Health
Reimbursement Arrangements (HRAs)
On June 26, 2002 the IRS
authorized and defined Health Reimbursement Arrangements or
HRA’s. These arrangements allow brokers and health plan
administrators to design innovative programs of health plan
coverage utilizing the fully insured health plans you work
with everyday.
HRA SIMPLE
PLANS
HRA plans may range from as
basic as purchasing a high deductible fully insured health
plan and the employer assigning a portion of the deductible to
the participant. The employer would then self-fund the balance
of the deductible. Under certain circumstances, the premium
savings may be great enough to justify the increased exposure.
Or, where the employer has few plan choices or impaired
options for cost or coverage, these plans may present a viable
alternative.
HRA PLUS PLANS
For the employer who wishes
to take more innovative approaches to plan design, the HRA
concepts allows the employer to actually design plans that fit
longer term strategies. Or, create employer specific Defined
Contribution Plans. For example, allocate a defined amount to
reimburse employees for their medical cost. To reduce
utilization, consider removing co-payments for office visits
and Rx but compensate for the increased exposure through a HRA
plan. At the employer’s choice, a portion of the
employee’s unused funds may be rolled over to subsequent
years.
Many employers are not
satisfied with accepting the ever-increasing health plan
premium cost with no alternatives being considered. They are
looking for new concepts and ideas to offset these increases
now and in the future. HRAs may offer solutions to some of
these situations.
Are HRAs the answer to all
premium increases? Certainly not. In many cases the increased
exposure of a HRA enabled plan may be greater than the savings
of the premiums between the base plan and the high deductible
plan. So, when should you consider a HRA?
When premiums are extra
ordinarily high due to:
-
Carrier lock due to an
"On Going" situation?
-
Over Utilization by
covered participants?
-
Lack of Carrier
Competition?
-
Lack of competitive
provider networks
When the Employer is
receptive to new approaches such as
Someone is going to present
these new concepts to your client and prospect. Will it be you
or your competitor?
Admin America is an
independent TPA specializing in Flexible Benefit Plans and now
HRAs. Please give us a call for our package that provides a
more detail explanation of these plans or just to discuss your
questions and concerns regarding Health Reimbursement
Arrangements (HRAs)
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