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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:

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: 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: 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

Your Health Benefits Toolbox

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WrenchToday’s blog post is a general overview about all of the “tools” that are available to people to fund their healthcare. We’re also going to talk about the sources of these tools.

One of our biggest goals is to help you understand the programs that are available, and where the access and funding of these programs comes from.

Keeping it simple, there are three major sources that fund benefits programs:

  1. Your employer.
  2. Your contributions (You).
  3. The government.

Below are summaries of the programs that are available to people through the above listed benefits sources. Keep in mind that only healthcare, disability, and life benefits are discussed (retirement benefits are not included):

Government Programs:

  • OASDI (Social Security): Old Age, Survivors, and Disability Insurance. This is a government program that provides benefits for the elderly, survivors/dependents of deceased family members, and the disabled. 
  • Medicare: This is a government program that provides health benefits for the elderly.
  • Medicaid: This is a government program that provides health benefits for the poor.
  • State Disability Income: Five states have state disability programs (California, New York, New Jersey, Hawaii, Rhode Island). Puerto Rico also has a disability program. These programs help the citizens of these states with income protection in the event of disability.
  • State Health Insurance Exchanges (set to begin January 1st, 2014): The new “Health Insurance Marketplaces” of healthcare reform (ACA 2010) will provide a place where people with incomes between 100% and 400% of the Federal Poverty Level (FPL) may receive subsides to purchase individual health insurance policies.
  • Guaranteed Issue Mandate: A provision of ACA 2010 (healthcare reform) that will require insurance companies to accept all applicants who apply for health insurance.

Employer Programs: 

  • Group Health Insurance Plan: Some employers may offer their employees an opportunity to enroll in a group health insurance plan. The employer may pay all (or a portion) of premiums. 
  • Group Dental Insurance Plan: Some employers may offer a group dental plan that is similar in concept to a group health insurance plan.
  • Employer-Paid Vision, Supplemental Health Insurance, and Life: Employers may decide to add additional benefits that are paid for.
  • Health Reimbursement Arrangements (HRAs): These are arrangements that are set up by an employer to reimburse employees tax-free for “qualified medical expenses.”
  • Employer Self Funding: This is an arrangement where an employer pays for the medical expenses of their employees through the general revenue of the company. Typically there is a third party administrator and stop-loss coverage involved.

Individual Programs (programs you pay for individually):

  • Individual Health Insurance Plans: These are insurance plans that people participate in outside of an employer. Starting on January 1st, 2014 all applicants who apply for individual health insurance must be accepted.
  • Voluntary Benefits: These are benefits that are typically offered to the employees of a group at a “group rate” that is usually discounted. Employees typically pay for these benefits through payroll deduction, and premiums can also be paid for tax-free through section 125. Examples of voluntary benefits include supplemental health insurance, vision & dental plans, disability insurance, life insurance, etc.
  • Individual Life, Dental, Vision: There are many individual life insurance, dental, and vision programs available outside of group plans.
  • Health Savings Accounts (HSAs): Health Savings Accounts allow people to save money for medical expenses, and then pay for them tax free.
  • Union, Association, MEWA, etc: Individuals may have accessibility to benefits through these types of organizations. Benefits may be paid for out of pocket, and could be offered at a reduced rate.

The above listed gives you the general overview of the benefits that are available through the government, employers, and individual purchases. This does not include all benefits (as it is a general overview)… but it should give you a broad-based idea about the tools that are available, and where they come from.

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: “Consumer Directed Healthcare”

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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:

  1. It’s a concept that gives the consumer power to make their own health benefits decisions.
  2. It is an important concept in the post-healthcare reform environment.
  3. 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:

  1. What kind of health insurance plan should I be looking at?
  2. What do I need to know about healthcare reform, and what kinds of new options are available?
  3. How can my employer or the government help me?
  4. Are there any tax incentives when it comes to health insurance/benefits?
  5. Where does dental insurance and supplemental health insurance fit in?
  6. What is a health savings account, and a health reimbursement arrangement?
  7. …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

Policy Advantage Insurance Services: Content Guide

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This is the Policy Advantage Insurance Services comprehensive content guide. We are giving you insight into our various information outlets (much like TV channels), so that you can effectively utilize these resources as valuable tools. You can find us at all of the top social media sites on the web. (username: policyadvantage)

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In this blog post you will discover all of the platforms and services where we distribute our information (ie: Facebook, Twitter, YouTube, etc). Although each location is a little bit different, we try to stay as consistent as possible with the information we share. Our biggest goal is to help empower our clients, when it comes to making decisions about funding their healthcare.

