- Savings accounts for health care (HSA)
In this plan, the employer buys a health insurance plan with a high deductible. Most of the time, these groups come from plans with very low deductibles. Since plans with a higher deductible usually cost much less, the difference is put into the employee's "Health Savings Account." The employee can use the money in this account to pay for certain medical costs. If the money isn't used, it carries over to the next year. Even if the worker leaves the company, the money is still theirs.
- Health Reimbursement Arrangements (HRA)
This is a lot like the HSA above, but the employer "pledges" to pay a portion of the qualified medical expenses that are not covered by insurance. This means that the employer only spends the money if there is a portion of the bill that is not covered by insurance. This would be better for the employer because, with an HSA, the money goes to the employee whether or not they make a claim. The problem with HRAs is that right now, only a small number of carriers offer them.
- Medical Reimbursement Accounts
This is very flexible and a lot like the HRAs above. It is also called self-funding in part. The employer buys a higher deductible, and if the employee uses up that deductible, the employer pays all or part of it, depending on how the agreement is written. This is true for other costs that insurance doesn't cover. The idea is that the employer pays for the costs that are usually smaller out of their own money (presumably, the savings in premium dollars from going to a higher deductible.) This is bad because many carriers don't let you use this strategy with their plans. It can be very useful, but you should make sure to use an experienced third-party administrator because there may be legal and tax paperwork to fill out. Section 105 is another name for this law.
- Kaiser.
Kaiser is getting more and more groups. It costs less money than almost every other plan, benefit for benefit. Kaiser is investing billions of dollars in the future, and their quality control looks good.
- Putting Blue Cross and Kaiser next to each other. Blue Cross has a new programme that only requires five employees to sign up. Kaiser can take care of the rest. This is a completely new way to think about flexibility.
- Blue Cross Elect. Blue Cross has a portfolio called Elect that has 16 plans, including HMOs, PPOs, and an EPO plan. Each of these plans has premiums that range from very low to very high.
The great thing about this programme is that Blue Cross lets the employer "define" how much of the employee's cost they are willing to pay. Blue Cross, for example, has a PPO plan with a copay of $10, $20, $25, $30, $35, and $40. The plan that costs $10 is the most expensive of these.
After looking at all of the premiums for the different plans, the employer can decide at random which plan they are willing to pay for, for example, the employee-only premium. Let's say it's the $25 copay plan in this case. The employee can sign up for the $25 copay plan at no cost to them. But if they want the more expensive $10 copay plan, the difference in premium costs would be taken out of their paychecks.
Let's say they want to cover their dependents, but their employer will only pay for the employee. The employee could choose the cheaper $40 copay plan and use some of the money they saved to help pay for their dependents.
This programme has been very successful because it gives employees more options and helps them be more clear about their costs and needs. At the same time, it helps employers define their costs in a more efficient way.
This information can change at any time and is time-sensitive. Please email me at [email protected] if you have a question or want to know more. —Todd Rich
Todd Rich knows a lot about California Small Group Health Insurance Plans and has written four books about them. Visit www.TheStrategyGuide.com/ezines to learn more about Todd and his books.
