1. Before a plan can file a Form 5500 using EFAST2, the appropriate individuals must register at the EFAST2 website.  This process involves identifying the party who will complete the Form 5500 and any and all parties who will sign it.  One individual can register for more than one role.  All users are encouraged to register early to avoid last-minute errors.

2. Once an individual registers, he or she cannot go back to choose additional roles, so it is important to understand the roles each person will play before the registration process begins.  The five available roles are Filing Author, Filing Signer, Schedule Author, Transmitter and Third Party Software Developer.

3. The individual who completes the online Form 5500 must register as the Filing Author and the individual who will sign the online Form 5500 must register as the Filing Signer.

4. The credentials an individual uses to register are personal and are not linked to the company.  The registration process assigns a unique identification, personal identification number and password to each user.

5. The Form 5500 can be completed either by the Filing Author or a third-party administrator.  If your TPA typically prepares your Form 5500, verify that the TPA is properly certified to prepare and submit the filing.

6. The Internal Revenue Code permits either the plan sponsor/employer or the plan administrator to sign the filing.  However, the Form 5500 instructions state, “Any Form 5500 that is not electronically signed by the plan administrator will be subject to rejection and civil penalties under Title I of ERISA.”

7. Filings submitted under the EFSAT2 program will be posted on DOL’s website, so all social security information should be excluded from the filings. In addition, if your plan is a defined benefit plan and you maintain a company intranet, you must post certain information from the Form 5500 on the company’s intranet website.

8. Plans are no longer required to attach a copy of the Form 5558 (application for extension of time to file) to the Form 5500 filing. Filers who previously submitted a Form 5558 for the plan year now simply check the appropriate box on line D. Plans must retain a paper copy of the Form 5558, if any, with the plan’s permanent records.

9. Schedule E and Schedule SSA have been removed from the Form 5500. The annual registration statement must now be filed directly with the Internal Revenue Service.

10. Plans will be required to retain a paper copy of the Form 5500, with all required signatures, for their permanent records.

EBN asks if the goal is to save paper and be more green/efficient, why is there a requirement to keep a paper copy?   I’m from the government and I’m here to help….

HSAs and Health Reform

Last summer, as the health reform debate was heating up, I met with a Democrat member of Congress (who happens to sit on the House Ways and Means Committee).  At the time, the big push was still for the “public option”, and I was told by this MOC that Democrats don’t like HSAs.  As the debate proceeded, I would continually make the point that the HSA model was the most successful innovation in health finance of the last decade, and there were success stories everywhere that you turned.  There were numerous success stories in the private sector among employers both large and small, and those with low, middle, and higher income people.  Very importantly, the concept also worked in the public sector (e.g., Indiana).

We all know about the process that lead to the passage of a bill in March of 2010—sausage making at its worst.  As the dust settles and we begin to assess how best to move forward under the new health reform laws, I believe that it is full steam ahead for the HSA model.  There were certain policy changes that may have a slightly negative impact, but they are minor.  The changes are as follows:

• Penalties for the use of HSA funds for “non-qualified” expenses will go up.
• The list of “eligible medical expenses” was pared back somewhat with the removal of over-the-counter (OTC) drugs, unless prescribed by physician.
• Contributions to an HSA will be limited to the level of your high deductible health plan.

Friends, it could have been much worse.  The private sector now has an opportunity to show the government what works, so let’s take advantage of it.

Where Do We Go From Here?

My hope, and expectation, for the future of health reform is that we keep the positive features of Obamacare (e.g., underwriting changes, health exchanges) and repeal the negative aspects (e.g., some new regulation, confusing tax credits).  In addition, we need to keep pushing for other changes that were not, but should have been, part of health reform such as:

• Increased competition (e.g, repeal of health insurer anti-trust exemption, allow competition across state lines)
• Transparency
• Tort reform

In short, we need to GET TO WORK.  The health care system remains an employer-based system, so employers need to roll up their sleeves and manage the heck out of their health benefits.  That means a move away from business as usual—give your employees appropriate incentives and ‘skin in the game’, developing a multi-year plan, promote wellness, and use competition to shift the balance of power away from insurance companies and to you, the purchaser of health benefits.  In most cases, there is a role for HSAs in your health benefits strategy.

Governor Daniels’ Mission

Mitch Daniels, a former Director of the U.S Office of Management and Budget (OMB), assumed the Indiana governorship in January of 2005. Gov. Daniels knew that he would have to immediately begin to address the State’s annual $600 million budget deficit if he was succeed in his mission to improve quality of life in the Hoosier state. Indiana has over 30,000 state employees, and one of Daniels’ early decisions was to offer an HSA option to these workers.

The HSA Model for Indiana

The principle behind the HSA concept is that individuals spend their own money for routine expenses, and they are “insured” above some pre-determined, high deductible level. If they incur high expense due to a serious illness or injury, they have full insurance coverage above the deductible. But otherwise, they are spending their own money and they are therefore more likely to be concerned about the cost and value of the services they are receiving. For those Indiana workers choosing the HSA, it works as follows:

• Employees have a choice between a traditional PPO model and an HSA.
• Depending on whether the employee chooses single or family coverage, the state will deposit money into an account controlled by the employee, used to pay for all health bills (average deposit in Indiana is $2750 per employee per year).
• After the deductible, the state and employee share costs up to an out-of-pocket maximum, after which the employee has 100% coverage.
• Employees pay a share of their premium for PPO coverage but there is NO PREMIUM paid by the state worker for their HSA coverage.

In the first year of the program, 4% of Indiana workers signed up for the HSA, and there has been a steady growth in participation since.

Financial Results

Today, over 70% of Indiana workers participate in the HSA and the financial impact has been impressive:

• In 2010, Indiana will save at least $20 million in its state budget from this program.
• Workers choosing the HSA option save an additional $8 million compared to workers in the traditional PPO plan.
• The average balance in the HSA bank accounts is $2000 and growing rapidly, thereby adding to a worker’s take home pay.
• HSA participants spend an average of only $65 in medical costs for every $100 incurred by traditional PPO plan participants (e.g., for prescription drugs, costs are $18 lower per script).

The success of Indiana’s health benefits program is a model for other states as well as for private sector employers—it is a ‘win-win’ for both the employer and their employees.

Impact on Employee Satisfaction and Consumer Behavior

More good news!! As the enrollment in the HSA model has steadily grown, the participants seem highly satisfied—only 3% have chosen to switch back to the traditional plan. The state reports that workers are visiting emergency rooms and physicians 67% less frequently than co-workers with traditional health care, and they are admitted to hospitals half as frequently. Most importantly, there is no apparent evidence identified by the state or its consultants that HSA participants are neglecting to receive needed healthcare services in order to save money. Indiana employees are satisfied; they are receiving good health care and it is costing less.

Implications For Business

At RMP, we’ve been setting up programs like the one in Indiana longer that any other health insurance advisor in the area. My article, called HSAs Work, Here’s Why was published in the Philadelphia Business Journal in 2006. RMP client case studies, particularly from those who have been with us for a few years, can attest to this fact. The concluding words from Governor Daniels best sum up this story:

The prevalent model of health plans in this country in effect signals individuals they can buy health care on someone else’s credit card…. What seems free will always be overconsumed, compared to the choices a normal consumer would make. Hence our plan’s immense savings.

Our conclusion—it IS possible to get equal or better healthcare for less money. If you are buying health benefits for your employees, or otherwise purchasing healthcare services, you can most likely do better. Call us at 610-975-4415 if we can help.