UW employees have access to a fairly new type of health plan: the consumer-directed health care plan with a health savings account or so called "CDHP-HSA." Current medical providers—Uniform Medical, Group Health, and Kaiser Permanente—will each offer this plan in addition to the traditional Classic and/or Value plan.

This page and the corresponding PEBB web page explain the CDHP-HSA plan. Navigate to Uniform Medical, Group Health, or Kaiser via the right side bar under "Medical Insurance Plans" to read a description of the plan choices sponsored by each provider.

Terms to Know

Before explaining the CDHP-HSA, it's important to understand that in addition to monthly premiums which are deducted from your pay, other costs should be considered when choosing a medical plan, such as:

• Annual deductibles - the amount you must pay out of pocket for health care and prescriptions before the plan begins to pay.
• Copays - the amount you must pay per visit.
• Co-insurance - the cost that you and the plan share.
• Out-of-pocket maximums - the maximum amount you will generally pay in any year.
• Also, if you have a specific medical condition, investigate costs and provider options outlined in the plan's Certificate of Coverage.

Consumer Directed Health Plan (CDHP)

CDHP is a type of insurance plan where you take on most of the cost for claims until the higher deductible for the plan is met. It has lower premiums in exchange for significantly higher annual deductible and out-of-pocket maximums than typical health plans. The CDHP is automatically linked to a tax-exempt savings and spending account called a "health savings account" (HSA) that can be used to help pay for qualified medical expenses.

When you choose a CDHP-HSA, your monthly premiums (deducted from your paycheck) will be less, HOWEVER you take on a much higher deductible as you begin using health care services AND you assume the burden of ensuring your HSA contributions and withdrawals comply with IRS guidelines.

Health Savings Account (HSA)

When you elect a CDHP-HSA, the HSA portion is automatically established with HealthEquity, the qualified trustee. There is an employer contribution to this account, and you can also choose to contribute on a pre-tax basis into this account, either directly to Health Equity or through optional payroll deduction. You can use the money in your account to pay for eligible current or future health care expenses.

While the University allows payroll deductions for the convenience of its employees and transmits the funds to HealthEquity, all aspects of managing and maintaining the HSA remain the responsibility of the employee.

Key Features of the CDHP-HSA Plan

CDHP-HSA has a similar benefit plan structure to traditional plans, such as:

• Preventive care visits covered at 100% when you see a network provider for these services
• Regular office visits and diagnostics
• Vision coverage
• Prescription drug coverage
• Prescription drug coinsurance/co-payments applied to the out-of-pocket maximum for all CDHP plans.

But, unlike traditional plans, here are other things to consider:

• The structure of CDHP automatically includes use of an HSA, and you must meet the IRS-HSA qualifications of an HSA.
• You will need to build savings in your HSA in order to help cover the high deductible and/or co-insurance.
• You pay more coinsurance and/or co-payments before the plan pays 100% of covered benefits:

Member Costs

Member Costs for each CDHP Plan	Uniform Medical CDHP	Group Health CDHP	Kaiser CDHP
Annual Deductible	$1,400/person $2,800/family	$1,400/person $2,800/family	$1,400/person $2,800/family
Annual Out-of-Pocket Maximum	$4,200/person $8,400/family	$5,100/person $10,200/family	$4,200/person $8,400/family

Notes:

• Employee with one or more covered dependents must meet the family annual out-of-pocket maximum before the plan pays at 100% for covered benefits.
• Benefits may be subject to annual deductible and plan limitations.

Annual Contribution Limits for HSAs

For each health savings account, the combined employer/employee contribution limit allowed by the IRS are as follows:

• For individual coverage: $3,250 for 2013
• For family coverage: $6,450 for 2013
• Additional “catch-up” contribution of $1,000 allowed if you are 55 or older.

Remember to include the employer contribution when calculating your overall limit for the year. For individual subscribers, the state's monthly employer contribution to your HSA account will be $58.33 per month up to a maximum of $700 per year. For subscribers with one or more covered dependents, it will be $116.67 per month up to a maximum of $1,400 per year.

Under the Internal Revenue Code, employees bear full responsibility for monitoring their own limits—the UW does not track limits. Contribution limits are subject to change by the IRS.

HSA- IRS Eligibility

HSA's are governed under the Internal Revenue Code (IRC). To enroll you must meet the following eligibility requirements:

• You must be enrolled in a qualified high deductible health plan (CDHP).
• You cannot have other comprehensive health coverage that is not a qualified high deductible health plan.
• You cannot be enrolled in Medicare.
• You cannot be claimed as a tax dependent on someone else's tax return.
• You cannot have received care from the Veteran's Administration or one of their facilities, including prescription drugs, within the last three months.
• You cannot be enrolled in Tricare.
• You cannot have an active VEBA account.
• You and your legal spouse cannot be enrolled in an FSA in the same year. If you already have an FSA in the prior year and enroll in a CDHP-HSA for the next year:
  • You must use all FSA funds by December 31 of the prior year.
  • You cannot use the grace period of the next year (January to March 15) to use your FSA funds or the claims run-out period to file your previous year claims.

