Consumer Directed Healthcare Archives

Benefits Chalk Talk: Defined Contribution Health Plan Strategies

April 8, 2013/in Benefits Chalk Talk, Defined Contribution Health Planning, Employer Info, General Benefits Info, Health Reimbursement Arrangements (HRAs) /by PolicyAdvantage

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:

Smart Benefits: In most situations, it is a “smarter” way for businesses and individuals to fund healthcare (especially financially). It just makes better sense.
Healthcare Reform: Depending on your defined contribution planning strategy, healthcare reform (ACA/Obamacare) has made current conditions more favorable towards defined contribution benefits planning.
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).
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.

handing-over-cash_100177776_s1

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:

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.
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.
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: https://policyadvantage.com

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

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

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

Pinterest: http://www.pinterest.com/policyadvantage

Word Press (you are here): http://www.policyadvantage.wordpress.com

Insurance Alphabet: Letter D

April 1, 2013/in Insurance Alphabet /by PolicyAdvantage

D is for:

“Deductible”

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

—————————————————————————————————————————————-

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.

—————————————————————————————————————————————-

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: https://policyadvantage.com

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

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

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

Pinterest: http://www.pinterest.com/policyadvantage

Word Press (you are here): http://www.policyadvantage.wordpress.com

Phrases Made Easy: “High Deductible Health Plan” (HDHP)

March 11, 2013/in Employer Info, General Benefits Info, Phrases Made Easy /by PolicyAdvantage

Welcome back to another edition of “Phrases Made Easy.” Our intention with this series is to help make all of those long, drawn-out insurance phrases easier for people to understand. One of our biggest goals is to give our clients and potential clients the power to put the things in place that make the most sense. Well-informed consumers can make a big difference.

This post is about High Deductible Health Plans (or HDHPs). We selected this phrase for a few different reasons:

In many cases (but not all), High Deductible Health Plans (HDHPs) are the cornerstone of Consumer Directed Healthcare.
High Deductible Health Plans are usually used in coordination with HSAs and HRAs.
Consumer Directed Healthcare & High Deductible Health Plans are currently very popular within our industry.

To put the concept in perspective starting off, a High Deductible Health Plan (HDHP) usually works with other products in a system. Much like systems in a house: you have to have plumbing first to run your sink; you have to have electricity first before you can turn on your TV; and you need to have the walls and windows completed, before you turn on the heater or air conditioner.

EPLemon The visualization mentioned above is similar to the components that work with a High Deductible Health Plan (HDHP). There are four things that usually work in the system:

A High Deductible Health Plan (HDHP)
A Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA)
Supplemental Health Insurance
Tax Incentives (Section 105/106 & 125)

The management and coordination of the above concepts all make up a system that can help people manage their own health services more affordably and efficiently. In most cases, the system we just described is commonly referred to as Consumer Directed Healthcare.

Here are some additional facts about High Deductible Health Plans (HDHPs):

Insurance premiums can be most easily controlled by raising or lowering the deductible.
A High Deductible Health Plan can be referred to as a “catastrophic plan” that covers the lion’s share of the bills in the event of a hospitalization. HDHPs also usually have at least one yearly wellness visit.
Cash payments for other services (ie: deductibles, co-insurance, co-pays, physician visits, cash payments for lab work, cash payments for primary care, etc) can be funded w/ tax-advantaged (or sometimes tax-free) arrangements such as HSAs and HRAs. In most cases, unused cash is retained by individuals or employers.
Cash payments through an HSA or HRA encourage providers (doctors, hospitals, and dentists) to be more transparent with their pricing.
Additional concerns (accident, cancer, etc) can be “shored up” with supplemental health insurance plans.
High Deductible Health Plans work very well with the evolving Defined Contribution Healthcare model.

A High Deductible Health Plan was defined in 2013 (for HSA qualification) as a plan with a minimum individual deductible of $1,250/year, and minimum family deductible of $2,500/year. Should you have further questions about how a High Deducible Health Plan might work for you, we encourage you to contact us any time.

