NAPA Learning Center – HRA Example #1

HRA with First-Dollar Coverage
This example illustrates a high deductible health plan combined with an HRA that is designed to provide first-dollar coverage for employees. This plan would be a good choice for an employer whose current plan has limited out-of-pocket expenses.

Insurance Plan Design
Base insurance plan with a $2,000 single / $4,000 family deductible and pays for 100% of all expenses after the deductible.

HRA Plan Design
The HRA is set up to pay for the first $1,000 single / $2,000 family of medical expenses after which the employee must pay the next $1000 single / $2,000 family of medical expenses. By using the CHOICE CARE CARDTM we were able to reduce the over all premium by 42%. The employer was able to pass a portion of these savings on to the employees and was able to save over 20% on his annual health care benefit expenses.

The employees got a reduction in their premium expenses and were able to use the CHOICE CARE CARDTM to cover their out-of-pocket medical expenses including doctor visits, prescriptions, and more. In most cases these expenses were paid simply by showing their health provider card and making payment with their CHOICE CARE CARDTM. 

Here are a few stats about HRA’s and First Dollar Plans:

• The average amount an employer will reimburse each employee from the HRA is $500 single / $1,000 family.

• The average amount employees with claims exceeding $1,000 single / $2,000 family would pay is $300 single / $600 family.

• 60% of insured's will have claims totaling less than $1,000 single / $2,000 family