Understanding How a Health Reimbursement Arrangement (HRA) Works for One Company.

It’s important to understand how HRAs work. Here’s an example: TBJ Electronics offers an HMO plan to its fifty full-time employees. The annual premium is $320,000, of which the employer pays 75%, or $240,000. The employees pay the balance of the premium through monthly payroll deductions.

The current plan of benefits:

$15 office visit co-pay
$200 outpatient co-pay
$500 inpatient co-pay
$15/$25 prescription drug co-pay

In an effort to save money for their employees, TBJ Electronics selected a lower-cost plan from the same HMO with the following coverage:

$25 office visit co-pay
$500 outpatient co-pay
$1000 inpatient co-pay
80%/20% prescription drug co-insurance

By converting to the latter plan, TBJ reduces its total annual premium to $243,000. That’s a reduction of over 25%! The premium savings at TBJ are shared by employees and employer alike.

With the savings, the employer elects to fund The Choice Care Card™ for his employees. Each single employee receives $500 while every family receives $1000 in their account.

Every employee is free to use the money to cover out-of-pocket expenses, such as office visit co-pays, outpatient charges, prescription co-pays, and the like. TBJ allows employees who have no need for medical services to use the card for dental and vision care.

Would you like to learn more? Contact us today!