Consumer engaged or directed
health care options are the most
popular trend in the market today.
These consumer engaged programs help
business owners offer complete coverage and encourage better overall
employee health, thus reducing total
health care costs.
“These options include reimbursement
and health savings plans. Business owners should identify differences between
consumer engaged health care plans
and determine which plan best fits both
their needs and the needs of their
employees,” says Don Whitford, director of sales and client services for
Priority Health. “With new technologies
on the market, the benefit plan process
can now be seamless for both the
employee and employer.”
In part one of a two-part series, Smart
Business spoke with Whitford to understand the difference between the most
popular consumer engaged plans, how
to select the appropriate plan and the
new technologies on the market that
enhance service. Look for part two in
the August issue.
Which benefit design is more popular, the
Health Savings Account (HSA) or the Health
Reimbursement Arrangement (HRA)?
Each option has the opportunity to
help business owners save significant
dollars. One is not more popular or better than the other. However, business
owners should understand the differences between the two to determine
which option best fits their needs.
An HSA is owned by the employee,
allowing the employee to decide how to
spend money on medical care. This
account allows both the member and
business owner to contribute funds but
only the member controls the spending
decisions.
HSAs must have a high deductible
health plan. The accounts are opened at
a financial institution and, like other
savings accounts, can earn interest. An
individual can also invest the money
into an account similar to a 401(k). This
account rolls over investments to the next year and has triple tax savings, as
contributions are tax free, the interest
earned is tax free and the items you purchase with the account — provided it is
for health care use — are also tax free.
HSAs are portable, meaning the employees can take the account with them with
no penalty.
The HRA is significantly different
because the employer controls the
funds. The HRA is not a pre-funded
account. It is similar to a secondary
claims system in that the business
owner may decide to set a company
deductible of $500 and tell the employees that the company will allocate $300,
for example, to offset the deductible. If
an employee’s deductible-related expenses reach $500, the employer will
cover $300 and the employee is responsible for the remaining $200. HRAs have
many features that allow employers to
customize a plan to fit their needs. The
HRA puts part of the financial responsibility on the employee and helps minimize the employer’s financial risk.
How is one reimbursed with the HRA plan?
The HRA process starts with the
provider submitting a claim. The health
plan processes the claim and sends a
remittance notice to the provider and to
the member. This process may seem
cumbersome but with new technologies
the entire process can be streamlined.
Claims are automatically transferred to
the HRA. This takes the manual claims
submission out of the hands of the member and reduces waiting time of reimbursement for all providers. The member receives only one statement, which
shows the amount applied to the
deductible and the HRA payment.
How does a business owner select the right
plan?
Business owners should work with
their agent or health plan representative who will help them answer some
important questions. What are your
long-term health care objectives? What
are you trying to accomplish in the
short-term? When these answers are
determined, a professional can prepare
financial comparisons of different plans
and the effect they will have on the
overall business. It is important for owners to fully understand each plan before
making a decision.
How do you communicate plan choices to
employees?
There should be ongoing communication when dealing with consumer
engaged health care. These programs
require participation from the employee
and are new concepts for many.
Education and understanding is a must
for employees to utilize these programs
properly. These plans have a success
rate because once employees are
engaged they make better health care
decisions.
DON WHITFORD is director of sales and client services for Priority Health. Reach him at [email protected] or
(248) 324-4711.