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Health Insurance

What Is a "High Deductible Health Plan" (HDHP)?

  • Health insurance plan with minimum deductible of:
    - $1,000 (self-only coverage)
    - $2,000 (family coverage)
    - These amounts are indexed for inflation
  • Annual out-of-pocket (including deductibles and co-pays) cannot exceed:
    - $5,000 (self-only coverage)
    - $10,000 (family coverage)
    - These amounts are indexed for inflation
    (Revised August 18, 2004)
  • Reasonable benefit designs not counted toward the out of pocket maximum include:
    - Lifetime limits on benefits
    - Limits to usual, customary and reasonable (UCR) amounts
    - Limits on specific benefits
  • Maximum number of days or visits covered
  • Maximum dollar reimbursements
    - Pre-certification requirements
    ( Revised August 18, 2004 9)
  • HDHPs can have:
    - first dollar coverage (no deductible) for preventive care
    - higher out-of-pocket (copays & coinsurance) for non-network services
    ( Revised August 18, 2004 10)

Conflicts with state benefit mandate

  • State mandated first dollar coverage will result in plan losing status as HDHP - NJ requires first dollar coverage of any treatment of lead poisoning
  • Transition relief for state mandates in place on January 1, 2004
    - Plans containing such mandates will not lose status as HDHP prior to January 1, 2006
    - After that date, plan will lose status as HDHP if such mandates remain in place
    ( Revised August 18, 2004 11)

Prescription Drugs

  • HDHPs must apply costs of prescription drugs to the annual deductible or the individual may not contribute to an HSA
  • Transition relief provided until January 1, 2006 if the individual is covered by a prescription drug benefit provided by a separate plan or rider from the HDHP
    (Revised August 18, 2004)

Preventive Care

  • Safe harbor list of preventive care that HDHP can provide as first-dollar coverage before minimum deductible is satisfied:
    - Periodic health evaluations (e.g., annual physicals)
    - Screening services (e.g., mammograms)
    - Routine pre-natal and well-child care
    - Child and adult immunizations
    - Tobacco cessation programs
    - Obesity weight loss programs
  • Can apply co-pays to preventive care services
    (Revised August 18, 2004)
  • Preventive care generally does not include any service or benefit intended to treat an existing illness, injury or condition
  • Certain drugs and medications can be considered preventive care.
    - Drugs taken by a person who has developed risk factors for a disease that has not yet manifested itself or to prevent reoccurrence of a disease
    - Example: Cholesterol-lowering medication for those with high cholesterol
    (Revised August 18, 2004)

Information as of 2004