Consumer-Driven Health Plans

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Presentation transcript:

Consumer-Driven Health Plans Health Reimbursement Arrangements (HRA’s) Flexible Spending Accounts (FSA’s)

Health Reimbursement Arrangement HRA

Why HRA? HRAs are a way for employers to give their employees freedom of choice in healthcare planning while controlling their own costs. HRAs are similar to Flexible Spending Accounts (FSA) except that the employees do not lose their money at the end of the year. Unused dollars may be rolled-over into the next year.

Why HRA? HRAs permit the employee to accumulate money for future healthcare needs. HRAs allow employers to offer a high deductible plan and allocate the savings to the HRA for future employee-directed healthcare. HRAs empower employees to make prudent healthcare decisions regarding the quantity, and quality of services that are deemed medically necessary.

The HRA Strategy Employer sets an equal amount of the HRA for each employee The employee can accumulate the unused amount from year to year The employee now has “ownership” in making healthcare decisions The HRA is a “Consumer-Driven” healthcare strategy designed to help manage Plan utilization

HRA Dollars Apply Toward: HRA dollars only apply toward Major Medical Plan Deductibles ($1,000 individual / $2,000 family)

HRA Dollars Do Not Apply Toward: Office Visit Co-Pays Prescription Drug Co-Pays Major Medical Co-Insurance Out-of-Pocket Dental Expenses Vision

Health Reimbursement Arrangement Single Employee Coverage   $250 Employee Deductible

Health Reimbursement Arrangement Single Employee Coverage   $250 Employee Deductible $600 HRA Employer Dollars

Health Reimbursement Arrangement Single Employee Coverage   $250 Employee Deductible Employee Risk: $ 400 Employer Risk: $ 600 $600 HRA Employer Dollars $150 Exposure Major Medical Plan Deductible: $1,000

Health Reimbursement Arrangement Employee & Family Coverage   $500 Family Deductible

Health Reimbursement Arrangement Employee & Family Coverage   $500 Family Deductible $1,200 HRA Employer Dollars

Health Reimbursement Arrangement Employee & Family Coverage   $500 Family Deductible Employee Risk: $ 800 Employer Risk: $1,200 $1,200 HRA Employer Dollars $300 Exposure Major Medical Plan Deductible: $2,000

Example of Office Visit: Ear or Sinus Infection: Office Co Pay: $ 30 Total Office Visit Charge: $ 75 Employee Pays Office Co Pay: $ 30 Insurance Plan pays balance of Office Visit: $ 45

Example of Office Visit with Preventive Services: Preventive Routine Annual Checkup: Office Co Pay: $ 30 Physician Office Visit Charge: $ 75 Lab, X-Ray and Diagnostic Testing: $300 Total Office Visit, Lab, X-Ray & Testing Charge: $375 Employee Pays Office Co Pay: $ 30 Insurance Plan pays balance: $345

Example of Office Visit with Medical Condition: Diagnosis of High Blood Pressure: Office Co Pay: $ 30 Total Office Visit Charge: $ 75 Insurance Plan pays balance of Office Visit: $ 45 Lab, X-Ray & Diagnostic Testing: $500 Applied to Deductible (Employee-Paid): $500 Employee receives Explanation of Benefits from Insurance Plan: $500 applied to employee’s $1,000 Annual Deductible. Employee forwards Explanation of Benefits to MediFlex. $250 is applied to HRA Deductible. Employee receives $250 HRA reimbursement check.

