Health Spending Arrangement

[Guest caseylaw]

How would a Health Spending Arrangement work for a self-insured plan as opposed to a fully-insured plan and has anyone implemented this on a self-insured basis? Is this type of plan only for a fully-insured plan?

[GBurns]

I do not understand your post.

Health spending arrangements whether FSAs, 105(B) or "new" HRAs are all self funded plans. Usually these are all used in conjunction with a medical/health insurance plan which can be whatever it wants to be.

[Guest caseylaw]

I am referring not to FSA's but the new Health Spending Accounts and am looking for an example of how this works for a self-insured medical plan.

[papogi]

The HRA's that GBurns refers to in his post are the new Health Spending Accounts you are talking about. His post is on the mark.

[Guest caseylaw]

OK, I'll try an example myself even though I haven't seen one for a self-insured plan. An employer allocates X amount in premium and offers two plans one with a $250 deductible and 90/80 coinsurance, the other plan $1000 deductible 80/70. The employee can choose the later plan and have unused premium which goes into the account and can be used the next year. I just see this as a better senario for a fully-insured plan and don't see the full benefit for claims savings for the employer in a self-insured situation.

[papogi]

If you’re talking about self-insured versus full-insured health coverage and how that relates to offering HRA’s (which are always self-funded), that opens up something completely different. From a purely statistical and theoretical standpoint, there should be no difference at all. Whether a company sets aside a fixed premium per person per month for a year to go towards a fully-insured plan, or they set aside an amount equal to the expected claims experience per month per year to go towards a self-funded plan, the bottom line at the end of the year should be similar. If the fully-insured plan offers a low option so that money is freed up for an HRA, the self-insured plan can also offer a low option which allows the employer to predict lower claims experience and result in freed up money for an HRA when someone elects that option. Really, this opens up the constant debate of fully-insured versus self-insured. I don’t see how HRA’s really affect that debate, since they are always self-insured, regardless of the accompanying health plan.