NAPA Learning Center – HRA Example #3

HRA in Conjunction with an HMO
This example illustrates a high deductible health plan combined with an HRA that is designed to offset employee out-of-pocket expenses. This plan would be a good choice for an employer who wants to maintain his current HMO plan but control rising premium costs.

Insurance Plan Design
In this case we simply increased the co-pay and deductible amounts.

Previous Plan

• $15 office co-pay
• $200 outpatient co-pay
• $500 inpatient co-pay
• $15/$25 presciption co-pay

New Plan

• $25 office co-pay
• $500 outpatient co-pay
• $1,000 inpatient co-pay
• 80/20% prescription co-insurance

HRA Plan Design
In this case the HRA is designed to offset up to $500 single /$1,000 family of out-of-pocket expenses. The employee can choose whether they wish to use the money towards doctors' office co-pays or the more unpredictable outpatient or inpatient co-pays. By using the CHOICE CARE CARD we were able to reduce the over all premium by 26% and the employer was able to pass a portion of this savings on to the employees. 

In this case the employer allowed his employees to use the CHOICE CARE CARD for dental and vision care and allowed any unused funds to be rolled forward to a maximum of $1,000 single / $4,000 family. Thus giving employees a wide range of benefits and the freedom to control their individual health care expenses.