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HealthSavings CDHP Insurance Options
The Health Savings CDHP (also called a consumer driven health plan with a health savings account or HSA) covers the same services and uses the same networks as the PPO options.
The main differences are the HealthSavings CDHP has:
- Lower premiums and higher deductibles
- Coinsurance payments instead of copays
- A health savings account
You pay for your healthcare expenses based on the discounted network rates until you meet your deductible. Once you meet your deductible, you pay coinsurance. That is a percentage of the total discounted cost of services. Your medical coinsurance is either 20 percent or 30 percent, depending on which HealthSavings CDHP option you are enrolled in.
State and higher education can choose the
- Promise HealthSavings CDHP — if you agree to complete the 2017 Partnership Promise, the state will contribute money to your HSA
- No Promise HealthSavings CDHP — you fund your HSA with payroll deductions
Local education and local government agencies have the
- Local HealthSavings CDHP option
Pharmacy costs with HealthSavings CDHP options
Instead of paying pharmacy copays,
- you pay the full negotiated cost of the prescription drugs up to the annual deductible,
- then you pay the coinsurance until the annual out-of-pocket maximum is reached,
- the plan covers 100 percent of in-network costs after that.
Note: For certain 90-day chronic maintenance drugs (e.g., hypertension, high cholesterol) you pay only 10 to 20 percent coinsurance and do not have to meet your deductible first.
Payflex administers the Health Savings Account.
- Phone: 855.288.7936
- Website: stateoftn.payflexdirect.com
Health Savings Account (HSA)
With a HealthSavings CDHP option, you also have a health savings account (HSA), a tax-free savings account that you can use to pay for your deductible, coinsurance and other qualified expenses. The banking vendor who helps administer your HSA is PayFlex. Check out this video for more information about how the HSA works. Note: The video refers to an HDHP, which is another term for CDHP.
The HSA is triple tax-free:
- Your contributions are made pre-tax,
- Your account balance earns interest tax-free, and
- Your distributions are tax-free if they are used for eligible medical expenses.
You can contribute money through payroll deduction if offered and in some cases your employer may contribute money to the account for you.
The money in the HSA is your money. The balance rolls over at the end of the year. As long as you use it for eligible medical expenses it will be tax free. And if you leave or retire, you take it with you. It can help fund health expenses tax free when you retire and at 65, it can be used for non-medical expenses with no penalty charges (but it will be taxed). If you use the HSA money for non-medical expenses prior to 65, you will pay a penalty as well as taxes.
When you enroll in the HealthSavings CDHP, a HSA is set up for you and you register the account. You can pay for services online or with a debit card that will be provided by PayFlex. You can order additional cards for your spouse or dependent.
The IRS determines the maximum amount that can be contributed to your HSA. In 2017, you can contribute up to $ $3,400 (single) or $6,750 (family) annually on a pre-tax basis.
If your employer contributes to your account, that is included in the annual maximum amount.
Individuals age 55 and older can make an additional annual catch-up contribution of $1,000.
State and Higher Education: If you agree to fulfill the 2017 Partnership Promise, you are eligible for the Promise HealthSavings CDHP and the state will put money into your HSA at the beginning of the year: $500 for employee only coverage or $1,000 for family coverage.
If your coverage effective date is September 2 through the end of the year, you will not receive the state contribution towards your HSA.
Frequently Asked Questions about HealthSavings CDHP options
What is the HealthSavings CDHP insurance plan?
The HealthSavings CDHP is a consumer driven health plan (CDHP) with a Health Savings Account (HSA). It uses the same provider networks and discounted rates as the PPOs.
You control and manage more of your healthcare dollars. It has a higher deductible and lower monthly premiums. Instead of copays, you pay coinsurance after you meet your deductible until you reach your maximum out of pocket. Then you are covered 100 percent.
You also have a HSA, a tax-free savings account that you can use to pay for your deductible and coinsurance expenses.
For state and higher education employees, if you agree to the Partnership Promise, the state will put money into your HSA in 2017: $500/individual and $1,000/family. If your coverage begin date is after September 2, the state contribution for 2017 is not available.
Local government and local education employees should check with your agency benefits coordinator to see if your agency will provide funding for your HSA.
What is a Health Savings Account?
A health savings account (HSA) is a tax-exempt account that individuals can use to pay or save money for qualified medical expenses on a tax-free basis. Our HSA is administered by PayFlex. The money in the account earns interest and when it reaches $1,000 you can invest it.
How does an HSA benefit me?
- The money you save in the HSA (both yours and applicable state or local agency contributions) rolls over each year and collects interest. You don't lose it at the end of the year.
- You can use money in the account to pay your deductible and qualified medical, vision and dental expenses.
- The money is yours! You take the HSA with you if you leave or retire.
- You will receive a PayFlex debit card for youself and may order additional cards for your spouse and/or dependent(s) to use for medical expenses.
What are the HSA tax benefits?
The HSA offers a triple tax advantage on money in your account:
- Both employer and employee contributions are tax-free
- Withdrawals for qualified medical expenses are tax-free
- Interest accrued on HSA balance is tax-free
The HSA can be used to pay for qualified medical expenses that may not be covered by your plan (like vision and dental expenses, hearing aids, contact lenses, acupuncture and more) with a great tax advantage.
Money in the account can be used tax-free for health expenses when you retire. And, when you turn 65, it can be used for non-medical expenses. Non-medical expenses will, however, be taxed.