GV to save money with new heath savings account

Courtesy Photo / gvsu.edu
Dave Smith, Director of Benefits and Wellness

Courtesy photo

Courtesy Photo / gvsu.edu Dave Smith, Director of Benefits and Wellness

Jessie Miller

In an effort to reduce staff medical expenses, Grand Valley State University will implement a new health savings account for 2012.

“Since the concept is fairly new, GVSU is still collecting data to find trends in cost-savings, but there are already visible benefits of the newly implemented plan,” said Dave Smith, director of Benefits and Wellness at GVSU.

GVSU teamed up with the United Bank to create the HSA bank accounts, which go into effect Jan. 1. The HSA is set up so that insurance holders create an individual account that allows them to use their tax-free dollars to pay for their health care expenses.

The IRS mandates that the HSA be coupled with the High Deductible Health Plan PPO (HDHP), but the HSA can also cover other qualified services such as dental expenses and eye care.

“Each year, GVSU pays for a portion of insurance holders’ medical expenses, deposited into their HSA bank account,” Smith said. “Like the majority of the GVSU health plans, the HSA is self-insured; GVSU pays for the health services out of its budget rather than through an insurance company.”

The difference between the HSA and other health care plans is that there are no co-pays or co-insurance associated with the HDHP PPO in the HSA plan. Insurance holders must pay the discounted price for all prescription drugs.

Until the deductible is met, the HSA forces insurance holders to pay for their medical expenses out of pocket until they reach their deductible max, and then the insurance coverage pays them back in full.

“For some this may be too great a risk, but one benefit of the HSA is that insurance holders can take money out of their HSA instead of paying ongoing taxes,” said Bart Bartels, Campus Sustainability manager.

“The HSA provides a triple tax benefit; contributions by GVSU and the faculty and staff members are made tax free, the account earns interest tax free, and when the funds are spent on qualified medical expenses (like deductibles) there is no tax,” Smith said.

Norman Christopher, executive director of the Sustainable Community Development Initiative, just joined the HSA and said it is doing a good job as an alternative to the other health plans.

GVSU is collecting data of a potential cost-cutting trend in prescription drugs associated with the new HSA plan, which will measure how many prescriptions are filled with a generic drug. In the first six months of 2011, the generic dispensing rate went up six percent.

“That represents about a 15 percent savings to our faculty and staff members,” said Smith.

GVSU continues to study the trends associated with this new plan.

“Our goal is to manage our annual cost increase or trend so that is it consistently lower than our benchmarks,” Smith said. “We will do that by engaging our faculty, staff and their dependents to be the best consumers of their health care dollar as possible, encouraging participation in our multi-faceted wellness program and the ongoing promotion of preventive care.”

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