Consumer Driven Health Care Health Reimbursement Account (HRA) Client Case Studies…“Client B”
| |
Customer Since: 1999
Industry: High-Tech
Eligible Employees: 280
Locations: 1
Headquartered: Waltham, MA |
| |
Client B had taken quite a step forward in the CDHC environment by introducing a high-deductible plan as a low cost offering (with only a 7% employee contribution). Therefore, as the renewal approached, Client B was confident that rolling out an HRA or HSA product would make sense. Client B’s renewal (without any plan or product changes) was a 15.6% increase. Client B was under tight budget constraints to not only decrease current medical expenses, but also have a plan in place where during the next 24 –36 months medical costs could be budgeted at single-digit increases as compared to double-digit increases. Longfellow’s approach was to integrate an HRA offering alongside the current HMO and PPO, while educating employees on the current healthcare environment via group and one-on-one presentations. The overall goal was to offer choice at an affordable cost for the employer and to employees.
| |
2005 Employer Costs:
$1,365,496
2006 Initial Costs:
$1,578,513 (15.6%)
2006 Costs w/CDHC Strategy: $1,483,821 (8.67%)
True-Up 2006 Costs w/CDHC Strategy:
$1,533,821 (12.3%)
Expected HRA Liability:
$50,000
Communication Strategy:
Home mailings; group meetings; and one-on-one meeting either in person or via telephone. |
| |
HRA With High Touch Education
Client B chose to fund an HRA to coincide with it’s in-force high-deductible PPO plan. The PPO deductible was $1,000 for individuals and $2,500 for families and Client B committed to applying the HRA to the first 50% of the deductible for each PPO member. The employee contribution was structured as such that any employee who moved to the PPO/HRA would be improving their overall financial situation relative to the first dollar PPO offering, even if they incurred medical expenses above the HRA amount up to the deductible. This was explained to all employees via group meetings over a three-day period as well as 15-minute one-on-one sessions face to face and/or via telephone.
In Summary
By offering three products, one with an HRA that included appropriate employee contributions, employees were able to not only understand the HRA offering, but also enhance their understanding of the first-dollar PPO and HMO offerings already in-force. HMO enrollment improved 33%, and HRA membership was 25% higher than expected.