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More posts by Josh Parks, DHP
In the small group health insurance market, it’s not uncommon these days to see renewals with increases of 20 percent or more. In fact, many groups are thrilled to get medical renewals with less than double digit increases. Health insurance costs are scheduled to rise 5.4% this year (compared to 3.9% inflation) and that trend isn’t likely to end anytime soon. Agents, employers, and benefit coordinators alike are all looking for ways to decrease costs without burdening employees with higher out of pocket amounts. One way to do this is to establish Health Reimbursement Arrangements or Accounts (HRAs). Though they have been around a long time, many employers you come across may be confused about what HRAs are and how they can be used.
HRAs allow employers to self-fund a portion of the plan benefits without taking on too much risk. Employers can decrease premiums without increasing employee benefits by raising the plan deductible and setting up an HRA to pay the difference for those employees who need it. This is especially helpful for groups in which the same few folks are utilizing the plan—and driving up the premium every year—more than the others.
Benefits of HRAs include:
Aspects of HRAs to warn your groups about:
Educate yourself about the benefits and limitations of HRAs. They aren’t a good fit for every group, but they are a good tool to keep in that “premium reduction toolkit” of yours.
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