You can click on the icons below to visit each location. There’s a goldmine of information… here you go:

Policy Advantage Insurance Services’ Homepage: 

home

Page URL: www.policyadvantage.com

Purpose: Like any home page, this is where our business resides online. Here you will find standard company information (addresses, phone numbers, email addresses, etc). You will also find things like customer testimonials, links to our social media, online application tools, and other information that is useful for both clients and colleagues.

Our homepage’s goal is to be a very important resource to our clients and policyholders. We are currently in the early stages of our homepage development, with a goal to make it a very interactive and user-friendly location that provides many tools (ie: applying online, user profiles, easy accessibility to information, and many others). We’ll continue to improve our homepage, so make sure to check back.

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Policy Advantage Insurance Services’ Twitter Page:

Twitter

Page URL: www.twitter.com/policyadvantage

Purpose: The purpose of our Twitter page is to distribute short, valuable, up-to-date pieces of information to our Twitter followers. We like to call it a “micro-blog.” At our Twitter page, we will tweet links to articles of interest, important webpages, important blog posts, etc. Our Twitter posts are also sometimes social (ie: non-insurance content that may include current events, pictures, “inside” company info, sports, local events, etc).

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Policy Advantage Insurance Services’ Facebook Page:

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Page URL: www.facebook.com/policyadvantage

Purpose: The purpose of our Facebook page is to distribute valuable information to the people who “Like” our Facebook page and also to the general public. Everything (all posts) at our Facebook page are public. We encourage our friends, clients, and followers to “like and share” the information that we post in our news feed. There are graphics, links, etc that can come in handy. We share a lot of info at our Facebook page.

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Policy Advantage Insurance Services’ Word Press Page:

word press

Page URL: www.policyadvantage.wordpress.com

Purpose: This is Policy Advantage Insurance Services’ primary blog. This is where you’ll find the most in-depth written information that we share. Our intended audience here is both employers and individuals. You will find valuable information across all subjects when it comes to financing (paying for) healthcare. Many of our posts are categorized, and we try to keep things as simple as possible. Whatever you are looking for, you will find it here… spend some time at this blog. It’s like a health benefits newspaper.

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Policy Advantage Insurance Services’ YouTube Page: 

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Page URL: www.youtube.com/policyadvantage

Purpose: Some people would rather watch/listen than read. For those that would rather watch, our YouTube page is for you. If you are interested in hearing presentations on the various topics and subjects, this is where you want to be. We add Power Point presentations on a periodic basis. Some of our most important information is shared through our YouTube channel.

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Policy Advantage Insurance Services’ Pinterest Page:

Pinterest

Page URL: www.pinterest.com/policyadvantage

Purpose: Pinterest is kind of a newbie in the social media world. It is a great website. This is a place where you can learn more about us at a personal level (outside of just insurance/health benefits talk). We have various creative pin boards here, where we pin the things that inspire us. We even have one dedicated to our clients and colleagues: “Heart of a Lion.” Definitely look us up and follow us at Pinterest, we have fun here. Our webpage was also just recently “Pinterest verified.” We now have the official red check mark next to our URL.

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Policy Advantage Insurance Services’ Blogspot Blog:

Blogger

Page URL: www.policyadvantage.blogspot.com

Purpose: Our Blogspot blog is currently our secondary blog (we always recommend our Word Press blog first). We have future plans to develop this blog further. Currently, it is pretty much a “mirror” to the rest of our content.  Check back periodically.

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Policy Advantage Insurance Services’ About.me Page:

about.me

Page URL: www.about.me/policyadvantage

Purpose: Our newest addition to the content family, our About.me page is currently under construction. Check back periodically as we prepare it to distribute more Policy Advantage Insurance Services information in the future.

