Friday, September 6, 2013

IBM Extend Health HRA accounts

I have been looking at various IBM chat boards to see what others are saying about the IBM shift to Extend Health.  I think I understand more about HRA accounts.  However, I have also seen A LOT of information posted that is not correct.  Anyone who is saying they know what specific products Extend Health will provide for us and/or the price of those products is either clairvoyant or they were able to hack into EH.  There are no products nor prices available yet and they will not be officially available until the beginning of October.

I do think the information floating around about HRA accounts is accurate.  I also dug back into my memory of health care changes.  Shame on me for not remembering it better as I was a manager and used to hold meetings on this stuff but I have tried to piece it together based on what I did recall and what I read. Here is my perspective.

In the late 1980s and early 1990s you might recall that there were many retirement incentive packages offered (and many jokes about being hit with a 2 by 4 to take a package).  Anyway, there was usually a component that included health care coverage that would come with the package.  Prior to those incentives when someone retired and became Medicare eligible, IBM covered both the part B premium costs and secondary insurance costs.  Successive retirement incentive packages would include warnings that if one did not take the package they would lose this or that guarantee of health care premium coverage.  In the beginning of 1997 health care premium assistance was eliminated.  Premium assistance is provided to retirees who retired prior to 1997 as a reimbursement.  The retiree files a claim with a third party company to get the reimbursement. I suspect there is a cap on the reimbursement for all employees.  I know this because my spouse, who retired in 1996, gets part B premium reimbursement but it caps at $900. That process is not being changed and is not part of EH.

Separate from that program, IBM subsidized retiree insurance.  What that means is they worked with insurance companies to create insurance offerings and paid part of the cost of a premium for us. In the late 1990s IBM told employees who were retirement eligible they would freeze this subsidy at a fixed amount per employee.  The amount was either $3000 or $3500.  I don't recall and I have seen both numbers being tossed around.  Let's assume it is $3000.  So, as insurance premiums increased from year to year, IBM passed along increases not covered by the $3000 cap to the retiree. We never saw that money and I will guess they had a pool of money so it wasn't literally $3,000/employee because some retirees did not use IBM insurance or used policies that cost less per year and some used policies that were more per year.

In the early 2000s IBM declared to employees who were not retirement eligible the subsidy was changing again.  For those employees, IBM would contribute a fixed amount of money to an account that would max out at $25,000.  So, if the employee got lucky and was not laid off prior to hitting the max, when they retired they would have a retiree subsidy assistance for as long as the $25,000 lasted.

Several years ago IBM totally removed the benefit --- ergo, there are some retirees that are "Access Only".

I am sorry I don't know the exact dates of all of those changes.  But you get the gist.

So, here's how that plays out with this move to EH.  Each of us will now get an HRA account that contains the subsidy we are eligible to receive.  The people who cap at $25,000 face the same process.  They can spend that money out of the HRA account until it runs out.  It rolls from year to year.

For people who get the $3000 subsidy - every year IBM will fund your HRA account with that money.  You then have to file paperwork to get that money as a refund for premiums and copays.  If you don't use it all or file paperwork to get it back by year end you will "lose it". You can only access that money if you buy an EH product.  In October you will be told exactly what will be in your HRA account in 2014.

An interesting aspect to this change is that IBM will likely now spend less than $3000/retiree because some will forget to file the paperwork and some might pick plans that don't use it all up.  So, it is another way for IBM to claw money back.  Sigh.

19 comments:

  1. Would you know if there will be an HRA for both my wife and me?..thanks

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  2. I tried to ask that question at the briefing and the presenter said he didn't know how the HRA would be funded. I do know that in the current IBM group plan if your wife did not work for IBM then you paid significantly more in premiums for you and your wife than if you both worked for IBM. For example, my spouse and I each worked for IBM and each paid $7/month for Aetna A Integration as separate enrollees or $14/month for both of us. If just one of us had been an employee the monthly payment would have been more like $90/month for both of us. That indicates to me that you did not get twice the subsidy of a single retiree. How they structure the HRA mechanics is also unclear - I don't know if each of you will have your own HRA or there will be one HRA. The presenter said we would know "in October" what the subsidy will be. The implication was we may not know on October 1st. If they give you separate HRAs the mechanics of reimbursement become a bit more onerous because you have to manage two accounts.

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  3. Thanks again for all your help..people who read your blog should feel lucky for all your info and comments.

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  4. Again, nice post! The $3500/3000 depended on when you retired. Those who retired before 1992 get the $3500 - this was in lieu of the reneging on the promise if you retired by the end of 1991, you would never be affected by any possible future caps on medical benefits. You had to sign an agreement to get this (along with the "up to" 52 weeks of pay to take the retirement package - another bone of contention as per the IRS rules (at the time) it was not to be taxed - a "coercion" agreement - and IBM took out taxes - and IRS would not refund them).

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  6. I just checked NetBenefits and I can't find any mention of my FHA account (maxed out at $25k plus interest) anymore. I had been planning to retire in June 2014 when I would become eligible to draw on FHA for Medigap premiums based on 15 years tenure in June. I'd like to find out if it matters anymore whether I wait until then, i.e. how does retirement date affect FHA/HRA value?

