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What does the section 125 have to do with this discussion?
"Donny you're out of your element!"
HRA - Health Reimbursement Account
- Thread starter Small Town ND
- Start date
What does the section 125 have to do with this discussion?
"Donny you're out of your element!"
- Thread starter
- #22
Small Town ND
Expert
- 30
What do you mean by a "Gap Policy" so to speak?
With the raise from a 250 to a 2,000 deductible. The way it is set up now (on the quote) is for the employee to pay the first 250 and the company to pay the next 1750 until the deductible is meet.
- 1,459
Somarco,
Here is what I've found so far, even though I'm playing town ball compared to playing in the Big Leagues like Sam. Most of my groups have been in the 15% to 20% utilization area on the benefit rich HRAs. In fact, most of the HRAs I set up reimburse 100% up to the deductible, offering a more benefit rich plan that they had previously. From the carrier standpoint, utilization has actually gone down and as a result, the rate tables for those groups.
That being said, I always show them their liability levels at 20%, 50%, and 100% utilization. Usually their break/even is above the 100% utilization rate! Maybe it's priced differently here than most places, but it's a huge win and a solution most small groups have not been pitched.
However, I don't propose this strategy with unhealthy groups except in the case for a small group stuck on the top rate table due to one employee with an otherwise healthy group.
It's been a huge win for all the employers I have helped into HRA plans and when I show them what they saved each year compared to their old plan design, they invite me to dinner (no kidding, two owners have in the last 12 months!).
Here is what I've found so far, even though I'm playing town ball compared to playing in the Big Leagues like Sam. Most of my groups have been in the 15% to 20% utilization area on the benefit rich HRAs. In fact, most of the HRAs I set up reimburse 100% up to the deductible, offering a more benefit rich plan that they had previously. From the carrier standpoint, utilization has actually gone down and as a result, the rate tables for those groups.
That being said, I always show them their liability levels at 20%, 50%, and 100% utilization. Usually their break/even is above the 100% utilization rate! Maybe it's priced differently here than most places, but it's a huge win and a solution most small groups have not been pitched.
However, I don't propose this strategy with unhealthy groups except in the case for a small group stuck on the top rate table due to one employee with an otherwise healthy group.
It's been a huge win for all the employers I have helped into HRA plans and when I show them what they saved each year compared to their old plan design, they invite me to dinner (no kidding, two owners have in the last 12 months!).
No doubt the HRA can be a winner but I am the cautious type and cut my teeth on self funded plans years ago when TPA's were promising all kinds of savings that never worked out as promised. Some blew up in the first year while others lasted 3 yrs before the employer figured out you can't get something for nothing.
Stop loss underwriters caught on to the employer funding the underlying deductible a lot quicker than fully insured underwriters. I believe Aetna finally figured out the high deductible plans weren't working for them (small group, under 50 lives) and pulled the plug on the 100% plans while jacking rates on the others when an HRA or HSA was involved.
Your state (AL according to the flag) is a bit unusual in that BX pretty much dominates everything over there. Perhaps you can pair a high deductible with underlying 100% HRA and still save money. Not going to challenge you on that since it has been 20 yrs since I worked your area.
Going back to the topic, first year savings can be overstated due to claim lag. Usually takes 15+ months for the claims covered by the HRA to catch up with everything else.
The OP stated everyone was healthy except one employee with diabetes. No mention of dependent health which is where you can get killed.
Would be interesting to know what tier level the group is rated for currently. If anything above the mid tier there will be a rate distortion comparing a std rate to a tier 5 - 10 rate.
The HRA is a conceptual sale, much like self funding. If you sell the savings it can come back and bite you. The key is to sell the idea of controlling costs by taking the small claims out of the insured plan and self funding them.
It also gives the employer more flexibility in funding the total plan going forward.
Stop loss underwriters caught on to the employer funding the underlying deductible a lot quicker than fully insured underwriters. I believe Aetna finally figured out the high deductible plans weren't working for them (small group, under 50 lives) and pulled the plug on the 100% plans while jacking rates on the others when an HRA or HSA was involved.
Your state (AL according to the flag) is a bit unusual in that BX pretty much dominates everything over there. Perhaps you can pair a high deductible with underlying 100% HRA and still save money. Not going to challenge you on that since it has been 20 yrs since I worked your area.
Going back to the topic, first year savings can be overstated due to claim lag. Usually takes 15+ months for the claims covered by the HRA to catch up with everything else.
The OP stated everyone was healthy except one employee with diabetes. No mention of dependent health which is where you can get killed.
Would be interesting to know what tier level the group is rated for currently. If anything above the mid tier there will be a rate distortion comparing a std rate to a tier 5 - 10 rate.
The HRA is a conceptual sale, much like self funding. If you sell the savings it can come back and bite you. The key is to sell the idea of controlling costs by taking the small claims out of the insured plan and self funding them.
It also gives the employer more flexibility in funding the total plan going forward.
- 1,459
I have a few plans of this nature going on four years now, haven't seen the jump in utilization. Not saying that's normal, just been my experience so far.
I do understand the issue from a conceptual standpoint on why utilization would be expected to increase. If that happens, my thought is we could always change the reimbursement schedule to compensate for it. For now, simple is working.
FYI: I'm actually located in the frozen north, my state borders Canada, will change my state flag one of these days.
I do understand the issue from a conceptual standpoint on why utilization would be expected to increase. If that happens, my thought is we could always change the reimbursement schedule to compensate for it. For now, simple is working.
FYI: I'm actually located in the frozen north, my state borders Canada, will change my state flag one of these days.
I was wondering when AL annexed North Dakota.
As for the rest, not picking a fight, but I helped convert a lot of plans in the real south from fully insured to self funded with spec and agg.
When I was involved in the sale we did it right.
When the broker did it by themselves it was usually a ticking time bomb.
While some carriers were writing these plans down to 10 lives the carriers I used were 20+. My ramblings above were not conceptual but actual situations.
Granted, I have downed a few bottles of wine since then but still have most of my brain cells intact.
However I do have trouble finding my car keys from time to time.
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Go one more state east and you'll find me.
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