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: https://policyadvantage.com

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

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

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

Pinterest: http://www.pinterest.com/policyadvantage

Word Press (you are here): http://www.policyadvantage.wordpress.com

Benefits Chalk Talk: What are the differences between a Health Savings Account (HSA) and a Health Reimbursement Arrangement (HRA)?

February 11, 2013/in Benefits Chalk Talk, Employer Info, Health Reimbursement Arrangements (HRAs) /by PolicyAdvantage

Welcome back to another post in our series called “Benefits Chalk Talk.” This series is designed to help people and employers better understand all of the tools that are available when funding their healthcare. Our biggest goal is to help our clients and potential clients put the things in place that make the most sense.

This post will help you make comparisons between two very important concepts: Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). The reason these two are so important is because they are “money smart” concepts that can help you retain funds. When utilized correctly and with the proper guidance, they can help you save premium dollars that would normally go to the insurance companies.

Here are some important comparisons between an HSA and HRA. We’ll show them as questions, so they’re easier to understand:

Can I get a general overview of both an HSA and HRA? What exactly are they?

Health Savings Account: HSAs are accounts that are created at financial institutions (usually banks). It is established in an employee’s or individual’s name. An HSA helps someone save and pay for medical expenses tax-free. The account is owned by the individual. Participation in an HSA requires enrollment in a high deductible health plan (HDHP).
Health Reimbursement Arrangement: HRAs are the funding option that gives the employer the most control. The employer determines what services are covered, the amount they want to give each employee, and retains control over unused funds.

Who can make contributions to an HSA and HRA?

Health Savings Account: An employer can contribute to an HSA. The employee/individual can also directly contribute to an HSA. Further, an employee can re-direct salary to an HSA account.
Health Reimbursement Arrangement: The employer is the only one that can contribute to an HRA. An employee may not contribute to an HRA in any way.

Who owns an HSA and HRA account?

Health Savings Account: The individual/employee owns the account.
Health Reimbursement Arrangement: The employer owns the arrangement/account.

Who has responsibilities during claims when they pertain to HSAs and HRAs?

Health Savings Account: Only the employee is responsible for maintaining supporting claims records. The employer does not need to be involved.
Health Reimbursement Arrangement: This is an ERISA plan. The employer (or HRA administrator) must substantiate claim expenses.

How involved do I have to be as an employer?

Health Savings Account: There is no employer involvement required in administration or compliance. Although, the employer may contribute and allow for payroll deferral (either after-tax, or through Section 125).
Health Reimbursement Arrangement: This is an ERISA plan, where compliance is required (proper reporting documents and administration).

Do my funds rollover year-after-year?

Health Savings Account: Yes. Funds in a Health Savings Account will rollover year-after-year. There is a maximum yearly contribution that is adjusted at times. The account goes with the individual/employee if they leave or change jobs.
Health Reimbursement Arrangement: Employers generally allow some rollover for future years’ use. However, money does not go with the employee, if the employee changes jobs.

The above questions should give you a basic understanding about the differences between an HSA and HRA. There are additional details about planning strategies when using HSAs and HRAs. Each business and individual is unique, so please contact us anytime to get further information about what types of insurance plans may fit your situation best when working with a Health Savings Account or Health Reimbursement Arrangement. These are both very valuable tools.

Thanks for stopping by. 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: https://policyadvantage.com

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

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

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

Pinterest: http://www.pinterest.com/policyadvantage

Word Press (you are here): http://www.policyadvantage.wordpress.com

Phrases Made Easy: “Consumer Directed Healthcare”

January 28, 2013/in Employer Info, Phrases Made Easy /by PolicyAdvantage

This is another post in our series called “Phrases Made Easy.” The purpose of this series is to help our clients and potential clients understand insurance jargon that has a tendency to be complicated.

Consumer directed healthcare is an important concept that sounds difficult… but it really is very simple! We’ve selected this phrase for a few reasons:

It’s a concept that gives the consumer power to make their own health benefits decisions.
It is an important concept in the post-healthcare reform environment.
It is a phrase you will see a lot in our content at Policy Advantage Insurance Services (in fact, it was already in another one of our series’ called Benefits Chalk Talk: Consumer Directed Healthcare).

