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More big insurance company wisdom from "Benefits Selling Weekly"...
California carriers hamper HRAs
By Ralph Weber
California employers are being deprived of one of the best tools available for lowering the cost of coverage and offering health benefits. They are being deprived of this tool, not by state legislators and regulators, but because of concerted action by the state's health plans. At a time when the governor and the legislature are desperate for solutions to the vast number of uninsured, it is insane employers are forbidden from using a tool employers everywhere else are adopting.
This tool is a health reimbursement arrangement. Employers all over the country have embraced HRAs as a workable solution to providing affordable health insurance coverage. Roughly 6 million workers are covered by HRA programs and the rate of growth is sizzling.
The response has been overwhelmingly positive. Workers are more sensitive to the cost of care and more cautious in how they consume benefits. This results in lower utilization, better compliance with treatments, and lower costs for everyone.
Unfortunately, in California most of the major carriers are prohibiting the use of this new tool. They will sell the high-deductible insurance plan, but only if the employer agrees not to attach an HRA to it:
Kaiser is threatening to withhold agent commission and/or cancel their agent contract beginning Jan. 1, 2008, if agents set up an HRA program for their clients.
Blue Cross has been requiring small employers to sign a Statement of Understanding acknowledging the employer will not offer an HRA in conjunction with the carrier HDHP.
Heath Net announced the same restrictions and guidelines in 2006.
All of the carriers, including United Health Care, have created plans with deductibles as high as $5,000, but price them higher than their lower-deductible "HSA/HRA compatible" plans.
Some carriers allow employers to use HRAs with certain plans, but only if you use the TPA owned by the carrier, not a TPA of the employer's choosing.
These policies interfere with the way employers attack the health care crisis. Many California employers neglect to offer health insurance to their employees due to cost. HRAs - with HDHPs - have been the answer for hundreds of small employers who need a way to offer an affordable group health plan as part of their benefit package to recruit and retain employees.
These actions taken by the above insurance carriers may be in violation of the Small Group Reform Legislation of 1993. Section 10705 clearly states that carriers must "fairly and affirmatively offer, market, and sell all of the carrier's benefit plan designs that are sold to, offered through, or sponsored by, small employers."
It also states that an agent shall "advise the small employer of the carrier's obligation to sell to any small employer any of the benefit plan designs it offers to small employers." By violating these regulations, the carrier is also putting the California agent in violation.
With the rate of non-insureds so high in California, we need to make sure our small employers have affordable options to offer their employees. We cannot allow the insurance carriers to offer only their high-cost plans to our employers.
Look for more on this subject in next week's Benefits Selling Weekly.
California carriers hamper HRAs
By Ralph Weber
California employers are being deprived of one of the best tools available for lowering the cost of coverage and offering health benefits. They are being deprived of this tool, not by state legislators and regulators, but because of concerted action by the state's health plans. At a time when the governor and the legislature are desperate for solutions to the vast number of uninsured, it is insane employers are forbidden from using a tool employers everywhere else are adopting.
This tool is a health reimbursement arrangement. Employers all over the country have embraced HRAs as a workable solution to providing affordable health insurance coverage. Roughly 6 million workers are covered by HRA programs and the rate of growth is sizzling.
The response has been overwhelmingly positive. Workers are more sensitive to the cost of care and more cautious in how they consume benefits. This results in lower utilization, better compliance with treatments, and lower costs for everyone.
Unfortunately, in California most of the major carriers are prohibiting the use of this new tool. They will sell the high-deductible insurance plan, but only if the employer agrees not to attach an HRA to it:
Kaiser is threatening to withhold agent commission and/or cancel their agent contract beginning Jan. 1, 2008, if agents set up an HRA program for their clients.
Blue Cross has been requiring small employers to sign a Statement of Understanding acknowledging the employer will not offer an HRA in conjunction with the carrier HDHP.
Heath Net announced the same restrictions and guidelines in 2006.
All of the carriers, including United Health Care, have created plans with deductibles as high as $5,000, but price them higher than their lower-deductible "HSA/HRA compatible" plans.
Some carriers allow employers to use HRAs with certain plans, but only if you use the TPA owned by the carrier, not a TPA of the employer's choosing.
These policies interfere with the way employers attack the health care crisis. Many California employers neglect to offer health insurance to their employees due to cost. HRAs - with HDHPs - have been the answer for hundreds of small employers who need a way to offer an affordable group health plan as part of their benefit package to recruit and retain employees.
These actions taken by the above insurance carriers may be in violation of the Small Group Reform Legislation of 1993. Section 10705 clearly states that carriers must "fairly and affirmatively offer, market, and sell all of the carrier's benefit plan designs that are sold to, offered through, or sponsored by, small employers."
It also states that an agent shall "advise the small employer of the carrier's obligation to sell to any small employer any of the benefit plan designs it offers to small employers." By violating these regulations, the carrier is also putting the California agent in violation.
With the rate of non-insureds so high in California, we need to make sure our small employers have affordable options to offer their employees. We cannot allow the insurance carriers to offer only their high-cost plans to our employers.
Look for more on this subject in next week's Benefits Selling Weekly.
