Greenwood Village, Colo., & Ridgefield Park, N.J. -- Great-West Healthcare and Mellon Financial Corporation's Human Resources & Investor Solutions (HR&IS) business unveiled an alliance to offer an easily administered health savings account (HSA) for employer-sponsored health plans with January 1, 2005 effective dates.
HSAs are employee tax-favored savings accounts used in conjunction with qualified high-deductible health plans. HSA funds may be used without tax penalty to pay for qualified medical expenses such as deductibles and prescription drugs, as well as long-term care insurance and COBRA premiums. Employees and employers may make combined annual tax-free contributions less than or equal to the deductibles, up to certain limits. Although thresholds for 2005 have yet to be established, a qualified plan in 2004 has minimum deductibles of $1,000 for individuals and $2,000 for families.
Accounts may even be used to pay for services often not covered by traditional health plans such as acupuncture, eyeglasses and dental care. Unused monies grow tax-free and roll over from year-to-year and from job-to-job until retirement, when participants may continue to tap funds for qualified health care expenses.
"Our alliance combines Great-West Healthcare's expertise in self-funding, award winning medical management programs and creative consumer-driven plan designs with Mellon's depth of financial and human resources consulting services," says Rick Rivers, Executive Vice President of Great-West Healthcare. "The HSA is an important component of Great-West Healthcare's consumer-driven product portfolio, which offers a range of cost-saving plans and easy-to-use member decision-making tools. With six years of previous medical savings account processing experience, Mellon's flexible payment and investment options appeal to both employers and participants."
Features of the Great-West Healthcare -- Mellon HSA include:
- It's easy for employees to enroll in and use the HSA, since the medical plan and tax-advantaged account work together.
- Employers and employees contribute money to the interest-bearing HSA on a pre-tax or tax-deductible basis.
- Members pay for medical care from their HSA using debit cards and/or checkbooks.
- Employees may invest HSA funds over an account minimum threshold in a selection of mutual funds available through The Dreyfus Corporation, a Mellon company established in 1951 and among the nation's leading asset management companies.
- Participants can quickly check HSA account balances and make transactions on-line. Participants can also contact a dedicated HSA customer service unit for assistance.
"HSAs represent a powerful new approach for addressing spiraling health care costs," says James D. Aramanda, Mellon Vice Chairman and head of its HR&IS business. "Employees are most interested in the many tax advantages, especially since contributions to and earnings on HSA balances are not taxed, and the use of account funds is tax-free for qualified medical expenses."