Spending Accounts & the Deductible
BlueEdgeSM allows your clients to give their employees a Spending Account option, which helps employees pay for qualified health care expenses. One option is to establish a Health Care Account for each employee with employer funds. The other option is a Health Savings Account, which can be set up with employer funds, employee funds or both.
Health Care Account
With the BlueEdge plan, the company sets aside a specific amount of money in a Health Care Account for each employee each benefit year.
Here’s how the Health Care Account works:
- The account pays for the member’s covered health care claims until the balance is depleted. These claims are applied to meeting the deductible.
- Preventive care services are covered at 100 percent in-network even before the deductible is met, so these claims are not deducted from the Health Care Account.
- BlueEdge provides a seamless approach to claims, paying claims automatically from or the PPO benefit plan.
- Employees do not pay for services up front or submit claims for reimbursement.
- Employers only fund claims as they are paid, so unused account balances remain part of the company's cash flow.
- Funds roll over year-to-year as long as the employee remains in the plan.
- If the employee leaves the plan, the funds stay with the employer.
Health Savings Account
BlueEdge HSA is compatible with Health Savings Accounts (HSAs), which are funds that your clients’ employees can use to pay for qualified health care expenses.
Here’s how a Health Savings Account works:
- The account can be funded by the employer, the employee or both, but the account is owned by the employee. (There is a maximum amount that can be contributed annually.)
- Funds in an HSA are completely portable, so if an employee changes jobs or stops working, the funds remain with him/her.
- There are no "use it or lose it" rules like there are with Flexible Spending Accounts — unspent money stays in the HAS from year-to-year.
- A separate trustee administers the HSA (not Blue Cross and Blue Shield of Illinois).
- HSA can be invested in interest bearing accounts.
- Employer contributions are not subject to FICA taxes and employee contributions are tax deductible. Amounts distributed from the account are not taxable as long as they are used to pay for qualified health care expenses.
BlueEdge includes an annual deductible that employees must meet before their PPO benefits begin. Claims paid from the Spending Account are applied toward the plan deductible.
Here’s how the family deductibles work:
- BlueEdge: If an employee’s dependents are covered under the plan, the deductible works like most other Blue Cross and Blue Shield of Illinois PPOs. No family member has to satisfy more than the individual deductible before receiving PPO benefits and the PPO benefits will be paid for the whole family once the family deductible is met.
- BlueEdge HSA: The family deductible is an aggregate deductible. The entire deductible amount must be satisfied before PPO benefits begin for any family member. Once the family deductible is met, PPO benefits will be paid for the whole family.