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HRA Health Plans Are Good Option for Some Companies

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HRA Health Plans Are Good Option for Some Companies

HRA Health Plans Are Good Option for Some Companies

It is evident that for the employers the cost for offering healthcare advantages to its workers has been continuously increasing in the past few years. In case of Pittsburgh-based Busy Beaver Building Centers, on an average it grows by 15% per year.

Thus, while the time arrived for the company renewing its healthcare benefits plan in the previous year, the company was looking for some alternate options.

According to Nick DeMao, the chief finance officer and the vice president for administration at Busy Beaver Building Centers, it kept the previous plan. On the basis of the rate of renewal, the company's contributions could have been considerably higher, but instead of that the healthcare increment in the present year will be in the high single figures.

There are some factors that contributed to let the Busy Beaver do so. As per Mr. DeMao, one of the most important factors was a shift to health reimbursement accounts that are financially supported by the employer.

In case of an HRA, a high deductible has to be paid by the employee which is later funded by the employer. The employer also bears certain extra risk; however, it too pockets surplus funds.

Though, these arrangements have been in use for several years and according to the U.S Bureau of Labor Statistics, almost 1/3rd of the private industry workers along with over half of the state and local government workers have accessibility to a Health Reimbursement Account; but many employers are still indecisive about going to that way for the risk factors.

Let us see, what would happen if most of the employees use the total deductible.

John Seltzer, the employee benefits specialist and insurance expert for BBR Services, Downtown who considers Busy Beaver as one of his customers, created a software program, which pulls most of the doubt out of question.

According to Jason, Mr. Seltzer's son and a consultant for BBR said that the program is destined to watch further out along with being prognostic for three, four of even more years further on instead of going from year to year.

Precisely, Mr. Seltzer thinks that he can convey the message to the companies that if a Health Reimbursement Account is worthy of the risk factors and if it is not a good deal, they would not suggest that; if not there is more than 75% chance of saving money, even in the worst case.

Up to now, they have been advising to go for an HRA about 25% to 30% of the total time, as said by Mr. Seltzer.

This software program actually does crunch figures as said by Mr. Seltzer. Moreover, he said that this program is just an attachment to an existing medical insurance policy.

However, such accounts are good option for some companies. Mr. Seltzer said that one of his clients, a local non-profit organization had Cadillac Health Plan that provided 100% coverage to the workers and their dependants.

He added that while that turned into financially indefensible, Mr. Seltzer recommended it to an HRA plan that bears deductible of $1,500 per year for the individuals and 3,000 USD for each family. Now the employees are accountable for high co-payment- - from 10 USD to 25 USD. However, the deductible payments are paid by the company.

According to Mr. Seltzer they always have paths to let the customers save money either by raising deductibles or cutting benefits. And what they want to make out is how they can accomplish employer's target without putting any unjustified burden on the workers.

Employers with less cash supply or little workers that restrict the risk pool may not be good contender for Health Reimbursement Accounts. And, it happens with Market Central, a Robinson-based company that develops hardware parts for computer networks.

According to Charles Lehman, the vice president at Market Central, to them it made no sense that BBR with only 13 workers evaluated administrative costs of controlling a health reimbursement account. But still, he agreed that it was helpful since they need to review it each year as the market changes.

Mr. Seltzer told that every customer started a health reimbursement account has saved money, it is not like that. People think that the companies are trying to cut the expenses. But the reality is that they have to offer their workers better health advantages and good salary to keep them employed.


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