Friday, December 9, 2011

The explication to Rising health Care Costs: Defined contribution Plans and Hra's

On September 23, 2010 the first of the health Care Reform mandates kicked in resulting in someone else round of rising costs. The key for company owners over the next 3-5 years will be to implement "new school" strategies to get operate of your health benefits budget.

The major mandate that went into ensue requires health assurance companies to cover preventive services without a co-pay or any deductible. While on the outside this is a great benefit it does come with a cost. Estimates are that premiums will raise 6-8% just for this alone. This would be in addition to the normal increases we have seen.

Health Care Reforms

Here are two strategies that you can employ that can help you perform operate of your health benefits budget:

The explication to Rising health Care Costs: Defined contribution Plans and Hra's

1. Implement a Group health repayment account (Hra) plan and raise the deductible on your group medical. With this formula you pick a plan with a High Deductible. This will lower your selected significantly. Second, lead some of the selected savings to a health repayment Account. This contribution can be used by the employee to pay some or all of the increased out of pocket costs. One of the largest companies in the U.S. Just implemented this strategy. They are outside the first ,000 of out pocket costs for each employee before any deductible is paid

2. Implement a Hra plan coupled with individual health assurance policies. Why individual policies? First, they are generally 20-40% less cost than a comparable group plan. In this case each employee chooses their own procedure based on their needs and wants. You, the employer, lead a pre-determined, pre-tax allowance for each employee. Your funds is fixed and totally predictable. The added benefit is the boss removes themselves from the assurance company all together. You plainly decide a contribution amount.

Which one should you choose? There is no right or wrong reply and there are pros and cons to each.

Until 2014 when the law changes individual coverage continues to be underwritten for pre-existing conditions. Some employees may not be able to get coverage under this scenario. If you currently do not have coverage and the expense of group coverage is unrealistic then this is a great way to go. Uninsurable employees can qualify for whether the state or federal plan for individuals with pre-existing conditions. On the other hand group assurance coverage is guaranteed issue and all employees will be covered without regard to pre-existing conditions. someone else benefit to the individual route is that when employees have more responsibility in choosing their own plan and are spending an allowance they tend to do so in a more wise way. They also are often happier since the boss picked group plan may not fit for their situation.

There is a third options and that is a hybrid plan where the employees remain on a group health plan and the house coverage is shifted to the individual Defined contribution Plan. There are many creative combinations for controlling costs with a Defined contribution Plan than the original "old school" coming that group health plans offer and it is well worth investigating what fits best.

The explication to Rising health Care Costs: Defined contribution Plans and Hra's

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