HomeMy WebLinkAbout7 Health Savings Accounts Agenda Item # 7
Public
ACTION
To: Board of Directors
From: Nancy Waters
Date: October 05, 2010
Subject: Consideration of an Optional High Deductible Health Plan and
Health Savings Accounts
1. WHY THIS MATTER IS BEFORE THE BOARD
Board authorization is necessary to implement a new health plan option and health-
savings account.
2. HISTORY
Currently, the District offers only one health plan option through National Rural Electric
Cooperative Association (NRECA). It is a Preferred-Provider Plan, or PPO.
3. NEW INFORMATION
NRECA offers other types of health plan options, one being a High Deductible PPO
Plan (HDHP) that works along with a Health Savings Account (HSA). This voluntary
plan has a higher deductible of $1,200. The premium cost for the HDHP is less
expensive than the existing PPO plan. The savings are then shared with the employee
with a percentage contributed by the District in the employee's HSA.
HSA's are employee-owned, tax-exempt accounts that can be used for out-of-pocket
medical expenses during the year or anytime in the future. Funds can carryover from
year to year and the account is fully portable should the employee leave or retire.
Staff would like to offer this plan to District employees on a voluntary basis, with the
premium cost savings to be split by 70/30, with 70% going to the employee's HSA.
This savings split is biased in favor of the employee because the employee is the
party being exposed to increased risk.
The following chart shows the annual savings between the two plans, the 70%
contribution by the District to the Employee's HSA, and the District's savings. Staff
proposes to fund the HSA, half in January and half in July.
Annual 70% Contribution Annual District
Savings to HSA Savings
Individual Only 2,116.32 1,481.42 634.90
Ind + Spouse 5,040.48 3,528.34 1,512.14
Ind + Children 4,762.32 3,333.62 1,428.70
Ind + Family 7,321.68 5,125.18 2,196.50
4. FISCAL IMPACT
This voluntary plan will result in a cost-savings to the District ranging from $635 to
$2,196 per participant. The total amount of savings depends on the number of
employees that choose to enroll in the HDHP.
5. RECOMMENDATION
Authorize Staff to offer the NRECA HDHP and HSA option to employees, with
seventy-percent of the cost difference contributed to the employee's HSA.
/417
Mary Cha an v Michael D. Holley
Administrative Services Manager General Manager