Easy

Here it is… this is the Policy Advantage Insurance Services definition of consumer directed healthcare:

Consumer directed healthcare is the idea that patients will behave as medical consumers. Patients will be the ones deciding how their healthcare dollars will be spent. Not doctors, employers, insurance companies, or the government.

That’s it… that’s all it is. You (the consumer) make your own decisions about your own health benefits.

As a consumer, you’ll need to know about all of the different “tools” that are available to you. You’ll also need to know whether-or-not you’re getting help from an employer, the government… or if you’re doing it on your own (there are also combinations of the three).

That’s where Policy Advantage Insurance Services comes in. We share valuable, up-to-date, relevant information that helps businesses and individuals finance (pay for) healthcare. In other words, we help you put all the pieces together. These are the kinds of questions we can help you with:

What kind of health insurance plan should I be looking at?
What do I need to know about healthcare reform, and what kinds of new options are available?
How can my employer or the government help me?
Are there any tax incentives when it comes to health insurance/benefits?
Where does dental insurance and supplemental health insurance fit in?
What is a health savings account, and a health reimbursement arrangement?
…plus others.

There you have it… consumer directed healthcare, made easy. 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: www.PolicyAdvantage.com

Twitter: www.twitter.com/PolicyAdvantage

Facebook: www.facebook.com/PolicyAdvantage

YouTube: www.youtube.com/PolicyAdvantage

Pinterest: www.pinterest.com/PolicyAdvantage

Word Press: www.policyadvantage.wordpress.com

Benefits Chalk Talk: Consumer Directed Healthcare

December 10, 2012/in Benefits Chalk Talk /by PolicyAdvantage

This is our first post in our series called “Benefits Chalk Talk.” Much like an after-practice or halftime chalk session in athletics, our goal is to help empower our clients to put all the many different benefits tools in play. And, much like you face different opponents in a sports contest (and strategies change over time)… our chalk sessions will provide relevant, up-to-date information that will help give you the advantage.

Today’s topic is “Consumer Directed Healthcare.” We selected this as our first concept for a number of different reasons:

Consumer Directed Healthcare’s foundation rests upon individual choices, planning strategies, and knowledge.
Consumer Directed Healthcare will be a concept of emphasis in the post-healthcare reform (Obamacare) environment.
Consumer Directed Healthcare emphasizes the direct involvement of the consumer, encouraging people (and employers) to make sound, informed purchasing decisions (the idea is to make the whole system more efficient).

So this leads us to our question: What exactly is consumer directed healthcare?

Well… consumer directed healthcare has many different definitions. Sometimes it’s even referred to as consumer driven healthcare.

This is the definition we use at Policy Advantage Insurance Services:

Consumer directed healthcare is the idea that patients will behave as medical consumers. Patients will be the ones deciding how their healthcare dollars will be spent. Not doctors, employers, insurance companies, or the government.

Some definitions claim that consumer directed healthcare must be utilized with a high deductible health insurance plan (HDHP). We reject this definition, because we think that all tools and programs must be considered when someone is directing their own program (whether-or-not their strategy includes the use of a high deductible health insurance plan).

There are many things that go into consumer directing:

Am I an individual or employer?
What is my personal situation (family, hobbies, lifestyle, etc)?
Should I utilize private or public options (or a combination of the two)?
What type of heath insurance plan should I put in place?
What are HSAs and HRAs?
What do I need to know about dental, vision, and ancillary programs?
What kinds of tax incentives are available to me?
Plus others…

We’ll answer these kinds of questions in future blog posts. “Benefits Chalk Talk” will identify the different areas of healthcare benefits planning, and then inform the consumer on how to put them into play.

Thanks for stopping by, we hope you found our information valuable. Please feel free to follow us at our other outlets:

Twitter: www.twitter.com/policyadvantage

Facebook: PAIS Facebook Page

Google+: PAIS Google+ Page

Blog: www.policyadvantage.wordpress.com

Blog2: www.policyadvantage.blogspot.com

Posts

Phrases Made Easy: “High Deductible Health Plan” (HDHP)

Interesting links

Pages

Categories

Archive

Tag Archive for: Consumer Directed Healthcare

Posts

Interesting links

Pages

Categories

Archive