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By Stuart Lambert
When considering Health Reimbursement Account (HRA) products as a strategy for your organizations health and welfare benefits, it is important to understand the features, benefits and potential return on investment (ROI). For example, if you have an manufacturing organization that has a predominately male population, you may want to seriously consider this option. As a fully integrated product, the modern HRA/HMO requires no additional time or resources from a participant and or the Human Resources department.
‘One of the main things that I like to point out regarding the HRA products, especially the HMO/HRA product from Aetna that is fully integrated, is that health insurance is built around the ‘sick.’ ‘With the ‘fund’ being ‘Fully Integrated’, this process makes the addition or usage of the fund, seamless to the employee. When the employee goes to the Doctor, he pays his co-pay etc. Anything else that he has done is sent to the carrier on a claim form, and if the fund applies, then the fund is applied (from the carrier) until exhausted, at which point, the employee would have out of pocket responsibility. However, the employee and the doctor will receive an EOB explaining exactly what was utilized from the fund, including remaining balance as well as additional funds required etc. This means that with 80% of a carrier’s claims experience being generated by only 20% of the population, there is about 80% of the employee population that is truly not getting a ‘benefit’ from the benefits that are put in place,’ says Kevin P. Robinson
The average employee goes to the doctor one or two times a year, pays their co-pay and maybe gets a drug. However, at renewal time, due to that other 20%, this employee is then faced with the same 15%-25% increase, which is ultimately driving our ‘healthy’ population out of this insured pool as he can get a cheaper plan through individual coverage. This is called ‘Adverse Selection,’ says Kevin P. Robinson with The LBL Group. Estimated savings of implementing a HRA/HMO plan could range anywhere from 4% to 18% when compared to a standard HMO plan (Aetna Data Analytics, January 2008).
‘We need to have the ‘young, single, healthy male population, but with there not being a true ‘benefit’ in place for them, unfortunately, they are pulling out of the group coverage because it doesn’t make sense for their situation. An HRA gives them a fund that they can utilize, so in all actuality, they are getting ‘free coverage’ until their ‘fund’ is exhausted. What this does, is it truly provides something for everyone. The 20% utilizers, get a little relief for their out of pocket, but they are also required to pay more once that fund is exhausted, but the 80% are getting that fund, and the fund (or what is left at year’s end) rolls from year to year and has the addition of a new fund at the beginning of the year. So basically, that fund will eventually be large enough to cover the deductible and possibly the entire Out of Pocket Maximum (OOPM) for an entire year. This also keeps the employees w/the existing employer as this ‘fund’ is just part of the premium, and stays w/the carrier (through the employer). The bottom line is that this is very true, and a huge issue. The HMO/HRA is another ‘lid,’ says Kevin P. Robinson with The LBL Group.
Controlling Medical Costs
As medical costs continue to rise, employers are looking for opportunities to save money. For example, the Aetna HealthFund HMO combines the most popular features of typical HMO plans, i.e. copays for office visits, with consumer features that help employees increase their understanding and control of their personal health care spending. In conjunction with online tools and support, employees can save money by making better decisions around the purchases they make on health care. Furthermore, the features incorporated in Aetna’s HealthFund HMO, provides health coverage employees need at a cost that’s beneficial to the employer.
When looking at an HRA/HMO plan, consider the following plan benefits:
– A Health Reimbursement Arrangement (HRA) fund
– Traditional HMO medical plan
– Optional Pharmacy rider
– Consumerism tools and information
‘There are only 5 services for which the fund applies – for example, if you put a 100% $750 deductible HMO/HRA w/a $250 fund in place, the employee’s max OOP would be $500 ($250 fund + remaining $500 balance of the $750 deductible) before Hospitalization goes to 100% coverage. Hospitalization is the key word here, as that is usually the big ticket item w/health insurance,’ says Kevin P. Robinson
– Emergency Care
– Hospital Care
– Outpatient Surgery
– Home Health Care
– Durable Medical Equipment
The Health fund could range from $250 to $1,000 for individuals and $500 to $2,000 for families. In relation to the fund, it will reimburse covered services and supplies that are applied to the plan’s deductible. ‘Copays are not eligible for fund reimbursements as they are not applied to the plans deductible and all fund reimbursements for covered eligible expenses are sent directly to members. At year end, any unused fund balance can be rolled over to the next year. However, members forfeit any unused balance when they discontinue participation in the plan,’ says Aetna.
When deciding on an HRA/HMO plans, it is important to compare hospital networks, doctor networks and other provider networks so that your employees will not be discouraged to enroll or take advantage of the benefits offered. Aetna offers members access to a Hospital Comparison Tool, Estimate the Cost of Care Tool, Healthwise Knowledgebase, Aetna InteliHealth website, DocFind, and The Personal Health Record (Aetna Registered Trademarks). Tools, resources and websites like this gives members secure access to their personal benefits information, with self-service features. Members will be able to securely access items such as: checking the status of a claim, finding a doctor, reviewing their health fund and deductible balances.
By incorporating HRA/HMO plans, employers are able to take advantage of key cost savings while offering their employees great benefits. Plans like Aenta’s HealthFund HMO, is robust, affordable, accessible and teaches employees to be proactive.
About the Author: Stuart Lambert is the Vice President of Marketing & Operations for The LBL Group. Stuart is responsible the strategic business development and managing The LBL Group located in Los Alamitos, California.