Benefits Chalk Talk: Integrated HRAs

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Welcome back to another edition of “Benefits Chalk Talk.” In this series at our blog, we provide you with valuable, up-to-date, relevant information about health benefits planning so that you can put the things in place that make the most sense for yourself or your company. At Policy Advantage Insurance Services, we feel that informed consumers can make a really big difference in our industry.

Today we’re talking about “Integrated HRAs.” If you’ve been reading our blog, you’ve heard about HRAs (or Health Reimbursement Arrangements) before. We’re a big proponent of them (HRAs in general) for a number of different reasons. They’re a very “money smart” concept when it comes to health benefits planning. If you want to understand more about the general nature of HRAs before moving on, you can read about them here.

As we’ve mentioned, HRAs are a great way to help employers retain funds that would normally go to insurance companies. There are many different ways to utilize HRAs. There are various strategies and ways to set up an HRA. This blog post is specifically geared towards explaining “Integrated HRAs.”

Question: What is an Integrated HRA? 

Answer: Integrate means to combine parts with another so that they become a whole. In the case of an Integrated HRA, there are two parts that are being combined:

  1. A group health insurance plan.
  2. A health reimbursement arrangement (HRA).

Question: What kind of group health insurance plan works with an HRA?

Answer: Any kind of group health insurance plan works with an HRA, as long it (the group health plan) conforms with PHS 2711 (no lifetime or annual limits, etc). Without getting into details that will confuse you, PHS 2711 is one of the big reasons that HRAs integrate so well with a group health insurance plan.

Question: Why would I want to “integrate” an HRA with a group health insurance plan?

Answer: The integration of an HRA with a group health insurance plan can allow an employer to retain funds that would normally go to insurance companies as premiums. In essence, it is a way for an employer to “partially self-fund” their group health plan. Example:

  • An employer puts in a higher deductible PPO (with the higher deductible, premium dollars are saved). The employer then “integrates” an HRA with the higher deductible group health plan to help cover the raised deductibles, co-payments, and other out of pocket expenses. In this example, premiums are lowered, and the additional out-of-pocket risk (higher deductibles and co-pays) are picked up by the employer, tax-free.

Question: How much money can I give to each of my employees in their HRA?

Answer: There is no limit on this amount, because it is integrated with the group health insurance plan (which cannot have annual or lifetime limits). You can decide the amount that you would like to give to each employee. It’s very budgetable. You can also tier your contributions (ie: managers get $200/month, and drivers get $150/month). There are many different ways that this can be set up. It’s very manageable; you can customize your contributions how you like. Contributions are also distributed tax-free by employees into “qualified medical expenses” through Section 105.

As you can see, when properly designed, an “Integrated HRA” can be a valuable and important employee health benefit. They are a very “money smart” concept to help employers save money, and provide quality health coverage. The Integrated HRA can be also considered another form of defined contribution health planning (because an employer is defining a contribution to an HRA).

If you have further questions about setting up an Integrated HRA, please contact us at any time. They’re very simple to administer. We work with a couple of different HRA third party administrators.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

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Phrases Made Easy: “Guaranteed Issue”

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Welcome back to another edition of our blog series “Phrases Made Easy.” Generally speaking… insurance phrases, words, and concepts can sometimes be difficult to understand. Our goal is to make all of those long, drawn-out phrases easier to understand. We feel that informed consumers can make a really big difference in our industry.

Today we picked the phrase “Guaranteed Issue.” The reason that we picked this phrase is because starting on January 1st, 2014 all health insurance policies must be written as “guaranteed issue” policies. When we refer to health insurance, we’re talking about major medical (ie: HMO/PPO) policies. Products like supplemental health insurance, dental, vision, long term care, etc are not required to be “guaranteed issue.”

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The first thing we’ll do is give you the longer definition of “guaranteed issue.” That way, the shorter and easier version will be really simple. Here’s the long definition of “guaranteed issue”:

Guaranteed issue is a term used in health insurance to describe a situation where a policy is offered to any eligible applicant without regard to health status. Often this is the result of guaranteed issue statutes regarding how health insurance may be sold, typically to provide a means for people with pre-existing conditions the ability to obtain health insurance of some kind.

Now that you know the longer definition of “guaranteed issue,” here is the simple version: if you apply for health insurance coverage, you must be accepted. It’s very simple, that’s all it is.

