Frequently Asked Questions
New OOP Cost-Sharing for VEHI Plans Begins on January 1, 2021
What does this mean for employees who qualify for and elect benefit coverage?
New out-of-pocket (OOP) and premium cost-sharing terms and benefit eligibility standards for active school employees go into effect on January 1, 2021, in accordance with the terms and conditions of the resolution of statewide negotiations conducted by the Commission of Public School Employee Health Benefits (hereafter, “statewide negotiations”).
This FAQ resource is to help employees prepare for open enrollment in the fall of 2020, whether they stay in the VEHI benefit plan they have now or choose a different one. Our chief focus is out-of-pocket cost-sharing and health spending accounts (HRAs, HSAs, and FSAs - Learn more about Healthcare Spending Accounts below, or in our Guidance document). We will, however, speak briefly to premium contributions and eligibility standards for benefit coverage beginning January 1, 2021.
VEHI strongly encourages school employees with questions related to health benefits or negotiations to consult their central office’s human resources personnel or, if their work positions are covered by a collective bargaining agreement, local union representatives. Ultimate responsibility for educating employees about both rests with them.
1. Are VEHI benefit plans changing on January 1, 2021?
No. School employees will have access to the same four plans in 2021 as they did in 2020. You can review the plans here, scroll down and select your employee type.
The VEHI plans will have the same four tiers of coverage, benefit structures, medical networks, and pharmacy formulary.
Each plan will retain the same out-of-pocket (OOP) cost-sharing structures and amounts – deductibles, co-insurance and co-pays – and maximum OOP amounts.
2. Am I required to change my current benefit plan for January 1, 2021, or sign-up for it again if I want to keep it?
No. You may remain in the same plan you are in now. Unless directed otherwise by your human resources personnel, you don’t need to sign-up again to keep the same plan.
3. May I change VEHI benefit plans in 2020, with coverage to start under the new plan on January 1, 2021?
Yes. You can change benefit plans during your district’s open enrollment period in 2020. Your human resources personnel will send you the documents to make a change.
4. What active school employees are subject under Vermont statute to the terms and conditions of statewide negotiations?
Three categories of active school employees are presently affected by the outcome of statewide negotiations:
a. Licensed teachers: Employees of Vermont school districts and supervisory unions providing employment services that require a professional teacher’s license from the Vermont Agency of Education;
b. Licensed administrators: Employees of Vermont school districts and supervisory unions providing employment services that require a professional administrator’s license from the Vermont Agency of Education;
c. Support Staff: Employees of Vermont school districts and supervisory unions defined as “municipal employees” in 21 V.S.A. Section 1722 and who provide employment services that do not require a license from the Vermont Agency of Education.
The great majority of non-licensed school employees (“support staff”) – para-educators, administrative and clerical employees, bus drivers, kitchen workers, computer-technology staff, and custodian/maintenance staff, etc. – fall under the definition of “municipal employees” in 21 V.S.A. Section 1722. They are, therefore, covered by the terms of statewide negotiations.
However, there are non-licensed school positions considered “exempt” under 21 V.S.A. Section 1722. They are not subject to a school district’s collective bargaining agreement and the affected employees are excluded from joining a local school union as a condition of employment. For example, business managers are exempt employees, as are confidential administrative personnel; there are others. The terms of statewide negotiations do not apply to “exempt,” non-licensed employees at this time.
If you are in an “exempt” position as defined by 21 V.S.A. Section 1722, please consult your superintendent or supervisor about your health benefits and cost-sharing.
If you are uncertain if you are in an “exempt” position as defined by 21 V.S.A. Section 1722, please consult your school district’s human resources personnel or your local union building representative.
5. Will Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) with employer contributions be offered by school districts to help cover out-of-pocket costs?
If you are a licensed teacher or a licensed administrator, click here to learn the amounts of out-of-pocket cost-sharing that begin on January 1, 2021 – what your employer will contribute to an HRA or HSA, how contributions will be structured, and what you, the employee, will be obligated to pay when you receive care.
