Benefit neutrality & integrated HRA plans

[bibliwho]

I've been tying myself in knots on the math trying to compare the cost-sharing implications of switching from a Cadillac health plan to a higher deductible plan w/ an integrated HRA.

The former is a family plan with a standard deductible of $0, no coinsurance, and a max out-of-pocket of $3k/$6k (per person/ per family).

The latter has a standard deductible of $3k/$9k, no coinsurance, and a max out-of-pocket of of $5k/$10k. Copays are naturally a bit higher & the plan is obviously more restrictive all around.

If one of the goals is to minimize cost-shifting to employees, how would you go about determining the appropriate HRA contribution amount?

My current thinking is that this should be based simply on the increase in the max out-of-pocket i.e., $4k ($10k - $6k). But I'm being thrown off by the much larger increase in exposure from the high deductible ($9k vs. $0).

I understand that comparisons will vary depending on total medical expenses, the number of visits, procedures, etc. & should also account for the employee's savings from lower premiums. So it's complex. But I'm hoping someone can help clarify my thinking and perhaps add some insight on how best to approach this.

Many thanks in advance.

[leevena]

Keep in mind that this is not the most efficient method of communicating, there are too many variables and unknowns.  That aside, I commend your effort.  If I understand your plan benefit description, it appears that your solution of funding the HRA by the increase in the max out of pocket.

To start, I would want to know more about your current plan design, and more specifically, how much OOP does the enrolle actual pay?  What, if any, expenses do the employees actual have?  There is no deductible or copays, so it appears to be a plan so rich that there are no employee OOPs.  Is this true?

If that is true, and your goal is to minimize cost shifting to the employee, you will need to design the HRA to match the other plan.  This is nothing more than analyzing where the Cadillac plan actual OOP expenses are.  Then do your math.

Do I understand the plans? 

 

[bibliwho]

Thank you -- yes, I think your understanding is good.

Unfortunately we're a very small employer with only 4 covered staff, so our broker isn't able to provide useful utilization data. There are OOP expenses under the current plan, albeit very low -- $10-$50 copays (including on prescriptions), 20% on durable medical equipment.  I am probably overthinking things, but obviously want to tread carefully when making such a major change.

[leevena]

2 hours ago, bibliwho said:

Thank you -- yes, I think your understanding is good.

Unfortunately we're a very small employer with only 4 covered staff, so our broker isn't able to provide useful utilization data. There are OOP expenses under the current plan, albeit very low -- $10-$50 copays (including on prescriptions), 20% on durable medical equipment.  I am probably overthinking things, but obviously want to tread carefully when making such a major change.

If theKeep in mind that this is not the most efficient method of communicating, there are too many variables and unknowns.  That aside, I commend your effort.  If I understand your plan benefit description, it appears that your solution of funding the HRA by the increase in the max out of pocket.

To start, I would want to know more about your current plan design, and more specifically, how much OOP does the enrolle actual pay?  What, if any, expenses do the employees actual have?  There is no deductible or copays, so it appears to be a plan so rich that there are no employee OOPs.  Is this true?

If that is true, and your goal is to minimize cost shifting to the employee, you will need to design the HRA to match the other plan.  This is nothing more than analyzing where the Cadillac plan actual OOP expenses are.  Then do your math.

Do I understand the plans? 

 

[leevena]

You may be over thinking it.  Go with th high deductible plan and make sure you identify the types of expenses and the amounts of expenses you want the HRA to reimburse.  Keep in mind, this is an ERISA plan, subject to all the requirements, including having written documents and fiduciary responsibilities.  Penalties can add up quickly.  That aside, this is easy to do.

[bibliwho]

Thank you, leevena. I ran through a few scenarios w/ major expenses (i.e., full deductible reached) & employees would be significantly impacted. This is primarily because our current provider will allow funding of the HRA only up to 50% of the deductible amount. Now thinking we should look into some kind of gap insurance. 

[leevena]

You may want to hold off on the gap idea for awhile.  I do not understand why your administrator will only allow 50% of deductible reimbursement.  Unless I am misunderstanding your benefit plan, you are trying to limit the employee OOP, to as close to $0 as possible.

Also, as mentioned earlier, this is an ERISA plan, subject to its rules.  You will need plan documents,  including a SPD, compliant plan design and wording, as well as being subject to section 105 non- discrimination rules.  Make sure your admin is aware and capable.

Lee

[bibliwho]

Yes, we're aware of the ERISA requirements, Lee. Thank you.

I did ask about the 50% cap & it's not unique to our administrator. The explanation given is the essentially the same as given here:

https://www.harvardpilgrim.org/portal/page?_pageid=849,971992&_dad=portal&_schema=PORTAL

I checked w/ Symetra as they have some gap products that could work. Unfortunately, we have too few covered employees. May ask in a new thread for referrals to other companies that may have products for very small groups in our state.

Thanks again!

 

[SmGrpBeneftis]

You can certainly reach out to me, I can advise you on an estimated utilization for a small group like yours, and how to self-administer an HRA.....I have helped 25+ small employers like you with an HRA. My email address is jim@curisbenefits.com. I recognize that you may be in Massachusetts or nearby?

[bibliwho]

Thank you, Jim. We're actually in NH. We've definitely considered using a non-affiliated HRA to get around the 50%-of-deductible restriction. My concern is that the rule appears to be from Anthem & violating it could lead to messiness down the road.

My latest brainstorm is to self-insure the second half of the gap (i.e., until the full deductible is met). But we would need a TPA & I'm not sure this is a thing.