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  7. I don't know much about FHA accounts and I don't want to guess about the rules. Call the IBM employee service center and ask what happened to your FHA account and what are the FHA rules. Make sure to emphasize that you are an active employee. None of the EH stuff applies to you as long as you are not a retiree.

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  8. Where can I find a complete list of procedures, expenses that are covered or maybe procedures that are NOT covered. Could I use the HRA to pay a Dentist bill? In that case, I will not get the dental insurance.
    What about acupuncture?
    Maybe I really don't know what a Health Reimbursement Arrangement is.

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    1. According to the IRS ruling on HRA accounts, anything that is related to medical issues are eligible for reimbursement from an HRA account - insurance premiums, copays, provider fees. HOWEVER, it is up to IBM to decide exactly what they want to allow us to be able to reclaim and they were supposed to give that list to EH in November. There is a general description in the early IBM brochures that were sent to us from Dr. Rhee. According to the Extend Health agents they have not gotten the IBM list yet. However, it has been indicated in multiple places that dental expenses will be reimbursed from HRA money.

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  9. I have another concern about this change to extend health.
    The extend health agent told me that I had to change my advantage plan to a different ins company than I have in 2013. He said that I would not be eligible for the HRA subsidy if I kept the same company. Does that make any sense?
    I complained, but he insisted, so I changed from United Health Care to Humana. They are very similar plans, but I still think he was wrong.
    The hold times were very long when I went to a "specialist". I had to leave after 1/2 hour hold. I will call back and verify the change insurance company rule.
    Is Extend Health getting a kickback for enrolling people in certain companies.
    There is a huge amount of money involved.

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    1. IBM negotiated a contract with Extend Health to administer this transition. It must include as part of the contract that we HAD to buy an medical or prescription drug policy through EH. That gives EH commissions from the insurance companies and EH likely charges IBM a lower HRA administration fee because of that deal. Medicare law prohibits an insurance agent from adding their name to a policy already in place for a Medicare recepient. EH is an insurance agent to Medicare. Therefore, the only way EH gets policy commissions is if we purchase a new policy. The IBM-EH contract is what forced you to switch to a different Medicare Advantage plan. It's IBM's crappy contract with EH that forced you to change.

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    2. Thanks, That makes perfect sense.
      I figured that EH worked on commissions.
      So next year, I will have to switch again, correct?

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    3. No. EH will still be the insurance agent of record so you don't have to switch again. I don't know how insurance commissions work at all but will guess that the agent gets a commission for every year you stay with the same plan. Otherwise there would be no incentive for the insurance agent and they would try to get you to switch to a new plan every year.

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    4. I just googled it - they get paid a commission every year you stay with the policy.

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  10. I mailed in 2 SHAP forms for Medicare B reimbursement to Acclaris Reimbursement Center at PO Box 20571, Tampa, FL 33622, but they were returned. I'm sure I read somewhere in all this EH stuff that this benefit would not change. Anyone know an answer?

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    1. The SHAP process still works. You sent it to the wrong address. They changed the address several years ago. The form goes to PO Box 25171, Lehigh Valley, PA 18002-5171. Or you can fax it to 1-813-830-7900. You can also get a new form with the right address on netbenefits.com.

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  11. I am currently using the SHAP reimbursement for 80%, $900 annually for Part B. Can I still use SHAP for 80% and use Extend Health for 20% instead of using HRA for 100% of Part b reimbursement? If I have to use EH it amounts to almost half of my HRA which I have already allocated all $3000 to pay premiums. I noticed in above comments by Plato that the benefit stays the same if retired before 1996. Any Comments

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    1. The SHAP money you receive for part B reimbursement has nothing to do with the EH HRA funding process. It is a different program and is the same as it always was. The funds for that IBM program is administered for IBM through another company and, as you said, caps at $900. If you don't submit the claim to SHAP you will lose $900. So, in essence, your total reimbursement from IBM for medical expenses is $3,900 because you retired before 1996 but to get it you claim it two ways. There is no reason why you can't use the EH funding process to be reimbursed for your remaining part B payment (which is $358.80 if you are paying $104.90/month) if you have money left over in your HRA account after you pay your other insurance premiums. However, you must prove you paid the part B premium and IRS rules for proof for the payment is the Social Security 1099 form you receive in 2015 for what SS paid you. Included in that statement is what you paid for Medicare part B in 2014. So, you cannot submit a part B claim until the beginning of 2015. You would submit a claim for $358.80 with a copy of the 1099 form and ask for $358.80 even though the 1099 will show the total part B payment of $1258.80. It's important to not be double reimbursed for part B (or any medical expense claim). It is an IRS issue but I don't know what the penalty is for trying to do so. It might cause you to lose your HRA funding for the year. But you said you already have claims against your HRA for $3000 to pay other insurance premiums so maybe there is no balance left to get the $358.80?

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    2. Fantastic! Thanks for the reply, I will take the $900 and not claim the $358.80 on EH as I have max'ed it out anyway. I was concerned that IBM had replaced Acclaris with HRA reimbursement of Part B. I received claim form from EH called "IBM RECURRING PREMIUM REIMBURSEMENT" and Medicare Part B is already listed in Premium Type. Which appeared that you could submit this year with 2014 SSA statement of benefits for $104.90 monthly.
      Thanks again for your speedy reply.

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