How an HSA Works

Your HSA is established for you at the same time that you elect the CDHP. Here's how it works:

• An employer contribution will be made to your HSA account each month as follows:
  • $58.33 per month up to a maximum of $700 per year for an individual subscriber.
  • $116.67 per month up to a maximum of $1,400 per year for a subscriber and one or more covered dependents
• Subject to the IRS limits listed above, you or anyone else may also contribute to your HSA through:
  • Pre-tax payroll deduction
  • Payments sent directly to the qualified trustee, HealthEquity.
• HSA contributions are scheduled to post to your account two business days after the end of the month in which contributions are received.
• Funds are used to pay qualified medical expenses for you and your IRS tax-qualified dependents only. (If you cannot claim the insured person as a dependent, you cannot use the HSA funds for his/her expenses.) Over-the-counter drugs without a prescription are not considered qualified medical expenses.
• The HSA is owned by you. As such, the funds are portable and:
  • Carry over from year to year, unlike an FSA,
  • Go with you when you leave your job or retire, and
  • Are passed on to your named beneficiary after your death.
• You are responsible for managing the HSA funds, and for understanding what are qualified medical expenses.
• You are responsible for maintaining records (receipts, explanation of benefits, etc.) so you can provide documentation in the event of an IRS audit.
• HealthEquity, the qualified trustee, and/or a qualified tax advisor can advise you about HSA accounts

Compare the Account Types

You may be asking yourself—what's the difference between an HSA and a Flexible Spending Account (FSA)? This chart compares the two types of accounts..

* Employees terminating mid-year can elect to continue their FSA through COBRA.

CDHP-HSA is generally best for people who:

• Can meet the eligibility requirements to participate in a CDHP-HSA.
• Want the lowest monthly premium.
• Can pay out-of-pocket for treatments and services needed, if there are not enough dollars accrued in the HSA.
• Have funds available to meet the annual deductible before the CDHP pays any benefit amount.
• Are generally very healthy; primarily use preventive care from their health plan; and do not have ongoing major medical needs and/or use specialty drugs (e.g. high-cost injectable, oral, or inhaled drugs).
• Are willing to retain documentation for HSA expenditures in case of IRS audit.
• Are willing to verify if services or supplies, not covered by insurance, are qualified medical expenses for coverage under the HSA.
• Want additional tax-free savings for future medical expenses.
• Want to build a health savings account that remains with them even after UW employment or into retirement.

ACT

Step 1: Decide on a Plan and Provider

Now that you are familiar with how the CDHP-HSA works from the preceding information, the next step is to decide which plan is right for you—Uniform Medical Plan, Group Health, or Kaiser Permanente CDHP. (Note: Kaiser is only available in certain areas.)

To choose the medical plan that's best for you and your family based on plan availability, costs, providers, and more—go to Choosing a Medical Plan where you will find a helpful comparison chart for this purpose.

Return to this page and Step 2, if you are ready to enroll in a CDHP-HSA.

Step 2: Enroll in a Consumer-Driven Health Plan

Complete the Medical and Dental Insurance Enrollment/Change Form listed on the medical/dental forms page. Be sure to include valid dependent verification documents if you are adding family members to your coverage and/or a Tax Status form if you are adding a qualified domestic partner to your coverage.

Once enrolled, you will receive an enrollment confirmation from your health care provider—Uniform, Group Health, or Kaiser Permanente. You will also receive a welcome notice from HealthEquity indicating that your Health Savings Account has been opened. At this point, you may begin optional payroll deductions as follows.

Step 3: Start or Change Payroll Deductions to Health Savings Account

• You must already be enrolled in a consumer-directed health plan with an HSA before you can start a payroll deduction. To verify your CDHP enrollment, log into Employee Self Service (ESS) at www.uw.edu and view your plan under the “Insurance” tab.
  Note: If you received an enrollment confirmation and your enrollment is not yet reflected in ESS, contact the Benefits Office.
• Complete this form:
  2013 Employee Authorization for Payroll Deduction to Health Savings Account
  Read and agree to the statements in Part 3, then and sign and date the form.
• Return the original form to the Benefits Office. Keep a copy for your records. Fax or email attachments cannot be accepted.

Additional Notes:

• The HSA payroll deduction (or change to your existing HSA deduction) will be effective the first pay day that begins at least 10 days after the form is received by the Benefits Office.
• You may change your deduction as often as you wish during the year as long as you are covered by a qualified CDHP.
• You can fully fund your HSA at the beginning of the year, provided you stay covered by a qualified CDHP for the entire year.
• You can use payroll deductions to prefund your account for anticipated expenses. For example, if you expect a large medical expense during the year, you can put your money into your HSA first through an increased payroll deduction instead of paying directly out-of-pocket. That way, you can pay with pretax dollars. This increases the value of your money (depending on your tax bracket) by 18% to 30%. Refer to page 82 of The Complete HSA Guidebook (see below).

EXPLORE

The Complete HSA Guidebook

Frequently Asked Questions about CDHP-HSA

HealthEquity - Qualified trustee of the HSA

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Disclaimer: The information on this page does not substitute for official plan documents. If there is a conflict between the information on this site and an official plan document, the official plan document will govern. Refer to the Benefits Forms & Publications page.

Plan availability and eligibility may change depending on your employment status and/or actions of the Washington State Health Care Authority (HCA), the agency that purchases and coordinates health insurance benefits for public employees, including employees of the University of Washington, through the Public Employees Benefits Board (PEBB) program.

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