Here are some additional notes on guaranteed issue coverage:

  • All plans from all carriers must be “guaranteed issue” nationwide starting on January 1st, 2014
  • The “guaranteed issue” mandate applies to plans both inside and outside of state health insurance exchanges

“Guaranteed Issue” will take some “getting-use-to” by the public. When this concept is mentioned to our clients and potential clients, they still have a difficult time comprehending it. However, this is correct: regardless of your health status (any pre-existing conditions), you must be accepted for health insurance coverage if you apply for coverage starting on January 1st, 2014.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: http://www.policyadvantage.com

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State Health Insurance Exchange: “Covered California”

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As you know, state health insurance exchanges were a large part of healthcare reform (PPACA). Each individual state was required by the law to set up these new exchanges, and have them ready for enrollment by October 1st, 2013. Some states have elected not to set up an exchange (deferring administration to the federal government). Other states have set up a joint state/federal partnership to operate their exchange.

California has continued along the path to setting up a state-only administered exchange (ie: no help from the federal government, except for funding). The state has taken a more aggressive approach to setting up their exchange, and further information is continuing to roll out. The California state health insurance exchange is called “Covered California.”

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Covered California is anticipated to be the largest insurance exchange in the country. Here are some general questions and answers about the exchange:

Question: How can Covered California help me find affordable insurance?

Answer: Covered California is an online marketplace where you will able to shop for and compare health insurance coverages. If you can’t afford health insurance, and are unable to obtain it through employer, individual or other government programs, the exchange will be something you may want to look at.

Question: How can I participate in the Covered California exchange?

Answer: Eligible individuals will be able to enroll in the exchange plans online, over the phone, or in person.

Question: Can Policy Advantage Insurance Services help me enroll in the exchange?

Answer: Yes. Policy Advantage Insurance Services, and any other “exchange certified” agents/brokers can help you with your questions and enrollment in the Covered California exchange. The exchange has not rolled-out further information about “exchange certification” yet, but we (Policy Advantage Insurance Services) will be getting certified.

Question: How much will my premiums cost at Covered California? 

Answer: Depending on your income bracket (400% of FPL or less), you may received a subsidy from the exchange. Covered California has provided a premium estimation calculator here.

Question: Who will receive subsidies from the Covered California exchange?

Answer: California was one of the states that expanded Medicaid eligibility to 138% of FPL. So, individuals who make between 138% and 400% of the federal poverty level (FPL) should be eligible for subsidies. If you make less that 138% of FPL, you will be eligible for Medicaid in California.

Question: When can I enroll in the Covered California exchange?

Answer: Enrollment is set to begin on October 1st, 2013, and coverage begins on January 1st, 2014.

Question: What types of plans will be available in the Covered California exchange?

Answer: Plans inside of the exchange must contain the same benefits as those outside of the exchange (plans that are being offered within the exchange are private plans that are funded by the federal government). They are essentially identical to those that will be found outside of the exchange. Here are the levels of coverage:

  • Platinum (90% paid by health plan, 10% paid by plan member)
  • Gold (80% paid by health plan, 20% paid by plan member)
  • Silver (70% paid by health plan, 30% paid by plan member)
  • Bronze (60% paid by health plan, 40% paid by plan member)

That’s all for now about the Covered California state health insurance exchange. If you have questions, please feel free to contact us at anytime. As soon as further information is available, we’ll be getting “exchange certified” and helping our clients and potential clients enroll starting on October 1st, 2013. The Covered California website is: www.coveredca.com.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: http://www.policyadvantage.com

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Benefits Chalk Talk: Defined Contribution Health Plan Strategies

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Welcome back to another edition of “Benefits Chalk Talk.” Our biggest goal in this blog series is to help you understand all of the different tools (and planning strategies) that fund healthcare. By providing you with valuable, up-to-date, and relevant information… we’ll give you the power to put things in place that make the most sense for yourself or your business. Knowledge is power; you’ll be able to put a comprehensive program in place for yourself or your company, while saving money.

Today we’re going to be talking about “defined contribution” health plans again. In case you’ve missed past blog posts, we’ve talked about these concepts a little bit already. If you’d like to read up about the concept a little bit more before moving on with this post, you can find further information about it here.

One of the biggest buzz phrases in health benefits planning today is “defined contribution.” It’s a red hot concept. There are a number of different reasons as to why it’s becoming so popular. Here are a few of them:

  1. Smart Benefits: In most situations, it is a “smarter” way for businesses and individuals to fund healthcare (especially financially). It just makes better sense.
  2. Healthcare Reform: Depending on your defined contribution planning strategy, healthcare reform (ACA/Obamacare) has made current conditions more favorable towards defined contribution benefits planning. 
  3. Technology: New computer programs and software are allowing businesses and companies to administer defined contribution health plans with ease. In most cases, these are what are called TPAs (or Third Party Administrators).
  4. Innovation & Creative Benefits Planning: Businesses and companies have been dealing with rising healthcare costs for quite some time (especially with standard group health insurance plans). It has been tiresome and burdensome to find the right coverage, and contain costs. Defined contribution planning can address both of these issues.

