What is an Explanation of Benefits (EOB)?

An EOB is a description your insurance carrier sends to you explaining the health care benefits that you received and the services for which your health care provider has requested payment.

What is Coinsurance?

Coinsurance is a provision in your health plan that describes the percentage of a medical bill that you must pay and that which the health plan must pay.

What is Out-Of-Pocket Maximum?

The maximum amount (deductible and coinsurance) that an insured will have to pay for covered expenses under a plan. Once the out of pocket maximum is reached the plan will cover eligible expenses at 100 percent.

What is a Pre-Existing Condition?

A pre-existing condition is a physical or mental condition that existed prior to being covered on a health benefit plan. Some insurance policies and health plans exclude coverage for pre-existing conditions. For example, your health plan may not pay for treatment related to a pre-existing condition for one year. You should check with your insurance carrier to learn how your organization’s health plan treats pre-existing conditions.

What is a Deductible?

A deductible is the amount of money you or your dependents must pay toward a health claim before your organization’s health plan makes any payments for health care services rendered. For example, a plan participant with a $100 deductible would be required to pay the first $100, in total, of any claims during a plan year.

What is a Preferred Provider Organization (PPO)?

A PPO is a group of hospitals and physicians that contract on a fee-for-service basis with insurance companies to provide comprehensive medical service. If you have a PPO, your out-of-pocket costs may be lower in a PPO than in a non-PPO plan.

What is Utilization Management?

Utilization Management is the process of reviewing the appropriateness and the quality of care provided to patients. UM may occur before (pre-certification), during (concurrent) or after (retrospective) medical services are rendered. For example, your health plan may require you to seek prior authorization from your utilization management company before admitting you to a hospital for non- emergency care. This would be an example of pre-certification. Your medical care provider and a medical professional at the UM company will discuss what is the best course of treatment for you before care is delivered. UM can reduce unnecessary hospitalizations, treatment and costs.

Health Savings Account

What expenses are eligible for reimbursement from my HSA?

HSA dollars may be used for qualified medical expenses incurred by the account holder and his or her spouse and dependents. Qualified medical expenses are outlined within IRS Section 213(d). In summary the IRS Section 213(d) states that “the expense has to be primarily for the prevention or alleviation of a physical or mental defect or illness.”

In addition to qualified medical expenses, the following insurance premiums may be reimbursed from an HSA:

  • COBRA premiums
  • Health insurance premiums while receiving unemployment benefits
  • Qualified long-term care premiums*
  • Any health insurance premiums paid, other than for a Medicare supplemental policy, by individuals ages 65 and over

Are dental and vision care qualified medical expenses under an HSA?

Yes, as long as these are deductible under the current rules. For example, cosmetic procedures, like cosmetic dentistry, would not be considered qualified medical expenses.

What expenses are NOT eligible for reimbursement from my HSA?

The following expenses may not be reimbursed from an HSA:

  • Premiums for Medicare supplemental policies
  • Expenses covered by another insurance plan
  • Expenses incurred prior to the date the HSA was established
  • Over-the-counter drugs purchased without a prescription (except insulin)

What is a coverage gap?

This is the gap between total out-of-pocket expenses associated with your high-deductible health plan and your HSA dollars. For example, assume that you have a $2,000 deductible, a $4,000 maximum out-of-pocket, and either you or your employer has contributed $2,000 to your HSA account. If your medical costs incurred exceed $4,000 for the year, then you are financially obligated to pay the difference between your total maximum out-of-pocket ($4,000) and your HSA balance ($2,000) – ($4,000 – $2,000 = $2,000).*

What happens when my HSA funds run out?

You may be financially responsible for any eligible medical expenses that fall within the coverage gap.

Can I use my HSA dollars for non-eligible expenses?

Money withdrawn from an HSA account to reimburse non-eligible medical expenses is taxable income to the account holder and is subject to a 20 percent tax penalty – unless over age 65, disabled or upon death of the account holder.

When can I start using my HSA dollars?

You can use your HSA dollars immediately following your HSA account activation and once contributions have been made.

When do I contribute to my HSA account, and how often can I?

You, your employer or others can contribute to your HSA account through payroll deductions or as a lump sum deposit.* You can contribute as often as you like, provided your (and your employer’s) total annual contributions do not exceed these 2010/2011 limits:

  • $3,050 for individual coverage
  • $6,150 for family coverage

Individuals that are age 55 or older may be eligible to make “catch-up” contributions up to $1,000.

How do I manage my HSA?

Your Health Savings Account (HSA) is your account; the HSA dollars are your dollars. Since you are the account holder or HSA beneficiary, you manage your HSA account. You may choose when to use your HSA dollars or when not to use your HSA dollars. HSA dollars pay for any eligible expense. Most commonly, the HSA account holder will use HSA dollars to pay the out-of-pocket expenses (i.e., deductible and coinsurance) associated with their high deductible health plan.