HRA and High Deductible Plan
marc
3,126 Posts
Spoke to a new broker yesterday who is pitching a high deductible plan approach combined with an HRA.
It sounds interesting, although I have not done enough personal research yet to have a good feel for the pluses and minuses.
I am doing lots of reading now, but though my research would be incomplete without also asking my forum compadres about their experiences with this approach.
x:-/ x:-/ x:-/
What say you? Does it work well for your company? What do you like and dislike about this approach to the health care benefit.
Big pitfalls and traps? Selling the EEs?
Input needed please.
It sounds interesting, although I have not done enough personal research yet to have a good feel for the pluses and minuses.
I am doing lots of reading now, but though my research would be incomplete without also asking my forum compadres about their experiences with this approach.
x:-/ x:-/ x:-/
What say you? Does it work well for your company? What do you like and dislike about this approach to the health care benefit.
Big pitfalls and traps? Selling the EEs?
Input needed please.
Comments
I think the problem is that companies roll this out and think just the fact of having a new plan is going to change ee's behavior. It's kind of like when the team thing caught on. One day a manager came in and said, "You're a team." Then they walked out and hoped for the best. It never worked. Same for this type of health plan. With the right tools, planning and education it will work in 5-10 years.
There are three ways to cut costs with health care. Two of them are short term fixes that will not last.
1. Muscle your doctors and hospitals to take bigger discounts.
2. Switch to an insurance plan that low-balls your premium just to get the business.
3. Get your employees healthy and educate them on the best ways to use health care.
Oh I forgot, there is a fourth way. Get lucky and less people need to see the doctor that year. You'll pay for it the next year, though.
We are into our third year as a corporation offering the Consumer Choice Plan (PPO) in addition to the normal selections the ee can choose. The CCP has some glitzy bells and whistles and the key is no doubt education. With the traditional plans we still have, the ee can choose deductibles ranging from $150 to $300 and $1350 to $4000 out of pocket caps.
The CCP has $1000 deductible but features the Care Account where the company channels $500 per family member into the medical account and the out of pocket rises to $2000. Of course the CCP has lower premiums.
The bottom line is, in my opinion, few people trust the CCP because it is new and relatively unknown, thus untrusted.
We get nice four color brochures and do fabulous powerpoint presentations to our employees in groups, but something is missing in the education piece. Maybe everything like this just takes 10 years to become trusted. By then, it'll be time for a new concept to appear.
Meanwhile, the pinheads at the corporate level ask why nobody at the facility level takes advantage of the new plan (designed to save the company, thus the employee money). I can only answer, "Well, probably for the same reason that almost nobody at the corporate level enrolls in this feature either."
It may be a cadillac tractor, but nobody can seem to find the damned ignition switch.
Disclaimer: This message is not intended to offend or attack. It is posted as personal opinion. If you find yourself offended or uncomfortable, email me and let me know why.
I am doing some research - trying to wade through IRS bulletins and publications, which are written to obfuscate, confuse and distract (another story for later).
One thing I am a bit confused about (see, it worked!) is that a High Deductible Health Plan (HDHP) is required for HSA's or HRA's, but if one is a member of an HDHP, they cannot be a member of any other group plan. Exceptions exist for Preventive Care, Dental Plans and Vision Plans, but I see no other exceptions for STD, LTD or even group AFLAC products.
Any feedback on these features?
Does anyone out there track EE out of pocket costs? We don't do that, so I am struggling to find the right HRA threshholds to compare to existing out of pocket. A survey might work, but for some reason, I doubt the EEs track this very well themselves.
Perhaps the carrier might have some numbers...
I'm going to offer a dissenting opinion, somewhat, to what has already been stated.
We were a company on an HMO plan for many years. We only have about 30 employees participating out of 50 eligible. Our rates kept increasing because our loss ratio (claims to premiums) was skyrocketing. So 2 years ago we went cold turkey from an HMO to a $2,000 ($4,000 for family) deductible with the HRA.
YES--the employees were very upset. But, would be with any kind of change and certainly would be if we told them we could no longer cover the premium cost that we were covering because it was too high. With our HRA, the company pays the first 50% (which is pretty generous compared to other setups I've seen--so you may want to look at your own company's situation and see what you could afford). For our cost analysis, we saw that the company and the employee would both save money going this route. The only case where the company would NOT save money is if we were to pay our full share of the deductible for all employees (highly unlikely); and the only cae the employee would NOT save money is if they were to have to use their full deductible (which did happen in a couple of cases--these were obviously the people with high health care costs that were driving up our premiums).
To ease the grumbling, I did a lot of "hand-holding" the first year (that would be more difficult to do with a larger number of employees). The result--good. Employees realized that after the insurance company's discount, the amount to be applied to the deductible wasn't that much. The company paid their full share of the deductible on: 3 employees on the single plan; 4 employees on the family plan had at least one member of their family reach the company's max; 2 employees on the family plan met the full company-paid portion ($2,000).
These numbers may seem confusing just trying to put all this in a posting. If you'd like more information, I'd be happy to send it your way.
We initially controlled premiums by switching to an HMO and requiring 100% participation, which meant we pay all the EE premium. Costs have been somewhat contained since then: First year increase 10%, last year 7%, but we are in a tight budget year from a fundraising perspective (nonprofit human services agency) and I am trying to see if we can save significant money to fund a 403(b) matching contribution to enhance our overall benefit package.
Sorry for all that detail.
How did you know your employees out of pocket cost to establish their share of the high deductible? We are looking at the second $500 dollars, but only because the broker suggested it.