HR Memo 3/25/2013

TO:
SPU Faculty & Staff
FROM: Gary Womelsduff, Director of Human Resources
DATE: March 25, 2013
RE: SPU Medical Plan changes for 2013-14
During January and February it was announced that SPU was considering a High Deductible/
Health Savings Account (HDHSA) employee medical plan to be added for Plan Year beginning
July 1, 2013. After deliberation and review by faculty leadership and after receiving feedback from
many employees the President and Senior Leadership Team recommended in the Guideline
Budget plan for 2013-14 that SPU adopt a new HDHSA plan and it was approved by the Board at
their February meeting. The new HDHSA plan will become the new core employee medical plan
starting on July 1, 2013. The current PPO plan will continue in a modified form as an option for
employees.
Many employees attended the special “HSA 101” Forums where this new idea was explained,
even though we did not yet have final plan details or premiums to announce. During these past
several months, the University Finance and HR staff have worked with AON Hewitt benefit
consultants and in consultation with the Senior Leadership Team and faculty leadership to develop
all the final plan design and implementation issues, and we are pleased to provide the following
plan design details well in advance of the coming Open Enrollment (April 29 – May 17).
This letter is intended to give the highlights only, and there will be more details posted on the HR
website. Further, a new series of special Forums starting this week have been scheduled to
explain the new plan options. Please watch for the special separate announcement about changes
in this year’s healthcare Flexible Spending Account (FSA) timing for those employees who
currently have a healthcare FSA.
Medical Plan Options for 2013-14
There will be two medical plan options offered through Cigna this coming year, starting July 1,
2013:
1. Cigna “Open Access Plus” High Deductible/HSA Plan (HDHSA) -- $2,000 individual
deductible ($4,000 family). This will be considered the core plan at SPU, and there is no
monthly premium for employee only coverage. The HS Account (HSA) will be set up for all
eligible participants in this plan to receive University and employee pre-tax contributions to
cover medical costs that are charged to the employee as part of the higher annual
deductible. (An important exception to this is that preventive services will not be subject to
the deductible and will be fully covered by the plan.) All other medical costs including
pharmacy are subject to the deductible. There will be no co-pays on pharmacy or medical
services in the HDHSA plan because of the high deductible. If the deductible is reached,
the employee will be responsible for only 10% of allowable costs up to the annual Out of
Pocket Maximum.
The HS Account that will be established at JPMorgan Chase for HDHSA participants can be
accessed through the Cigna web site, and as noted a participant under the HDHSA plan will pay
for medical expenses out of the account. An employee that selects dependent or family coverage
will have to pay a monthly premium, but the premium will be no higher and in some cases will be

lower than dependent coverage under the University’s current PPO plan Option 2 that expires on
June 30, 2013.
The HS Account (HSA) will be funded by SPU as follows this first year:
SPU will contribute monthly - $84 for employee only coverage or $168 for employees with
family coverage. Over the course of a year this is $1,008 and $2,016 respectively. This
monthly SPU contribution is set in the annual operating budget of the University with the
intention of continuing at this level in subsequent years.
SPU will also add additional one-time contributions in July 2013 ($450 for employee only
or $900 employee and family) and in January 2014 ($450 for employee only or $900
employee with family) to the HS Account for those who elect the HDHSA during Open
Enrollment in May 2013 and who are still employed and on the plan at the time of these
special contributions. (If an employee does not elect the core HDHSA plan for 2013-14
they will not receive these special contributions.)
If one does the math, this means SPU would contribute $1,908 the first year for individual
covered employees (almost covering the $2,000 employee only deductible) and $3,816 for
employees with family coverage (nearly covering the $4,000 family deductible). The net
deductible exposure to family and dependents in the first year of the HDHSA is equivalent
to the exposure under the current PPO Option 1 plan, which ends on June 30, 2013. It
should be noted that, unlike the FSA, funds from the HS Account can only be spent up to
the current balance in the account.
In addition, employees can make their own contributions to the HS Account, which will be
deducted from the monthly paycheck on a pre-tax basis, and the amounts can grow taxfree
if not used, and it is tax free when it is drawn from the HS Account to cover a qualified
medical expense. Remember, any unused funds in the HS Account will roll-over year-toyear,
and the money is owned by the employee even if one leaves SPU or retires.
Further, it is anticipated, but to be confirmed a year from now based on the plan’s performance and
the status of University’s financial reserves, that SPU will offer a dollar-for-dollar match to
employee contributions to their HS Accounts up to $50 per month ($100 employee and family)
during plan year 2014-15, in addition to the regular SPU monthly contribution of $84 ($168
employee and family).
2. Cigna “Open Access Plus” PPO Plan – with a $500 individual deductible ($1500 family).
Right now in our planning we are considering continuing a PPO option indefinitely. This
plan is similar to the current “Option 2” $500 deductible plan, but the employee participant
will pay 10% co-insurance after reaching the deductible, rather than the current 20%. This
plan if chosen by an employee will also have a monthly premium for employee-only
coverage. The annual premium for dependent coverage will also be higher than the
HDHSA plan because of the lower deductible.
IRS Regulations
1. Of course there are some regulations the government places on HS Account plans in
order to gain the tax favored treatment. Based on current IRS rules, if an employee elects
the High Deductible plan, in order to also participate in the HS Account an employee:
• Cannot be covered under another medical plan (e.g., spouse’s employer plan) unless it
is also a High Deductible plan
• Cannot be participating in a healthcare FSA, or have a spouse who is participating in
one
• Cannot be claimed as a dependent on someone else’s tax return
• Cannot be currently enrolled in any part of Medicare
2. In order to prevent a prohibited dual coverage situation under SPU’s healthcare FSA plan

