverse
benefit determination?
Under the regulation, an adverse benefit
determination generally includes any denial, reduction, or
termination of, or a failure to provide or make payment (in whole or
in part) for, a benefit. In any instance where
the plan pays less than the total amount of expenses submitted with
regard to a claim, while the plan is paying out the benefits to
which the claimant is entitled under its terms, the claimant is
nonetheless receiving less than full reimbursement of the submitted
expenses. Therefore, in order to permit the claimant to challenge
the plan’s calculation of how much it is required to pay, the
decision is treated as an adverse benefit determination under the
regulation. Providing the claimant with the required
notification of adverse benefit determination will give the claimant
the information necessary to understand why the plan has not paid
the unpaid portion of the expenses and to decide whether to
challenge the denial, e.g., the failure to pay in full. This
approach permits claimants to challenge whether, for example, the
plan applied the wrong co-payment requirement or deductible amount.
The fact that the plan believes that a
claimant’s appeal will prove to be without merit does not mean that
the claimant is not entitled to the procedural protections of the
rule. This approach to informing claimants of their benefit
entitlements with respect to specific claims, further, is consistent
with current practice, in which Explanation of Benefits forms
routinely describe both payable and non-payable portions of
claim-related expenses. See § 2560.503-1(m)(4)."
In addition
to plan SPD specific provisions in
defining covered medical expenses, a claimant must also comply with
plan provisions, as de facto control of HSA distribution by
employer/the plan, in managed-care environment, such as
pre-authorization, network provider limitations and utilization
reviews, in order to be eligible for benefits, even for covered medical
expenses.
In the course of such HSA ERISA exemption and ERISA
claim practice to establish that an HSA claim may not be eligible for
covered medical expenses in satisfying high deductibles under an ERISA
plan, a plan fiduciary has to access, disclose and possibly provide
for a copy of SPD, and to complete a full and fair review under ERISA
for such "adverse benefits determination" of "an ineligible ERISA claim"
of HSA expenses. In doing so, ERISA jurisdiction is inevitably
triggered and ERISA compliance requirement is evidenced.
Contrary to mainstream assertion and predictions,
this author believes that most HSA, up to 95%, will be ERISA claims
regardless of their merits under current crisis-cost shifting
managed-care environment. Failure in realizing this reality of ERISA
compliance requirement will eventually increase health-care costs and
managed-care litigations, and defeat entire purpose of timely medical
care and health care quality in cultivating health-care disasters.
HSA & ERISA law affect patients,
healthcare providers, insurance companies and TPA's as well as
employers.
We have received numerous comments
and feedback on our comprehensive chapters and pages on this web
site, requesting for a simplified "dummy version" of HSA's &/or ERISA page and a
roadmap of the ERISA basics in health care claim appeals.
We would like to try this
format to find out if we could accomplish this huge task.
Please e-mail your
questions and comments.
$$$$$$ ????? $$$$$$
???????? $$$$$$ ?????????
BCBSA Approves Use Of Blue-Branded Debit Cards For
Tax-Favored Health Savings Accounts (BCBSA
Media Resources,
February 1,
2005)
Blues Plans Join the Health Savings Account Train (Reuters, UK -
Nov 17, 2004)
Blue Cross and Blue Shield Companies Offering
HSA-Compatible Health Plans Across the Country, New Products Expand the
Blues' Portfolio of Consumer-Directed Offerings (National
Desk, Health Reporter U.S.
Newswire (press release)
Most Blues Patients in Most States Will
Have Access to Health Savings Accounts by the End of 2005
(American Medical News)
Kaiser's New High-Deductible Plan Signals Switch for Group-Model HMOs
(MANAGED CARE WEEK via AISHealth.com)
Excerpt: "With Kaiser Permanente's decision this
month to enter the consumer-directed market with a high-deductible HMO
product, the managed care organization (MCO) becomes a highly visible
sign of the continuing transformation of staff- and group-model HMOs
toward fee-based products. HMO-focused plans are moving toward such
products in greater numbers in an effort to remain competitive with
employers seeking lower-cost plans."