If you are non-licensed, educational support personnel covered by the terms of statewide negotiations as discussed above, click here to learn the amounts of out-of-pocket cost-sharing that go into effect on January 1, 2021 – what your employer will contribute to an HRA or HSA, how contributions will be structured, and what you, the employee, will be obligated to pay when you receive care.
If you are an exempt, non-licensed educational support employee who is eligible for benefit coverage but not covered by the terms of statewide negotiations, speak with your superintendent or supervisor about your health benefits and cost-sharing.
6. May I elect an HRA with any of the four VEHI Plans?
7. May I elect an HSA with an employer contribution with both the VEHI CDHP options – Gold CDHP and Silver CDHP?
No. Under the terms of statewide negotiations, if you have an HSA now and wish to retain it with an employer contribution, or if you want to open an HSA for the first time with an employer contribution, you must enroll in the Silver CDHP.
An employer contribution to an HSA is not permitted under the terms of statewide negotiations with enrollment in the Gold CDHP.
An employee who enrolls in the Gold CDHP may choose to personally open and fund an HSA, provided the employee does not receive any HRA or HSA funding from the employer.
8. If an employer fails to make a contractually obligated payment to an HSA on an employee’s behalf, is the employer required to pay interest on the missed payment?
9. May I still elect a Flexible Spending Account (FSA), with an HRA, in 2021?
Yes, provided your collective bargaining agreement or school district employment policies permit such an election.
If offered in your district, you may also elect an FSA without an HRA.
10. May I elect a LIMITED PURPOSE Flexible Spending Account (FSA) with an HSA in 2021?
Yes, if your collective bargaining agreement or district employment policies permit such an election.
11. Will my VEHI benefit plan selection in 2021 come with a debit card for Rx expenses and auto-pay to provider for medical claims if I choose a Health Reimbursement Arrangement (HRA)?
12. Will my VEHI benefit plan selection in 2021 come with a debit card for Rx expenses and auto-pay to providers for medical claims if I choose a Health Savings Account (HSA)?
An HSA is an employee-owned account; thus, access to a debit card and auto-pay to providers will be made by the employee. Third Party Administrators (TPAs – see page 8 more information), who administer health spending accounts, have a variety of capabilities and options, and access to a debit card and auto-pay to providers will depend on the TPA under contract to your school district.
13. May I elect coverage for a domestic partner in any public school district in Vermont starting in 2021?
Yes. There are requirements to qualify for domestic partnership coverage. To learn more about the requirements, and any tax implications, please contact your central office staff.
The IRS has special rules on the reimbursement of qualified expenses for domestic partners through an employee’s HealthCare Spending Accounts (i.e., HRAs, HSAs and FSAs). Please click here for more information on HSAs and HRAs on this issue and other eligibility matters.
14. Will a school district’s contribution toward premiums be the same no matter which of the four VEHI plans I enroll in?
No. Employees who enroll in the Platinum or Gold [Non-CDHP] Plans will pay MORE toward premium costs than employees who enroll in either the Gold CDHP or Silver CDHP.
Please speak with your human resources personnel or, if your work position is covered by a collective bargaining agreement, with a local union representative to understand how premium contributions by school districts will be structured beginning January 1, 2021, for licensed employees and non-licensed, non-exempt staff. Before signing up for a VEHI plan, know what your out-of-pocket costs and premium contributions will be.
If you are an exempt, non-licensed, support staff person, speak with your superintendent or supervisor about your premium contributions.
15. Where can I find a general overview on all four VEHI plans and my 2021 options for choosing an HRA, HSA and FSA with these plans?
Please click here to find our 2021 decision support site which includes an overview of the four VEHI benefit plans and how they integrate with HRAs, HSAs and FSAs beginning in 2021, in line with the terms of statewide negotiations, based on your employee segment.
Learning about Health Spending Accounts: HRAs, HSAs & FSAs
In 2021, whether you elect to stay in VEHI health plan you have now or elect a different one, or you are enrolling in a VEHI plan for the first time, you will select one or more health spending accounts with your plan choice.
IRS regulations governing these accounts vary in some aspects – for example, (a) you can have both an HRA and an FSA together, or separately; (b) you can elect an HSA alone or with a Limited Purpose FSA, but you cannot pair an HSA with a regular FSA, etc.
