Celebrating 75 Years 1932 -2007

1. Celebrating 75 Years 1932 -2007

2. Consumer Directed Health Plans How can they Impact Retiree Health Benefits

3. Consumer Directed Plans • Usually use a High Deductible Health Plan • Have a component of participant responsibility. • Empower participants to make independent decisions while providing an economic incentive. • Successful plans will provide tools to help participants in their decision process.

4. What are Consumer Directed Health Plans? • HRA’s - Health Reimbursement Arrangements • HSA’s - Health Savings Accounts • MSA’s (MMSA’s)- (Medicare) Medical Savings Accounts

5. HRA - Health Reimbursement Account Employer Benefits • Do not require a qualified plan • More flexibility in plan design • Employer owns benefit • Only portable to the extent employer allows • Limited long term liability • Stabilization of rising costs

6. HRA - Health Reimbursement Account Employee Benefits • Direct access to providers of choice - no referrals • No out of pocket expenditure for expenses under HRA balance • Control over healthcare decisions • Increasing benefits - rewarded for good health • Stabilization of rising costs

7. HSA Plans • Qualifeid High Deductible Plan (Required) • Tax Free Savings Plan to Pay for Healthcare Expenses • Available to any size Group • Employee Owns Account

8. HSA - Qualified Medical Plan • High Deductible • No first Dollar Benefits except for Preventative Care • Filed as a HSA Compatible Plan

9. HSA - Health Savings Account • Must use a Qualified Financial Vendor • Can Fund up to $2850 (single) or $5650 (family) for 2007 • Catch-up Provision – Over age 55, $800 for 2007, $900 for 2008 • Employee and/or Employer can make contributions • Employee owns the Account • Funds are fully portable

10. HSA -Use of Funds • Medical expenses under IRS Code 213(d) * • Medical • Dental • Vision • COBRA Premiums * • Medicare Premiums * • Long Term Care Premiums * • Retirement Savings - Subject to State and Federal Taxes * Subject to State Taxes

11. HSA - Health Savings Account Employer Benefits • Predictable Costs • Employer and Employee Can Fund • Usually better pricing than HRA Plans • No long term liability • Stabilization of rising costs

12. HSA - Health Savings Account Employee Benefits • Direct access to providers of choice - no referrals • No out of pocket expenditure for expenses under HSA balance • Control over healthcare decisions • Increasing benefits - rewarded for good health • Stabilization of rising costs • Employee owns the account

13. Example of Retiree Pricing Fresno County – Unblended Retiree Benefits • Blue Shield $250 Ded PPO Plan including Rx, Dental, & Vision = $823.47 per month Retiree Only • Blue Shield $1500 Ded HSA Plan $4500 OoP Max including Rx, Dental, & Vision = $468.12 per month Retiree Only • Savings = $355.35 Mth, $4264 Ann • Pays almost entire liability, Plus Tax benefits for HSA account.

14. Why HSA’s for County Retiree’s • More Affordable for Retirees • Reduces GASB liability where rates are still blended • Easy way to introduce to Employee Population • If offered to Employees provides a way to save for Retirement Health Benefits

15. MSA Medical Savings Account • Original Term for HSA’s • Now an option for Medicare MA Plans (MA = Medicare Advantage) • Still evolving, look to the future • High Deductible Plan combined with a Benefit/Savings account • Only Medicare can fund the account