Employees Do Not Think They Can Control Health
Care Costs Survey Results Show
(BenefitNews Connect via BenefitNews.com)
Excerpt: "Employees are willing to take more
control of their health care decisions, but are not quite sure how to
do so, a Hewitt Associates poll of 39,000 employees shows. Among the
consulting firm's findings: More than 80% of employees don't estimate
their health care expenses each year. Nearly as many (79%) don't think
they can do anything to control health care costs. More than half
(57%) have never researched provider costs or quality."
Three Employers Compare Consumer-Directed Health
Plan Design Notes During Audioconference
(INSIDE CONSUMER-DIRECTED CARE via AISHealth.com)
Patients Cutting Health Care Usage: Higher Costs
Force Workers to Make Difficult Decisions (The
Mercury News; one-time registration required)
"• Nearly
six out of 10 workers say they are avoiding their doctors until they
experience serious symptoms -- a decision that could lead to costly
bills that could have been avoided with preventive care."
Poor
health, not lack of insurance,
drives ED visits ... American
Medical News
"The
study published online Oct. 19 by
the Annals of Emergency
Medicine found that 85% of
emergency patients had health
insurance and 83% of ED visits
were made by people who had a
usual source of care such as a
primary care physician. People
without insurance were no more
likely to visit the emergency
department than people with
insurance."
Does lack of a usual source of
care or health insurance increase
the likelihood of an emergency
department visit? Results of a
national population-based study,"
Annals of
Emergency Medicine
Comments on and Excepts from Recent Articles on
the Implementation of Health Savings Accounts
(Attorney B. Janell Grenier via Benefitsblog.com)
Excerpt: "Generally, payment
with HSAs should work the same way payments generally work for
patients with insurance. The doctor informs the insurer of the
charges, the insurer sends the patient a statement explaining how much
the patient owes, and the patient then has to pay the doctor that
amount. Patients using HSAs should wait to pay until the doctor
submits the information to their insurer, says Mr. Engel of Mellon
Financial. . ... Some insurers, like UnitedHealthcare, are already
working to minimize this hassle, for example, by allowing consumers to
authorize the insurer to deduct directly from their HSAs to pay
medical bills."
Wall Street Journal Looks at Use of and Confusion
with Health Savings Accounts (Kaiser Family
Foundation)
Excerpt: "The Wall Street Journal on [November 30]
examined some of the challenges facing consumers, insurers and banks
as the health care industry works out the details of health savings
accounts. One 'potential are[a] of confusion' is
'when and how much' patients with HSAs should pay providers, the
Journal reports. According to the Journal, some providers and
consumers 'are confusing HSAs with direct, full-price payments' made
by the uninsured. In fact, consumers with HSAs are expected ...."
HSA Adjudication Is "Between the Taxpayer, God,
and the IRS" (Spencer Benefits Reports)
"Health savings account owners may use HSA funds to pay for their
spouse's and/or dependents' medical expenses, even if the spouse or
dependents are not enrolled in the employee's high-deductible plan or
have coverage under another employer's plan, said Kevin Knopf, attorney
adviser in the Treasury Department's Office of Benefits Tax Counsel. Mr.
Knopf spoke and answered questions at a January 13 teleconference
sponsored by the American Bar Association's joint committee on employee
benefits."
Predicting the Future of Health Savings Accounts
(PDF) (International
Society of Certified Employee Benefit Specialists)
"The Department of Labor (DOL) has issued guidance
as to the circumstances under which HSAs will or will not be subject
to ERISA. In order to avoid ERISA, employer involvement with HSAs must
be limited. While 58% of survey participants indicated that it would
be somewhat or very likely that their organization would choose to
avoid ERISA, a sizable minority (35%) said it was not very likely they
would structure an HSA so as to avoid ERISA."
Half of Insured Adults with High-Deductible Health Plans Experience
Medical Bill or Debt Problems (The Commonwealth Fund)
Excerpt: "About half of insured adults with a
high-deductible health plan have medical bill problems or debts,
co |