Before making a decision, please “do your homework” on these spending accounts, with the help of your human resources personnel and, especially, your school district’s Third Party Administrator. Your employer’s TPA can help you understand what is important to know about HRAs, HSAs and FSAs.
Health Spending Accounts 101
What follows is a very basic introduction to Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs), and Flexible Savings Accounts (FSAs). The school district and its local union will work with the district’s Third Party Administrator to make sure you have access to more detailed information and guidance on these accounts. Central office human resources personnel, along with the TPA, will assist employees with the election process.
The terms and conditions of statewide negotiations permit school employees to elect an HSA if enrolled in the Silver Consumer Directed Health Plan (CDHP).
What is an HSA and what are its benefits?
- It is an account employees can use to pay for qualified medical expenses as determined by the IRS. Funds can be used also for any expenses after retirement (currently age 65) without penalty; however, if the money in the account is used after retirement for something other than qualified medical expenses, it is subject to taxes. T
- The contributions to an HSA are tax-deductible, and the account’s earnings (if invested) are tax-free, as are withdrawals for eligible medical expenses.
- Once the money is contributed to the HSA, it belongs to the employee. There is no “use it or lose it” provision, so any unused money stays with the employee until it is spent.
- The employee can contribute to an HSA above the employer contribution up to the annual maximum set by the IRS. The employee can also change his/her/their contribution amounts throughout the year if financial or medical situations change.
- Because HSA funds can be used to reimburse employees for care other than that covered by your VEHI benefit plan, special rules apply for submitting receipts for routine dental services, orthodontia claims, vision care, and over-the-counter expenses.
If an employee had an HSA in 2020, but chooses an HRA for 2021, what happens to the HSA?
- The HSA funds remain with the employee. But no further money can be contributed by the employer or employee to the account if an HRA is chosen for 2021.
- The employee can use the HSA dollars at any time on any qualified medical expense, or simply keep the money in the account until such time as the employee chooses to use it.
- If the employee elects an HRA plan, the employer may discontinue paying HSA monthly account fees (if applicable). The employee has the option to move that money to a financial institution of their choice where fees may be reduced or are not applicable.
Pay Special Attention to HSA Eligibility Rules
Doing one’s homework is particularly important when it comes IRS eligibility and contribution rules for a Health Savings Account (HSA). This is because:
- Not everyone is eligible to make or receive contributions to an HSA under IRS rules.
- Accepting or making contributions to an HSA when you are not eligible has tax and penalty consequences.
- If you are considering opening an HSA for the first time in 2021, or are retaining an HSA you had in 2020, please do your research to be sure you understand and follow the IRS rules, including who can and who cannot make or receive a contribution to an HSA. Click here to learn more about HSA rules.
- For those with an HSA currently, it is advisable to revisit the guidance linked to above in the event your life circumstances have changed since you first opened an HSA – for example, an adult child on your benefit plan is no longer a tax dependent, you have since enrolled in Medicare Part A or B, you are now receiving benefits at the V.A. or through TRICARE, you have recently applied for or are now receiving Social Security payments, you have enrolled a domestic partner on your benefit plan, etc.
- If you are uncertain about your eligibility for an HSA, if your life circumstances have changed since you first opened an HSA, or you simply wish to clarify your understanding of HSA eligibility rules, please speak with your school district’s Third Party Administrator. Your human resources personnel will provide contact information for the TPA.
- To learn more about HSA eligibility and contributions requirements click here.
School employees can elect an HRA if enrolled in any of VEHI’ four benefit plans – Platinum, Gold, Gold CDHP and Silver CDHP.
What is an HRA and what are its benefits?
- An HRA reimburses employees and their families for out-of-pocket expenses (co-pays, deductibles and co-insurance charges) for eligible medical expenses defined by the terms and conditions of statewide negotiations. The OOP expenses are those arising from medical and Rx benefits covered by your VEHI benefit plan.
- An HRA is entirely funded and owned by your employer. Employees do not contribute to them.
