March 2011

In This Issue

HSA Limits Stay the Same for 2011

For calendar year 2011, the maximum Health Savings Account (HSA) contribution that can be made is $3,050 for employee-only coverage ($4,050 if you are age 55 or older and eligible to make catch-up contributions) and $6,150 for family coverage ($7,150 if you are age 55 or older and eligible to make catch-up contributions). Family coverage is defined as coverage for an eligible individual and at least one other individual.

For more information about HSAs please contact your account representative or call us at 800-662-7917. If your employees have established HSAs through Mellon, you may also contact them directly with questions. Mellon has a dedicated employer support line, 866-712-4551.

Health Care Reform and HSAs

Outlined below are the health care reform changes with the most immediate impact on Health Savings Accounts:

Effective January 1, 2011, amounts paid for over-the-counter drugs will no longer be qualified medical expenses eligible for reimbursement from an HSA unless the over-the-counter drug was prescribed by a doctor. The prescription requirement only applies to over-the-counter drugs. It does not apply to expenses for other over-the-counter items such as insulin and diabetic supplies, bandages, band-aids or contact lens supplies. These items continue to be reimbursable from an HSA without a doctor's prescription.
Also effective January 1, 2011, the penalty for reimbursements of nonqualified medical expenses from your HSA will increase from 10 to 20 percent.

Making the Most of HSAs

As a key component of consumer driven health care, a health savings account (HSA) is a great way for employees to save money for future medical expenses. By saving money in an HSA, either through their own contributions or those made by the practice, an employee can pay for qualified medical expenses, including eyeglasses, dental care, and medical supplies, with a triple tax advantage. Contributions are tax-deductible, the interest and capital gains are tax-free, and any money that is withdrawn for qualified medical expenses is also tax-free. Employees are encouraged to make the most of their HSAs and actively participate in health care decisions. If medical expenses are low and contributions are made regularly, the account can accumulate significant assets as deposits roll over from year to year.

In order to have an HSA, you must have a qualified high deductible health plan (HDHP). The North Carolina Medical Society Employee Benefit Plan is your "one-stop shop" for HDHPs and HSAs. The NCMS Plan has many qualified HDHP plan options from which you can choose, and all HDHP plans can be paired with HSAs from an integrated HSA provider, Mellon Bank.

If you want to use your HSA as a retirement vehicle, make the maximum allowable deposits each year and let the money accrue. Similar to a 401(k) or IRA, you'll be able to invest your HSA in a variety of funds through your HSA administrator. To put it into perspective: A well-diversified HSA may grow by 7 percent or more each year, and over the course of 30 years, a $1,000 yearly contribution could turn into $110,000.

If you use your HSA funds for nonmedical expenses before age 65, you will be subject to income tax and a penalty on the money you withdraw. Once you reach 65, you'll be eligible for Medicare and your out-of-pocket expenses will most likely drop. However, once you enroll in Medicare you won't be able to make any more contributions to your HSA. Additionally, if at any point you are no longer covered under a HDHP, you can still use the money in your account (now or later) but can no longer make contributions.

Already in your fifties? Don't worry! The IRS will allow anyone 55 or older to make catch-up contributions of an additional $1,000 per year.

The bottom line, though, is to make sure your employees get the care they need, understand the cost of the care provided, their benefits and what may be their responsibilty after the claims are processed. The NCMS Plan's administrator (BCBSNC) can be a valuable resource for evaluating costs and benefits of care for you and your employees. Employees can reach Member Services at 877-258-3334 or use online resources including a Health Care Cost Estimator.

For more information about HSAs and HDHPs, please contact your NCMS Plan representative.

Eat Smart, Move More, Weigh Less

Have you considered beginning or enhancing your health promotion efforts in 2011? This New Year, help your employees make their plans of a healthier diet and regular exercise a lifetime goal, not just a fleeting resolution.

Did you know that 2 out of 3 adults are overweight or obese? Eat Smart, Move More, Weigh Less is a 15-week weight management program that uses strategies proven to work. The program is offered to worksites and other groups interested in eating smart, moving more and achieving a healthy weight. Each of the one-hour lessons informs, empowers and motivates participants to live mindfully as they make choices about eating and physical activity. The program provides opportunities for participants to track their progress and keep a journal of healthy eating habits and physical activity behaviors.

Consider offering Eat Smart, Move More, Weigh Less at your practice. Visit http://www.esmmweighless.com/ for more information. Use the "Instructor Locator" to find a trained instructor near you to lead a Weigh Less class. The average price per participant is $20-$40 depending on the county you reside. Sessions are delivered at a public location or could be delivered on-site.

Jason Horay, NCMS Plan Health Promotion Coordinator, partners with practices to assess their appetite for health promotion, reviews and interprets NCMS Plan utilization data to target the most cost-productive areas and assists in the creation of short term and long term program action plans that will empower employees to maintain, improve and manage their health. If your practice is interested in creating or building upon a culture of health, please contact Jason Horay at 919-878-7530 or jason.horay@mmicnc.com.

Ask George

Question: George, our practice has an employee that is not working full-time hours but would like to have the health benefits. We know that only "full-time" employees are eligible for the coverage but what defines a full-time employee and how can we get this employee covered?

Answer: You may be surprised to know that the NCMS Plan gives participating practices a choice of how they define a full-time employee. A full-time employee is eligible for benefits if they are regularly scheduled to work at least twenty-four (24) or thirty (30) hours per week depending on your practice's preference. If a practice chooses the 24 hour definition, then any employee, physician or non-physician, must be offered coverage if they meet that criteria.

If you have questions about your practice's eligibility definition, or would like to change your full-time employee definition, please contact me at 919-878-7561 or george.fanelli@mmicnc.com.

About the North Carolina Medical Society

As the largest physician organization in the state, the North Carolina Medical Society (NCMS) is devoted to representing the interests of physicians and protecting the quality of patient care. The NCMS Plan, sponsored by the NCMS, is the only statewide employee benefits plan designed specifically for North Carolina physicians.

For more information about many other benefits of NCMS membership, visit http://www.ncmedsoc.org/.