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Products | Group / Employer Coverage - Health
HMO - A health maintenance organization (HMO) is a managed care organization that consists of a management organization and of medical providers that have agreed to provide care for members on pre-arranged financial terms. An HMO typically places great emphasis on well care and preventive care as a means to provide a healthier population with greater control over health care costs. The management of care in some HMOs can be somewhat inflexible, but most have become considerably more modern in their approach to meeting the consumers' needs.
Qualified High-Deductible Health Plan - A qualified high deductible is one which meets the IRS requirements for plan design, minimum deductibles and maximum out of pocket requirements to enable the covered person to be eligible to establish and/or contribute to a Health Savings Account.
Consumer Driven Health Plan - A consumer driven health plan (CDHP) is a plan with specific design features intended to encourage or provide incentive to the covered person to better participate in the health care purchasing process. Encouraging more cost effective settings, generic prescriptions, or better lifestyles are all examples of the goals of certain features of a CDHP. Buying less insurance is a good thing... most of the time. What about the rest of the time? Consumer Driven Health Plans (CDHPs) are built on a philosophy of buying less insurance, paying less for it, and handling the most affordable costs yourself. This can either be handled as a company in Health Reimbursement Arrangements (HRA) or as an individual in a Health Savings Account (HSA) type of plan.
Health Reimbursement Arrangement - In June of 2002, the IRS established a ruling and terminology for what are now known as Health Reimbursement Arrangements (HRAs). An HRA is an extension of a qualified medical reimbursement plan, in which the employer agrees to provide reimbursement for certain employee medical expenses. This process has always enjoyed a tax favored status as employer payments for reimbursement of IRS qualified medical expenses are deductible to the employer and not considered taxable income to the employee. The 2002 ruling added clarification that an employer promise of reimbursement that goes unused in a given year, can in fact, be carried forward for future years' expenses without adverse tax consequences.
Additionally, this ruling led to the establishment of several rules and guidelines for HRA utilization. In essence, non-discrimination rules, and other various guidelines were provided.
Basically, the HRA plan is an arrangement where an employer allocates dollars for the reimbursement of employee (and dependent) qualified medical expenses not covered elsewhere. Funds for HRA reimbursements always come from the employer, NOT from the employee.
What are the benefits of an HRA? The benefits of an HRA plan vary widely from plan design to plan design, but most often the plan is designed to SAVE THE EMPLOYER MONEY WITHOUT SIGNIFICANT COMPROMISE TO THE EMPLOYEE BENEFIT PLAN. An HRA is most often coupled with a high-deductible health plan, which reduces the premium considerably. This high deductible however, frequently becomes an issue of contention with the employees receiving the benefit. Therefore, the employer utilizes some or all of the savings to establish authorized reimbursement of employee qualified medical expenses for a portion of that deductible amount. Those employees that actually incur medical expenses are subsidized by the HRA promise made by the employer. Often, the numbers show that the employer can provide benefits comparable to the previous benefit structure at an overall reduced cost. Additionally, if the employee population enjoys a favorable level of expenses, the employer retains the funds allocated for those expenses as well as the premium reduction for the high deductible health plan.
Finally, the advantages of an HRA include a higher level of consumer awareness as to the spending for health expenses. Employees would typically prefer keeping their expenses to within the employers' allotted amount, thereby having full coverage for their needed expenses. This is likely to change employee behavior somewhat, to reduce over utilization of the health care system.
Health Savings Account - A Health Savings Account (HSA) is one of the newest and best ways for many to set aside money for inevitable health care expenses. There are many advantages to HSAs. First, HSAs create tax-free money for un-reimbursed medical expenses. HSAs earn tax-deferred growth and excess funds can be invested to maximize earnings. HSAs are also excellent ways to create supplemental retirement income.
The federal government created HSAs to be used in conjunction with a QUALIFIED high deductible health plan. Not all high deductible plans are qualified - special rules have been created to define exactly what type of coverage allows someone to open an HSA. First, an individual may not have any other type of health coverage besides a qualified high deductible health plan to be eligible to open an HSA. Coverage such as dental, vision, disability, and accident insurance are permissible. The minimum deductible is indexed for inflation by the IRS each year. This amount for 2008 must be at least $1,100 for self-only coverage or $2,200 for family coverage. The out-of-pocket maximum cannot exceed $5,600 and $11,200, respectively. In addition preventive services, such as annual exams, routine visits, and well child care may be covered with simple co-pays, without meeting the deductible. All other expenses, including prescriptions, must be subject to the deductible before coverage begins.*
The premise of this type of arrangement is that it allows someone to purchase health coverage that protects them from the bad things in life but allows them to take care of the small things themselves. Those who use this type of a plan are more responsible for their routine healthcare costs and therefore make more cost effective decisions regarding their care. This, in addition to the increased cost sharing and reduction in administration costs, results in a substantial reduction in the premiums of these plans. Quite often, the budget for a qualified high deductible health plan used in conjunction with an HSA to cover the deductible is still less expensive than a comparable "traditional" plan without the deductible. This means that it makes sense for everyone to consider this strategy regardless of their age or health status.