- Employer contributions to an HRA are not part of an employee’s income, so they are not taxed either when in the account or when used to reimburse an employee for qualified medical expenses.
- HRA funds will reimburse for qualified medical expenses even if an employee also has coverage under Medicare or TRICARE, has secondary coverage under a spouse’s health plan, or is enrolled in Social Security.
- To learn more about HRA eligibility (including reimbursements for domestic partners) and employer contributions requirements click here.
FSAs (Medical and Limited Purpose)
School employees can elect a Medical FSA if enrolled in any of VEHI’s four benefit plans – Platinum, Gold, Gold CDHP and Silver CDHP.
An employee can have a Medical FSA with an HRA. An employee cannot have a medical FSA with an HSA.
However, an employee who enrolls in the VEHI Silver CDHP and chooses an HSA can have what is called a LIMITED PURPOSE FSA, which “limits” reimbursement for qualified dental and vision expenses, such as dental cleanings, fillings, vision exams, contact lenses, lens solution/cleaner, and prescription glasses.
You cannot have both a Limited Purpose and a Medical FSA.
To learn more about FSA eligibility and contributions requirements click here.
What is a Medical FSA and what are its benefits?
- An FSA is used to pay out-of-pocket costs (co-pays, deductibles and co-insurance charges) for qualified medical expenses as determined by the IRS, including vision and dental services.
- You contribute to the account as a payroll deduction from your salary, and, in return, what is deducted is not considered part of your income and will not be taxed. (Deductions for a Limited Purpose FSA are also pre-tax.)
- FSA plans have what is known as the “use-it-or-lose-it” rule. This means, in general, funds you didn’t spend in your plan year are retained by your employer to offset their own FSA-related costs and fees.
- To avoid or lessen the impact of the use it-or-lose-it rule, the IRS permits employers to allow employees to use FSA funds that were deducted for one plan year and use them in the next plan year. These rules cover two major categories:
- Grace Period: This is a 2.5 month extension beyond your normal plan-year deadline. So, if your plan-year deadline is December 31, you would have up until March 15 of the following year to spend the previous year’s FSA dollars. Grace Period funds can be used to pay only for out-of-pocket expenses incurred in the previous plan year: for example, funds that transfer under a grace period to 2021 must be used to pay for out-of-pocket expenses incurred in the 2020 calendar year.
- Rollover: IRS rules also permit up to $550 of your FSA balance to carry over into the next plan year. And, unlike Grace Period funds, rollover funds can cover out-of-pocket expenses incurred in the new plan year: for example, funds that rollover from 2020 can be used to pay for claims incurred in the 2021 calendar year. So, if your plan-year deadline is December 31, you'd be allowed to roll over up to $550 to spend in the new year that begins January 1.
If your employer offers a rollover or grace period it will be in the employer’s Section 125 Plan Document, and perhaps in your local collective bargaining agreement. The IRS allows either of the above, but not both – it considers that double-dipping. IRS rules also do not require employers to offer a grace period or a rollover benefit. Check with your human resources personnel or, if your work position is covered by a collective bargaining agreement, with a local union representative to learn if either is available in your school district.
What is a Third Party Administrator?
For our purposes, a TPA – Third Party Administrator – is a company that specializes in helping employers and employees administer medical, prescription, dental, vision, or dependent care benefits and their costs through health reimbursement accounts (HRAs), health savings accounts (HSAs), and flexible spending accounts (FSAs).
Your school district has a contract with a TPA to assist you in gaining access to any HRA, HSA or FSA account funding available to you and to help you understand how these accounts function.
Most VEHI subscribers have health spending accounts now and are familiar with how they work.
If you are going to change health spending accounts in 2021 – moving from an HRA to an HSA, for example, or from an HSA to an HRA, or adopting an FSA for the first time – make sure you understand what that will mean for you and your family, and learn how your school’s TPA can serve you in this capacity.
If you are electing VEHI coverage for the very first time, however, and may have access to an HRA, HSA or FSA for the first time as well, your school district’s human resources personnel can tell you who the TPA is and how to contact its customer service staff. Your human resources personnel can also help you with the necessary paperwork and educate you on how to work with the TPA to maximize your benefits.