Health Savings Accounts (HSA)
In this tactic, the company purchases a health plan with a high deductible. These are typically groupings of people who get insurance through a plan with a very low deductible. Since higher deductible plans are typically substantially less expensive, the employee’s “Health Savings Account” is funded with the money saved. The employee uses the funds in this account to cover permissible medical costs. The funds carry over to the following year if they are not spent. Even if they leave the company, the employee is still entitled to the money.
Healthcare Reimbursement Plans (HRA)
This is quite similar to the HSA described above, but instead of the employer spending the funds if there is a component of the bill that the insurance does not cover, a portion of the qualified medical expenses that are not covered by the insurance are “pledged” by the employer. Since the money from an HSA flows to the employee whether or not there are claims, this would be more advantageous to the business. The issue with HRAs is that not many carriers now provide them.
Health Savings Accounts
This is quite flexible and similar to HRAs above. The other name for it is partial self-funding. Depending on how a pre-arranged agreement is drafted, the employer may pay the entire deductible if the employee exhausts it or only a portion of it. This also applies to other costs that the insurer does not cover. The assumption is that the company will pay for the normally lower costs itself through self-insurance (presumably, the savings in premium dollars from going to a higher deductible.) This has the drawback that several carriers forbid using this tactic with their plans. It can be quite efficient, but be sure to select a skilled third party administrator because you might need to provide certain legal and tax papers. or Section 105, as the case may be.
Groups are dispersing to Kaiser in greater numbers. Benefit for benefit, it is often less expensive than almost any other plan. Kaiser is investing enormous sums of money in the future, and their quality assurance is encouraging.
Presenting Kaiser and Blue Cross side by side. With a new initiative from Blue Cross, only five employees are required to sign up. Kaiser can take care of the rest. This is a revolutionary chance for flexibility. Blue Cross Elect There are 16 plans in the Elect portfolio from Blue Cross, which consists of HMOs, PPOs, and an EPO plan. Each of these plans has premiums ranging from very cheap to very high. The best part of this scheme is that Blue Cross gives employers the freedom to “define” how much of an employee’s premium they are willing to cover. For instance, Blue Cross provides copay PPO plans with $10, $20, $25, $30, $35, and $40. The most expensive of these is the $10 plan.
The employer can decide arbitrarily which plan they are willing to pay, say the employee’s only premium for, after looking at all of the premiums for the other plans. Let’s imagine that in this instance the copay amount is $25. The employee is not charged anything to purchase the $25 copay plan. However, the employer would payroll deduct the additional premium fees if they choose the more expensive $10 copay plan.
Let’s imagine they want to pay for dependents, but the employer only wants to cover the employee. The employee might choose the $40 copay plan, which is less expensive, and use some of the money they save to help cover the expense of adding their dependents.
This programme has been quite successful because it gives employees additional options, enabling them to be clearer about their demands and costs while also enabling the company to define costs more effectively.
This information must be acted upon quickly and is subject to change. Please email me at [email protected] if you have any questions or would like further information. Doug Rich
California Small Group Health Insurance Plans are Todd Rich’s area of expertise, and he has written four books on the subject. Visit www.TheStrategyGuide.com/ezines to learn more about Todd and his works.