The concept here is simple - use the same money in your healthcare budget to buy a reasonable amount of insurance for less money and put the difference in a specially treated fund that is there if you need it, and yours to keep if you don't use it! Let Client First look into your options in qualified high deductible health plans and Health Savings Accounts today. We have the knowledge and resources to determine and present your best options available.
*The preceding is meant to be a brief overview of the rules regarding what constitutes a Qualified High Deductible Health Plan by the IRS. Other rules apply.
For more information see www.clientfirstbank.com.
HRA and FSA Administration - HRA administrative services are available from CFN, Inc. in two ways. The first is done in-house absent of the need for complicated banking arrangements (Standard HRA Administration) while the second (Basic Debit Card HRA Administration) provides a broad spectrum of banking services and debit card utilization and is therefore more complex and costs a little more.
Standard HRA Administration provides for employer sponsored reimbursement of a portion of the benefits applied to the maximum out of pocket provisions of a ClientFirst Health Plan member. This HRA benefit excludes reimbursement for copays, over the counter (OTC) medications and any other reimbursement for items not specifically subject to the maximum out of pocket provisions of the CFHP. This type of administrative service can be provided on any CFHP product that is not being treated as a qualified high deductible health plan with related Health Savings Accounts.
Standard HRA Administration is very simple. With the help from a Client First representative (agent/broker/us) the employer designs the plan according to the options provided, completes, and signs the HRA Service Agreement. The employer then provides the starting HRA fund deposit for expected reimbursements. Client First will then automatically process the medical claims and HRA reimbursements in one process. This step will generate the appropriate benefit payment from the employer's claim fund and/or HRA deposit fund.
It's really that easy. The advantage to Standard HRA Administration is clear; simplicity and ease of use.
Basic Debit Card HRA Administration is available for more complex fringe benefits that the employer may want to provide. For example: benefits for OTC medications, dental, vision and eyewear, copays, or virtually any other qualified medical expense (IRS code 213(d)) that can be purchased with a debit card under the new IIAS (Inventory Information Approval System as per IRS rules). This type of administrative service can be provided with any CFHP product including qualified high deductible health plans (Investor's Choice plans). The use of a debit card instrument is required in order to streamline the adjudication process of an otherwise intensively manual process. Basic Debit Card HRA Administration provides the ability to reimburse employees for a wide array of benefits and services. With a debit card option a collateral account is used to secure funds accessible with those employee debit cards. Debit cards are used for employees to access their reimbursements directly at the point of purchase and can be used at any health care provider, or IIAS participating merchant. The same debit card can be used by employees electing to establish a health savings account (HSA) with Client First Bank (www.clientfirstbank.com) or even for employees having a limited use HRA in combination with a health savings account (ask us about Custom Administration!). This provides the highest level of automation and the greatest access to reimbursements with one simple debit card.
Self-Funded - The defining difference between self-funded benefits and group insurance is "Who makes the promise to pay for benefits?" In traditional group health insurance, the employer is the purchasing agent for insurance coverage for each participating employee. This insurance is evidenced by an insurance certificate which makes the promise to pay. In self-funded health benefits, the employer simply makes this promise in a document called a Summary Plan Description, which looks much like an insurance certificate - but maybe prettier. Of course, most employers would feel a little gun-shy about the financial obligations created by this promise to pay benefits, so they purchase stop-loss insurance. This protects them from any undue financial burden resulting from this promise. Additionally, they hire someone to handle all of the conventional operations of a health plan so that their employees see coverage much like what they may have been accustomed to all along. What's The Advantage? In self-funded benefit plans the employer has more control, more flexibility, and more potential to save! Each employer gets coverage which is rated specifically for his or her group of employees with specific demographic information. This way, the employer has the most specific rating for their own group with minimal subsidies of their neighbor groups. And while the claims that the employer pays have stop-loss protection to protect from excessive expenses; lower expenses yield savings to the employer's budget!