The above listed are a few of the reasons why defined contribution health planning is becoming more popular. Now that you have a better understanding, the remainder of this blog post will concentrate on the different strategies using defined contribution concepts and components.

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First off, we’re going to take a second to briefly define the concept. Here it is, in simple layman’s terms:

Defined contribution health plans are an allowance given to employees by an employer. An employer decides each month (or year) how much money they’d like to give to each employee to spend on healthcare benefits.

That’s all it is. As you can see, it’s very simple and budgetable. Once an employer gives each employee an allowance, the employee then decides how they would like to spend their money. It really is that simple.

There are a number of different strategies that can be utilized when setting up a defined contribution health plan. In this blog post, we’re going to describe those defined contribution strategies in their most basic form. We’ll get into further details about each strategy in later blog posts.

Here are currently some of the more popular defined contribution health plan strategies:

  1. Group Health Insurance Plans with an HRA: This is what is called an “integrated” HRA (it is integrated with a group health insurance plan). A group health insurance plan (typically a high deductible plan) is offered to employees. The employer then decides on a monthly allowance (the defined contribution) to give to each employee through the HRA. The employee utilizes the HRA funds towards qualified medical expenses (ie: the deductible, etc). Essentially an employer is partially self-funding with the HRA, and retaining funds that would normally go to insurance companies. 
  2. Group Health Insurance Plans with HSAs: Certain TPAs or Third Party Administrators (who are usually also technology companies), partner with insurance carriers to set up a pre-determined arrangement of group health insurance plans. Then, a TPA (like www.liazon.com) allows clients to select which products fit them best. The employer still decides the amount of money they would like to give to each employee each month, and employees chose the plan they want (still the defined contribution concept). In this strategy, HSAs are usually used instead of HRAs.
  3. After Tax Stipends: You “define a contribution” (ie: $300) per month, and employees then purchase their own individual health insurance plans. Employees can pick from insurance policies that are both on or off the public health insurance marketplaces (where they may receive substantial subsidies, based on income). This strategy is budgetable, and gets business owners out of the business of making insurance decisions. Employees make their own decisions and purchase their own plan. Effectively, all it is is an after-tax stipend. A raise.

As described above, there are a number of different strategies where an employer can utilize the “defined contribution” planning model. Those listed are only a few of them, and there are further details regarding all three. If you have questions, we encourage you to contact us. We work with the TPAs (Third Party Administrators) that can make defined contribution health benefits planning work for your company.

Defined contribution health benefits planning strategies will also continue to evolve and change, as further guidance is rolled out from the Department of Labor, and HHS. We stay on the front end of all of that, and will continue to keep you up-to-date.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: http://www.policyadvantage.com

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Insurance Alphabet: Letter D

D is for:

“Deductible”

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Deductible: is the initial amount of medical expenses an individual must pay before he or she will receive benefits under a medical expense plan.

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Example:

Plan Type: PPO

Co-Payment: $30 primary care, $50 specialist

Deductible: $3000

Coinsurance: 70%/30%

Annual out of Pocket Maximum: $5000

In the PPO listed above, the deductible is $3000. The $3000 deductible must be met before any other benefits are payable.

However, sometimes primary and specialty care office visits are excluded from having to meet the deductible. Other additional services may also sometimes be excluded (ie: things like lab work and x-rays, etc). It’s important to understand what is covered before the deductible has to be met. In addition, it’s also important to understand whether or not the deducible counts towards the plan’s annual out of pocket maximum.  

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Important note about deductibles: The deductible is one of the major components in a health plan that regulates premium prices. The higher your deductible is (ie: the more you pay out of pocket), the lower your premium is. The lower your deductible is (ie: the less you pay out of pocket), the higher your premium is. The reason this is important to note, is because Consumer Directed Healthcare typically uses higher deductible plans in order to lower premiums. With these higher deductibles, you’ll want to look into additional security with money-smart concepts with things like HRAs, HSAs, etc. They can help you retain premium dollars. For additional information about Consumer Directed Healthcare click here.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: http://www.policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

YouTube: http://www.youtube.com/policyadvantage

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