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This concludes our comprehensive review of our internet content guide. Check any of the various outlets, and you fill find valuable, up-to-date, relevant information about financing (paying for) healthcare. There is some great information at these different Policy Advantage Insurance Services social media locations.

We also stay on top of current trends, and will add additional “channels” when they become popular. Our username at each one is typically “slash policyadvantage.” (www.example.com/policyadvantage)

As always, thanks for stopping by. We hope that you found our information to be valuable. Please share it with friends, clients, colleagues, and family.

Insurance Alphabet: Letter B

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B is for:

“BROKER”

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Broker: is one that negotiates insurance contracts on behalf of the insured, therefore representing the client’s interest, not the insurer’s.

Brokers already have established relationships with the companies that they contract with. Because of this, they are able to navigate for the insurance consumer more easily. Areas of advantage: https://schweizer-apotheke.de/

  • Customer Service (changes, enrollment, administration, etc)
  • Ability to Expedite Processes (saving the consumer time, and making things more convenient)
  • Brokers are “Fluent in Insurance Language” (able to communicate w/ companies efficiently)
  • Product Knowledge (knowing the insurance company’s products inside-and-out)

Give yourself the advantage, and put a medical benefits broker to work for yourself or your company today.

PAIS Twitter: www.twitter.com/policyadvantage

PAIS Facebook: www.facebook.com/policyadvantage

Health Reimbursement Arrangements (HRAs): The Employee Benefits Home Run

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Note: **this is the fourth (4) of a series of four (4) blog posts that require some knowledge of previous posts to be understood. We recommend that you read them in order. Here is the suggested order of reading:

  1. Healthcare Reform: The Major Players
  2. Phrases Made Easy: “Defined Benefit” and “Defined Contribution”
  3. The Great Transition: Healthcare Benefits & Defined Contribution
  4. Health Reimbursement Arrangements (HRAs): The Employee Benefits Home Run

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When we talk about an employee benefits “home run,” we’re talking about a concept that is really “clutch” in many different aspects. HRAs are that clutch concept… especially in the post-healthcare reform environment. Here’s why:

  • Flexibility, Freedom of Choice, and Quality of Coverage: HRAs are flexible in the sense that they can help in just about any employee benefits setting. They’re really a “universal key.” It doesn’t matter what you currently have in place, they can be very beneficial in your planning strategy. In many cases, HRAs also allow an employee to choose the plan that fits them best, and “consumer direct” their program.
  • Budgetability and Ease of Administration:  We have talked about the “defined contribution” concept w/ respect to employee benefits in past posts. This is that concept: the HRA allows an employer to make decisions based on how much money he/she would like to contribute to each employee’s HRA (it’s much like a monthly allowance, tax free). Employees then make their own purchasing decisions. That’s the defined contribution… and it’s budgetable. With the help of a third party administrator (TPA), administration is easy. 5 minutes a month. 
  • Tax Incentives: “Qualified Medical Expenses” can be reimbursed tax-free through payroll with the help of Section 105 HRAs (this includes individual insurance premiums).

Home Run

As you can see, Health Reimbursement arrangements hit every base. That’s why we refer to them as an employee benefits “home run.”

Employers can utilize the tax incentives, flexibility, budgetability, and simple administration to tailor a program that fits the exact needs of each business. Employees also have freedom of choice (to pick any plan); they will become involved in their own decision-making.

We will get into further detail about how an HRA goes in to place, step-by-step, in future posts. Keep in mind that these are an important concept w/ regard to healthcare reform. They’re a valuable employee benefit, regardless of your future strategy when it comes to navigating the new legislation (ie: whether you decide to utilize private or public options).

Important Editor’s Note 11/22/2013: Since these original blog posts, federal guidance regarding “Stand-Alone HRAs” (which are addressed in-depth throughout these articles) has undergone significant changes. In order to stay in full compliance, please be advised that there are now many additional considerations when adopting this type of benefits planning strategy. Consult with a proper broker or insurance professional before utilizing employer dollars to purchase individual health insurance policies. 

Thanks for stopping by. We hope you found this information to be useful and valuable to yourself or your organization. Please check back weekly, as we add posts that help empower our clients to make sound health benefits decisions. Also, feel free to follow along 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