Hi, I’m John Milne, and welcome to this episode of BeneMINUTE.
Continuing our discussion on taking control of your health insurance spend, I’m going to talk about a basic strategy that has been used for years but many employers still are not taking advantage of.
This strategy is migrating employees into a High Deductible Health Plan and using a Health Reimbursement Arrangement (or HRA) to fund part of the deductible.
Moving to an High Deductible Health Plan can generate a very significant premium savings for the employer. This creates true savings for the employer but pushes the upfront financial exposure onto the employees themselves.
By implementing an HRA the employer can subsidize a portion of the employee’s deductible with the savings from the plan change. This will reduce the upfront out-of-pocket costs for the employee. Many times employees will actually see an increase in certain benefits based on how the plan is built. Such as, using HRA funds on higher-utilized and higher-priced items, like diagnostic tests or in-patient hospital stays.
This will also influence the employees to make smarter healthcare decisions, keeping their personal out-of-pocket costs down, and ultimately leading to minimal increases at renewal time.
The reason we are using an HRA for this strategy is because the employer only uses HRA dollars when claims actually occur. Meaning, employers only pay on amounts used and keep the rest of the HRA funds for themselves.
I recommend HDHPs to employers who are looking for a decrease in premium spend and willing to educate their employees on making better healthcare decisions.
Be sure to talk to your employee benefits consultant before making any drastic plan changes. Corporate Synergies can help.
For more information on this and other topics, please visit our Knowledge Center at corpsyn.com. Thank you.