- PPO
- HMO
- Qualified High-Deductible Health Plan
- Consumer Driven Health Plan
- Health Reimbursement Arrangement
- Health Savings Account
- HRA and FSA Administration
- Standard HRA Administration
- Basic Debit Card HRA Administration
- Self-Funded
HMO - A health maintenance organization (HMO) is a managed care organization that consists of a management organization and of medical providers that have agreed to provide care for members on pre-arranged financial terms. An HMO typically places great emphasis on well care and preventive care as a means to provide a healthier population with greater control over health care costs. The management of care in some HMOs can be somewhat inflexible, but most have become considerably more modern in their approach to meeting the consumers' needs.
Qualified High-Deductible Health Plan - A qualified high deductible is one which meets the IRS requirements for plan design, minimum deductibles and maximum out of pocket requirements to enable the covered person to be eligible to establish and/or contribute to a Health Savings Account.
| Annual Contribution Levels for HSAs | |||
| Individual Amount | Family Amount | ||
| 2008 | Minimum Deductible Maximum Out-of-Pocket |
$1,100 $5,600 |
$2,200 $11,200 |
| 2009 | Minimum Deductible Maximum Out-of-Pocket |
$1,150 $5,800 |
$2,300 $11,600 |
Consumer Driven Health Plan - A consumer driven health plan (CDHP) is a plan with specific design features intended to encourage or provide incentive to the covered person to better participate in the health care purchasing process. Encouraging more cost effective settings, generic prescriptions, or better lifestyles are all examples of the goals of certain features of a CDHP. Buying less insurance is a good thing... most of the time. What about the rest of the time? Consumer Driven Health Plans (CDHPs) are built on a philosophy of buying less insurance, paying less for it, and handling the most affordable costs yourself. This can either be handled as a company in Health Reimbursement Arrangements (HRA) or as an individual in a Health Savings Account (HSA) type of plan.
Health Reimbursement Arrangement - In June of 2002, the IRS established a ruling and terminology for what are now known as Health Reimbursement Arrangements (HRAs). An HRA is an extension of a qualified medical reimbursement plan, in which the employer agrees to provide reimbursement for certain employee medical expenses. This process has always enjoyed a tax favored status as employer payments for reimbursement of IRS qualified medical expenses are deductible to the employer and not considered taxable income to the employee. The 2002 ruling added clarification that an employer promise of reimbursement that goes unused in a given year, can in fact, be carried forward for future years' expenses without adverse tax consequences.
Additionally, this ruling led to the establishment of several rules and guidelines for HRA utilization. In essence, non-discrimination rules, and other various guidelines were provided.
Basically, the HRA plan is an arrangement where an employer allocates dollars for the reimbursement of employee (and dependent) qualified medical expenses not covered elsewhere. Funds for HRA reimbursements always come from the employer, NOT from the employee.
What are the benefits of an HRA? The benefits of an HRA plan vary widely from plan design to plan design, but most often the plan is designed to SAVE THE EMPLOYER MONEY WITHOUT SIGNIFICANT COMPROMISE TO THE EMPLOYEE BENEFIT PLAN. An HRA is most often coupled with a high-deductible health plan, which reduces the premium considerably. This high deductible however, frequently becomes an issue of contention with the employees receiving the benefit. Therefore, the employer utilizes some or all of the savings to establish authorized reimbursement of employee qualified medical expenses for a portion of that deductible amount. Those employees that actually incur medical expenses are subsidized by the HRA promise made by the employer. Often, the numbers show that the employer can provide benefits comparable to the previous benefit structure at an overall reduced cost. Additionally, if the employee population enjoys a favorable level of expenses, the employer retains the funds allocated for those expenses as well as the premium reduction for the high deductible health plan.
Finally, the advantages of an HRA include a higher level of consumer awareness as to the spending for health expenses. Employees would typically prefer keeping their expenses to within the employers' allotted amount, thereby having full coverage for their needed expenses. This is likely to change employee behavior somewhat, to reduce over utilization of the health care system.
Health Savings Account - A Health Savings Account (HSA) is one of the newest and best ways for many to set aside money for inevitable health care expenses. There are many advantages to HSAs. First, HSAs create tax-free money for un-reimbursed medical expenses. HSAs earn tax-deferred growth and excess funds can be invested to maximize earnings. HSAs are also excellent ways to create supplemental retirement income.
