HDHP with HSA in Teachers' Contract

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Goinganontoday
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Joined: Sat Jan 14, 2017 3:58 pm

HDHP with HSA in Teachers' Contract

Post by Goinganontoday »

I would appreciate help in creating some questions that would assist me and my colleagues in evaluating a potential change to our contract. My teachers' union is seeking to open up the contract in order to change the current PPO insurance to a HDHP with HSA in exchange for a guaranteed 1% increase in salary for the year after the current contract would have ended. There will be a meeting/presentation to answer questions prior to the vote. While I have some basic knowledge of HSAs, I want to make sure that I am prepared to ask questions that will best help me to evaluate the options.

What questions would you ask in this situation and/or what information would you still require? The basic information that we have been given so far is below.

1. Deductible of $2000/$4000. District to pay $1000 towards deductible.
2. Max out of pocket is $4000/$8000.
3. 80/20 copayment after deductible.

We have not been provided information about the premiums. We do not know which company will be administering the HSA (any good/bad ones to look out for??).
rooms222
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Re: HDHP with HSA in Teachers' Contract

Post by rooms222 »

Our union was forced to have everyone move to an HDHP with HSA eligibility. You should seek to have the deductibles be the minimum allowed under the IRS rules- $1300 self/$2600 family, subject to annual IRS adjustments for inflation. I think our OOP maximums are $2600 self and $4600 family (Blue Cross website is on maintenance mode so I can´t check). We have 10% coinsurance after deductible.

This has been a difficult transition for many of our members. I have seen lots of people who are not well organized financially self-deny needed care, not just optional items, especially because they chose not to have an HSA or have no funds in it. If you are on the negotiating committee, trying to minimize the effects for all your members should be a priority. Our government officials recognized some of these problems as real while also wanting to save money.

Also, the first year will be tough. Try to have the employer give an initial amount to the HSA to all members upon commencement of the plan so there are funds to pay for needed expenses. Our government made it optional to put in the HSA or get as a bonus. Many members did not trust the HSA custodian, so this created problems.

Watch out whether the network in the new plan is the same as the old plan or not.

Finally, for the more sophisticated users, work to get language in the contract that they will allow HSA payroll deduction to a choice of trustees. This will allow you to pick a low cost bank and still not pay SS tax and FICA on the deductions as they occur through payroll.

A degraded dental plan instituted at the same time caused as many complaints as the HSA.

Education is key to this change, and recognize that the government or vendor may not provide it. Also, many people have no desire or interest in this change, and getting their attention is important.
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Nate79
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Re: HDHP with HSA in Teachers' Contract

Post by Nate79 »

There are a ton of threads on here comparing PPO to HDHP plans from a financial perspective. I suggest you read these threads so you understand how to compare to plans and how to do the math. Without all the cost information you can not compare a PPO to HDHP.
Ron Ronnerson
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Re: HDHP with HSA in Teachers' Contract

Post by Ron Ronnerson »

I'd compare the new, proposed benefits to what you have currently (in terms of deductible, max out of pocket, copay, etc.). If what is in place now happens to be good, is it worth it to give that up for a 1% salary increase? If the average teacher makes $50k in your district, they'd end up getting $500 a year more in their pocket and then have to pay tax on that amount as well.

That being said, I chose to work for a district that offers no health benefits. We gave up health benefits in exchange for about a 10% higher salary (for the average teacher's salary at the time). The change occurred for our district a number of years ago and some teachers are unhappy that these benefits were bargained away long ago while insurance costs have gone up a lot in the meantime. However, the vast majority of teachers are happy as they are in my situation: benefits provided by a spouse's employer while we get bigger salaries. Even though some in our union have advocated reopening negotiations for benefits, it never goes anywhere as the majority of teachers prefer the higher salaries. In any case, during our annual salary negotiations, it's still brought up how much health insurance costs are going up so that we can get better increases than we might otherwise. Sorry about the longish side note - just thought maybe it would provide a comparison point for how negotiations on health benefits went in another district.
Spirit Rider
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Re: HDHP with HSA in Teachers' Contract

Post by Spirit Rider »

Goinganontoday wrote:1. Deductible of $2000/$4000. District to pay $1000 towards deductible.
2. Max out of pocket is $4000/$8000.
3. 80/20 copayment after deductible.
This is probably just imprecise terminology, but be very sure this is an HSA contribution and not a reimbursement before the minimum deductible ($1300/$2600) is met. The latter would make you ineligible for an HSA.
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grabiner
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Re: HDHP with HSA in Teachers' Contract

Post by grabiner »

Goinganontoday wrote:What questions would you ask in this situation and/or what information would you still require? The basic information that we have been given so far is below.

1. Deductible of $2000/$4000. District to pay $1000 towards deductible.
2. Max out of pocket is $4000/$8000.
3. 80/20 copayment after deductible.
These numbers make for a decent deal. The two most important issues: What is the change in the plan cost? Is the provider network the same?

To see why this is a decent deal, consider a family in the 25% tax bracket. The $1000 in the HSA is free money, and they can contribute $5750 more to the HSA, which is a $1438 tax benefit (compared to, say, putting the money into Roth IRAs); the tax savings is even more if there is state tax. So they start out $2438 ahead of the conventional plan, adjusted by any difference in plan costs. If they hit the $4000 deductible, they probably still come close to breaking even; in order to have $4000 in medical expenses,they would have a lot of deductibles, co-payments, and prescriptions under the conventional plan. If they don't come close to the $4000 deductible, or if they hit the out-of-pocket maximum, then come out ahead.
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Topic Author
Goinganontoday
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Joined: Sat Jan 14, 2017 3:58 pm

Re: HDHP with HSA in Teachers' Contract

Post by Goinganontoday »

Thank you all so much for your help. I appreciate your advice. I am really enjoying learning more about these issues and then trying to help my colleagues understand as well.
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