Testimony of Matthew Byrne on behalf of the

Ohio Association of Health Underwriters

In support of H.B 301

Before the House Insurance Committee

October 14, 2015

Chairman Hackett, Vice-Chair LaTourette, Ranking Member Bishoff, and members of the Committee, my name is Matthew Byrne and I am appearing today on behalf of the Ohio Association of Health Underwriters(OAHU) in support of Representatives Henne’s and Huffman’s H.B. 301. OAHU’s membership consists of insurance agents licensed by the Ohio Department of Insurance who specialize in the sale and servicing of health insurance benefits for both individuals and employers located throughout the state. I am the founder of MyHealthQuoter.com, a Dublin-based brokerage firm providing health insurance for individuals, families and corporations.

H.B. 301 requires the Department of Administrative Servcies to offer a High Deductible Health Plan (HDHP) to state employees and state elected officials. It also requires a state employee or state elected olfficial who wants to select the High Deductible Health Plan (HDHP) option to establish a Health Savings Account (HSA). However, it does not appear to require that the HDHP be HSA Compatible. So if my reading of H.B. 301 is accurate, new language needs to be added to the bill to clarify that the Department of Administrative Services shall offer a HDHP that is a HSA Compatible HDHP.

As way of background, HSA’s are savings plans that allow consumers to set-aside tax-free money to cover current and future qualified medical expenses. Theytypically offer lower out-of-pocket maximums and lower premiums for policyholders when compared to traditional copay plans.

An HSA allows account holders (or others on the account holder’s behalf) to set aside as much as$3,350 for individualsand $6,750for familiesannually before federal taxes to cover out-of-pocket healthcare costs, for individual and family coverage respectively in 2016 (and indexed annually thereafter).

Contributions to HSAs are made annually and can be made by both employers and individual account holders. Unlike flexible spending accounts (FSAs) in which funds must be used within a certain period of time or forfeited, unspent funds in an HSA can accumulate over time as tax deferred savings. If the money is used for qualified medical expenses, it is never taxed as long as it is an HSA compatible high deductible health plan (HDHP). When paired together, funds from a HSA can be used to cover the deductible and other cost-sharing aspects of an HDHP, as well as other qualified medical expenses, not necessarily covered by the HDHP (such as Lasik surgery or other elective medical treatment).

HSAs are only available with a HDHP. A HDHP has a minimum annual deductible of $1,300 for an individual and $2,600 for an individual and family coverage. A maximum annual out-of- pocket limit of $6,450 for an individual and $12,900 for and individual and family.

There are several reasons why an HSAis an attractive option for some indivduals and families:

HSAs increase consumerism, due to their cost sharing during the deductible phase, which incents the policyholder to take a more active role in their healthcare.

Tax free contributions to the HSA by the policyholder can lower their annual taxable income equal to the contributions made. These deductions are taken immediately if done by a pre-tax deduction or during a subsequent tax filing if contributed with post tax dollars. Deductions are not contingent on spending contributions in the year they were funded. Interest or other earnings on the assets in the account are also tax free.

HSAs and all contributions (regardless of source) are owned by the policyholder and roll over each year.

HSA contributions are not required. There is no minimum contribution. A policyholder may choose not to fund the HSA at all or may choose to fund it in some years and not others.

Monies in an HSA can be used even if the policyholder chooses a non-HSA plan in the future. Contributions can only be made when both a Health Savings Bank Account AND a Health Savings Compatible HDPD are maintained simultaneously.

Those over 55 can make an additional $1,000 per year “catch up” contribution.

Qualified Medical Expenses include most things covered by your insurance policy as well several items typically not covered by insurance such as Acupuncture, Medicare premiums (for those over 65), long term care insurance premiums and premiums while receiving unemployment compensation.

In conclusion, an HSA paired with an HSA Compatible High Deductible Health Plan can be a good health insurance (and investment) option for many state employees and elected officials to consider. Thanks for your time and I am happy to answer any questions you may.