Example of $15,000 Medical Claim (Single Deductible) Balance Claim Amount: $15,000 Employee HRA Deductible: $ 250 $14,750 Plan HRA Reimbursement: $ 600 $14,150 Employee Balance (to $1,000 Maj. Medical): $ 150 $14,000 Major Medical Coinsurance Plan – Plan pays 80% (of next $10,000): $8,000 $ 6,000 Employee Pays 20% (of next $10,000): $2,000 $ 4,000 Plan Pays 100% of Claim Balance: $4,000 $ -0- Employee Total Out-of-Pocket: $ 2,400 Plan Total Paid: $12,600

Example of $150,000 Medical Claim (Single Deductible) Balance Claim Amount: $150,000 Employee HRA Deductible: $ 250 $149,750 Plan HRA Reimbursement: $ 600 $149,150 Employee Balance (to $1,000 Maj. Medical): $ 150 $149,000 Major Medical Coinsurance Plan – Plan pays 80% (of next $10,000): $8,000 $141,000 Employee Pays 20% (of next $10,000): $2,000 $139,000 Plan Pays 100% of Claim Balance: $139,000 $ -0- Employee Total Out-of-Pocket: $ 2,400 Plan Total Paid: $147,600

Health Reimbursement Arrangement Process Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. 1 Provider’s Office

Health Reimbursement Arrangement Process Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. Insurance Claim Administrator adjudicates claim and sends the Employee an Explanation of Benefits to their home. 1 2 Provider’s Office Claim Administrator Providers Office Explanation Of Benefits

Health Reimbursement Arrangement Process Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. Insurance Claim Administrator adjudicates claim and sends the Employee an Explanation of Benefits to their home. Employee receives the Insurance Claim Administrator’s Explanation of Benefits and forwards it to MediFlex in their MediFlex envelope. 1 2 3 Provider’s Office Claim Administrator Providers Office Send to MediFlex Explanation Of Benefits

Health Reimbursement Arrangement Process Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. Insurance Claim Administrator adjudicates claim and sends the Employee an Explanation of Benefits to their home. Employee receives the Insurance Claim Administrator’s Explanation of Benefits and forwards it to MediFlex in their MediFlex envelope. 1 2 3 Provider’s Office Claim Administrator Providers Office Send to MediFlex Explanation Of Benefits The MediFlex Administrator adjusts the Explanation of Benefits for the deductible difference and sends a new MediFlex Explanation of Benefits Report to the employee and the employer. 4 MediFlex

Health Reimbursement Arrangement Process Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. Insurance Claim Administrator adjudicates claim and sends the Employee an Explanation of Benefits to their home. Employee receives the Insurance Claim Administrator’s Explanation of Benefits and forwards it to MediFlex in their MediFlex envelope. 1 2 3 Provider’s Office Claim Administrator Providers Office Send to MediFlex Explanation Of Benefits The MediFlex Administrator adjusts the Explanation of Benefits for the deductible difference and sends a new MediFlex Explanation of Benefits Report to the employee and the employer. 4 The MediFlex Administrator drafts a reimbursement check to the employee based on the MediFlex report amount. 5 Employer Drafts Check MediFlex

Health Reimbursement Arrangement Process Employee receives Check Employee sees Medical Provider for Services. Provider’s office sends claim to Insurance Claim Administrator. Insurance Claim Administrator adjudicates claim and sends the Employee an Explanation of Benefits to their home. Employee receives the Insurance Claim Administrator’s Explanation of Benefits and forwards it to MediFlex in their MediFlex envelope. 1 2 3 Provider’s Office Claim Administrator Providers Office Send to MediFlex Explanation Of Benefits The MediFlex Administrator adjusts the Explanation of Benefits for the deductible difference and sends a new MediFlex Explanation of Benefits Report to the employee and the employer. 4 The MediFlex Administrator drafts a reimbursement check to the employee based on the MediFlex report amount. Employee deposits the check and pays the Provider upon receipt of the Provider’s bill. 5 6 Employer Drafts Check Employee receives Check MediFlex

Flexible Spending Account FSA

How the Flex Spending Plan Works for the Employee: Without Section 125 With Section 125 Net Effect on Pay: $149

Making Informed Healthcare Decisions Ask your Doctor: Find out which over-the-counter products to consider before your doctor prescribes costly prescription drugs Determine whether or not “generic” prescriptions are available vs. more expensive “brand” drugs If you are unsure of your physician’s recommendation, seek other qualified opinions

End of Presentation