HUNT VALLEY, Md., July 12, 2012 – Health reimbursement arrangements (HRA), which are an integral component of many organizations’ consumer-directed healthcare plans (CDHP), celebrate their 10th anniversary on July 15. This employer-based plan allows consumers to use accounts funded by their employers for qualified medical services. HRAs offer a number of advantages: employers’ HRA contributions are not taxed, HRAs have no contribution limits, and employers may decide to let unused funds carry over each year or even stay with the employee after termination.
HRAs, along with health savings accounts (HSA), are gaining in popularity. According to a recent study by Mercer National Survey of Employer-Sponsored Health Plans, commissioned by the American Association of Preferred Provider Organizations (AAPPO), CDHP enrollment was up 18% in 2011.
Additionally, the study found that average employee enrollment is higher in plans with health reimbursement accounts. When employees have a choice between account-based plans and another medical plan, enrollment averages 31 percent for HRA-based plans and 21 percent for HSA-based plans.
“While everyone is analyzing the impact of the Supreme Court’s decision, HRAs are quietly celebrating their 10th anniversary,” Jamie Spriggs, ConnectYourCare president said of the occasion. “HRAs and their younger sibling HSAs are having a new impact on controlling healthcare costs and producing healthier outcomes.”
HSAs are predicted to become increasingly popular as cost-savings vehicles after the Supreme Court upheld the constitutionality of President Barack Obama’s Patient Protection and Affordable Care Act (ACA). The individual mandate and the implementation of Personal Health Exchanges, which are scheduled to launch in 2014, will make it easier for a consumer to shop around for the most suitable plan to meet his or her healthcare needs.
It is estimated that 21 million Americans with private health insurance in 2011 were enrolled in a CDHP or an HSA-eligible plan, according to a study by the Employee Benefit Research Institute (EBRI). Such consumers were found to be more likely to check whether their plan would cover the care they need, ask for a generic drug option, discuss treatment costs with a physician, use an online cost-tracking tool and develop a budget, when compared to consumers who did not enroll in a CDHP.
Success may be attributed to affordable costs
The Towers Watson consulting firm also reports that over half of employers have implemented account-based health plans, which are paired with high-deductible plans and have low premiums, making healthcare more cost-effective.
The substantial growth in these plans may be attributed to the increase in health insurance costs over the past decade, which has more than doubled. Since 2001, family premiums have increased by 113 percent, according to the Kaiser Family Foundation (KFF).
For individuals who may be otherwise uninsured, CDHPs may be an affordable and viable option now that health coverage is mandated. This includes the coverage gap often observed in young adults who are not on their parents’ plan.
ConnectYourCare’s consumer-directed healthcare (CDH) benefit delivery platform provides a pathway for migration to account-based health plans, supplying tools for consumers to better manage their healthcare dollars. ConnectYourCare’s core strategy is based upon providing stewardship to its customers by helping them simplify complex health benefit concepts, motivate individuals to act, and execute a successful solution, resulting in long-term health benefit cost containment. Please visit www.ConnectYourCare.com for more information.