The federal government created HSAs to be used in conjunction with a QUALIFIED high deductible health plan. Not all high deductible plans are qualified - special rules have been created to define exactly what type of coverage allows someone to open an HSA. First, an individual may not have any other type of health coverage besides a qualified high deductible health plan to be eligible to open an HSA. Coverage such as dental, vision, disability, and accident insurance are permissible. The minimum deductible is indexed for inflation by the IRS each year. This amount for 2008 must be at least $1,100 for self-only coverage or $2,200 for family coverage. The out-of-pocket maximum cannot exceed $5,600 and $11,200, respectively. In addition preventive services, such as annual exams, routine visits, and well child care may be covered with simple co-pays, without meeting the deductible. All other expenses, including prescriptions, must be subject to the deductible before coverage begins.*
The premise of this type of arrangement is that it allows someone to purchase health coverage that protects them from the bad things in life but allows them to take care of the small things themselves. Those who use this type of a plan are more responsible for their routine healthcare costs and therefore make more cost effective decisions regarding their care. This, in addition to the increased cost sharing and reduction in administration costs, results in a substantial reduction in the premiums of these plans. Quite often, the budget for a qualified high deductible health plan used in conjunction with an HSA to cover the deductible is still less expensive than a comparable "traditional" plan without the deductible. This means that it makes sense for everyone to consider this strategy regardless of their age or health status.
The concept here is simple - use the same money in your healthcare budget to buy a reasonable amount of insurance for less money and put the difference in a specially treated fund that is there if you need it, and yours to keep if you don't use it! Let Client First look into your options in qualified high deductible health plans and Health Savings Accounts today. We have the knowledge and resources to determine and present your best options available.
*The preceding is meant to be a brief overview of the rules regarding what constitutes a Qualified High Deductible Health Plan by the IRS. Other rules apply.
For more information see www.clientfirstbank.com.
HRA and FSA Administration - HRA administrative services are available from CFN, Inc. in two ways. The first is done in-house absent of the need for complicated banking arrangements (Standard HRA Administration) while the second (Basic Debit Card HRA Administration) provides a broad spectrum of banking services and debit card utilization and is therefore more complex and costs a little more.
Standard HRA Administration provides for employer sponsored reimbursement of a portion of the benefits applied to the maximum out of pocket provisions of a ClientFirst Health Plan member. This HRA benefit excludes reimbursement for copays, over the counter (OTC) medications and any other reimbursement for items not specifically subject to the maximum out of pocket provisions of the CFHP. This type of administrative service can be provided on any CFHP product that is not being treated as a qualified high deductible health plan with related Health Savings Accounts.
Standard HRA Administration is very simple. With the help from a Client First representative (agent/broker/us) the employer designs the plan according to the options provided, completes, and signs the HRA Service Agreement. The employer then provides the starting HRA fund deposit for expected reimbursements. Client First will then automatically process the medical claims and HRA reimbursements in one process. This step will generate the appropriate benefit payment from the employer's claim fund and/or HRA deposit fund.
It's really that easy. The advantage to Standard HRA Administration is clear; simplicity and ease of use.
Basic Debit Card HRA Administration is available for more complex fringe benefits that the employer may want to provide. For example: benefits for OTC medications, dental, vision and eyewear, copays, or virtually any other qualified medical expense (IRS code 213(d)) that can be purchased with a debit card under the new IIAS (Inventory Information Approval System as per IRS rules). This type of administrative service can be provided with any CFHP product including qualified high deductible health plans (Investor's Choice plans). The use of a debit card instrument is required in order to streamline the adjudication process of an otherwise intensively manual process. Basic Debit Card HRA Administration provides the ability to reimburse employees for a wide array of benefits and services. With a debit card option a collateral account is used to secure funds accessible with those employee debit cards. Debit cards are used for employees to access their reimbursements directly at the point of purchase and can be used at any health care provider, or IIAS participating merchant. The same debit card can be used by employees electing to establish a health savings account (HSA) with Client First Bank (www.clientfirstbank.com) or even for employees having a limited use HRA in combination with a health savings account (ask us about Custom Administration!). This provides the highest level of automation and the greatest access to reimbursements with one simple debit card.
Self-Funded - The defining difference between self-funded benefits and group insurance is "Who makes the promise to pay for benefits?" In traditional group health insurance, the employer is the purchasing agent for insurance coverage for each participating employee. This insurance is evidenced by an insurance certificate which makes the promise to pay. In self-funded health benefits, the employer simply makes this promise in a document called a Summary Plan Description, which looks much like an insurance certificate - but maybe prettier. Of course, most employers would feel a little gun-shy about the financial obligations created by this promise to pay benefits, so they purchase stop-loss insurance. This protects them from any undue financial burden resulting from this promise. Additionally, they hire someone to handle all of the conventional operations of a health plan so that their employees see coverage much like what they may have been accustomed to all along. What's The Advantage? In self-funded benefit plans the employer has more control, more flexibility, and more potential to save! Each employer gets coverage which is rated specifically for his or her group of employees with specific demographic information. This way, the employer has the most specific rating for their own group with minimal subsidies of their neighbor groups. And while the claims that the employer pays have stop-loss protection to protect from excessive expenses; lower expenses yield savings to the employer's budget!