Post on 10-Feb-2016
description
Lowering Health CareCosts for Your Company!
TPA Systems, Inc., Houston, Texas 713-641-TPA Systems, Inc., Houston, Texas 713-641-47204720
Buzzwords in LowCost Health Care
HSA Compatible PlansSignificant plan restrictionsEmployee rarely funds his own benefitsEmployer at risk for his contributions if employee terminates
TPA Systems, Inc., Houston, Texas 713-641-4720
Health Reimbursement Arrangements (Accounts)
Employer owned and controlledNo strings attached to plan designNo federal contribution limitsUnused funds retained by the employerA new concept – employers don’t know
how to design plan or determine plan cost
TPA Systems, Inc., Houston, Texas 713-641-4720
Health Reimbursement Arrangements (Accounts)
A great new idea, the cost of which is very predictable!
Can dramatically lower employer health care costs when combined with a high-deductible health plan
TPA Systems, Inc., Houston, Texas 713-641-4720
Determining the EmployerCost of a HRA
1. Employer chooses what expenses will be reimbursable
A. Deductible/Coinsurance Only: unreimbursed deductibles and coinsurance within a health plan (least expensive)
B. Deductible Plus: Unreimbursed deductibles, coinsurance, and co-pays (more expensive)
C. Freestyle 213: All expenses allowed under Section 213(d) of IRC (most expensive)
TPA Systems, Inc., Houston, Texas 713-641-4720
Determining the EmployerCost of a HRA
2. Employer determines his Total CommitmentA. Identifies the total number of covered individuals
in the planB. Establishes a dollar value that will be reimbursed
for eachC. Multiplies the two together (e.g. 40 covered
individuals X $2,500 dollar value = $100,000 Total Commitment)
TPA Systems, Inc., Houston, Texas 713-641-4720
Determining the EmployerCost of a HRA
3. Employer attaches an appropriate funding percentage to the Total Commitment, based on what expenses he deems reimbursableDeductible/Coinsurance Only: 20%Deductible/Coinsurance Plus: 40%Freestyle 213: 50%
TPA Systems, Inc., Houston, Texas 713-641-4720
Determining the EmployerCost of a HRA
4. Employer calculates his annual funding objective (which he pays monthly)A. Deductible/Coinsurance Only: 20% X $100,000 =
$20,000B. Deductible/Coinsurance Plus: 40% X $100,000 =
$40,000C. Freestyle 213: 50% X $100,000 = $50,000
TPA Systems, Inc., Houston, Texas 713-641-4720
Putting HRA to Work
pre-HRA health plan sketch
$1,000 annual ded., 100% thereafter, $20 co-pay for physicians, 10/35/65 drug card annual cost: $470,000
post-HRA health plan sketch
$5,000 annual ded., 100% coverage thereafter, $20/$40 copay for physicians, 10/35/55/25% drug card
annual cost: $310,000
HRA reimburses last $4,000 of employee deductible$3,500 in annual fees, $60,000 in
projected HRA funding, total $63,500
post-HRA health plan and HRA account combined
$1,000 annual ded., 100% thereafter, $20/$40 co-pay for physicians, 10/35/55/25% drug card annual cost: $373,500
oil field equipment manufacturer, 57 covered employees, 85 total covered individuals, Harris County
annual savings: $96,500 (21.5%)TPA Systems, Inc., Houston, Texas 713-
641-4720
Putting HRA to Work
pre-HRA health plan sketch
$500 annual ded., 90% thereafter to $10k, then 100%, $20 co-pay for docs, 10/30/50 drug card annual cost: $186,000
post-HRA health plan sketch
$5,000 annual ded., 100% coverage thereafter, $20/$40 co-pay for physicians, 10/35/55/25% drug card annual cost: $121,000
HRA reimburses last $4,500 of employee deductible$1,000 in annual fees, $12,000 in
projected HRA funding, total $13,000
post-HRA health plan and HRA combined
$500 annual ded., 100% thereafter, $20/$40 co-pay for physicians, 10/35/55/25% drug card drug card
annual cost: $134,000
shipyard and marina, 9 covered employees,
annual savings: $52,000 (27.9%)
15 total covered individuals, Harris County
TPA Systems, Inc., Houston, Texas 713-641-4720
The TPA SystemsDovetail Plan
Takes HRA to the next levelContributing 1/12 of the annual funding
objective binds the plan to fund all claimsProvides covered participants with ID cardsRemoves the employer from reimbursing
for claimsClaims advanced against uncollected funds!
TPA Systems, Inc., Houston, Texas 713-641-4720
Plan design factsUp to three payout tiers available, including first
dollarWaiting periods need not coincide with group planPlan year can be any twelve month periodPlan can pay claims retroactivelyCommon ownership and affiliated service group
rules apply
The TPA SystemsDovetail Plan
TPA Systems, Inc., Houston, Texas 713-641-4720
The TPA SystemsDovetail Plan
Claim FactsClaims paid weeklyClaims can be paid via USPS or ACHClaims must be accompanied by EOB from
carrier90 day run-out upon either employee or plan
terminationTPA Systems, Inc., Houston, Texas 713-
641-4720
The TPA SystemsDovetail Plan
Funding FactsEmployers are 100% liable for all paid claimsFunding adjustments are made quarterly, but can be
more frequent if necessaryAdmin fees and claim funding are by ACH into
different TPA Systems accounts (operating and claims)Will bill direct for claim funding – deposit of 2% of
Total Commitment required + 25.00 per month per bill
TPA Systems, Inc., Houston, Texas 713-641-4720
The TPA SystemsDovetail Plan
Plan expense factsSetup: $295 for plan documents, $12 one-time
set-up charge per participating employeeLow ongoing plan expenses ($50.00 per month
minimum)No set-up charge for future hiresNo charge for ID cardsNo charge for mid-year plan changes
TPA Systems, Inc., Houston, Texas 713-641-4720
Most plans will be Deductible/Coinsurance OnlyWith 15+ covered individuals, funding objective
accurate 90% of the timePercentage cost of administration is far less than
a health insurance policyHRA benefits are COBRA eligibleInterest: none in, none out
The TPA SystemsDovetail Plan
TPA Systems, Inc., Houston, Texas 713-641-4720
Ineligible HRA participantsOwners of sole proprietorshipsMembers of LLC’sPartners of partnerships2% owners of s-corporations
The TPA SystemsDovetail Plan
TPA Systems, Inc., Houston, Texas 713-641-4720
The TPA SystemsDovetail Plan
TPA Systems, Inc., Houston, Texas 713-641-4720