and the new HS Account, the SPU healthcare FSA Plan will be changed, which will affect
all current healthcare FSA participants. In order to be reimbursed from a current
healthcare FSA account, medical expenses must be incurred no later than June 30.
Dental and Vision expenses are still eligible for the extended “grace period” until August
31. This change does not affect the Dependent Care FSA plan.
3. If any of the above HS Account restrictions apply (such as a spouse who has a healthcare
FSA through their employer) an employee may still elect the High Deductible Plan during
Open Enrollment, but they may not participate in or contribute to an HS Account (either
SPU contributions or one’s own contributions) until the restriction no longer applies. For
example, if an employee’s spouse goes through an Open Enrollment with their employer in
December, and no longer elects a healthcare FSA in that plan, then the SPU employee
would be eligible to begin participating in the SPU HS Account in January if they had
already elected the HDHSA plan during the SPU Open Enrollment.
4. If an employee elects the High Deductible plan this year, but is unable to participate in the
HS Account for a period of time because of one of the four restrictions listed above, at the
point the employee is eligible to participate in the HS Account SPU will retroactively remit
all the monthly regular and special contributions that would have been made except for the
restrictions. The normal monthly scheduled contributions would also be made for the
remainder of the year. A participant may also begin making personal HS Account
contributions at this time. The retro-active “makeup” contributions will only apply to this first
plan year of the HDHSA plan. In other words, if an employee becomes eligible for an HS
Account after July 1, 2014 there will be no retro-active “makeup” contributions by SPU to
the HS Account for 2013-14 plan year.
5. Maximum annual HS Account contributions (SPU and employee combined) are currently
set by the IRS -- $3,250 for individuals and $6,450 for family coverage. Employees who
are age 55+ at some point during the calendar year may make up to $1,000 additional
personal contribution. Employees who elect the HDHSA plan and participate in the HS
Account may change their own contributions to the HS Account at any time throughout the
year.
6. Starting July 1, 2013 the Deductible Year will change to match the Plan Year (July 1 to
June 30) instead of the deductible being on a calendar year. For those who elect the PPO
plan, any deductible incurred during April, May and June 2013 will be applied to the new
Plan Year deductible beginning July 1, 2013. If an employee elects the High
Deductible/HSA plan, the new $2,000 ($4,000 family) deductible will begin on July 1, 2013.
The IRS does not allow any carryover from this year’s PPO deductible into the new
HDHSA plan.
Monthly Premium rates for the PPO and High Deductible Plans – 2013-14
Cigna "Open Access Plus" PPO Plan
Cigna "Open Access Plus" High
Deductible/HSA Plan
Employee (EE) $100 $-0-
EE & Spouse $474 $296
EE & Child(ren) $266 $ 97
EE & Family $680 $493

Other rates such as Dental, Vision, Additional Life Insurance and Long-Term Care will be shown
with Open Enrollment materials. Open Enrollment will be April 29 through May 17 this year.
Special Medical Plan Forums scheduled in March and April
For more information including detailed examples and information on how to choose the best plan
option for individual family and medical situations please plan to attend one of the following special
Forums:
Day Date Time Location
Tuesday 3/26/2013 12:30-1:30 Library Seminar Room
Thursday 3/28/2013 5:30-6:30 Library Seminar Room
Monday 4/1/2013 12:30-1:30 Library Seminar Room
Tuesday 4/2/2013 5:30-6:30 Library Seminar Room
Wednesday 4/3/2013 12:30-1:30 Library Seminar Room
Monday 4/8/2013 12:30-1:30 Library Seminar Room
Tuesday 4/9/2013 5:30-6:30 Library Seminar Room
Monday 4/22/2013 5:30-6:30 Eaton Science building 112
Wednesday 4/24/2013 5:30-6:30 Library Seminar Room
Thursday 4/25/2013 12:30-1:30 Eaton Science building 112