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Employer options for providing Medical & Dental Benefits
1. Fully insured - Insurance is purchased through a carrier, the carrier pays claims and provides administration. Insurance carrier assumes all risk.
2. Partially Self-funded - Employer pays premiums at an expected level. If claims surpass expected level, employer pays the difference. If premiums are in excess of claims, employer retains the difference. Plan is administered by the carrier. Insurance carrier and employer share the risk.
3. Self-funded - Employer pays all claims up to a specific stop loss and aggregate amount. Plan is administered by a third party. Employer assumes majority of the risk.
CONSUMER DRIVEN HEALTHCARE – What is it?
Welcome to the world of consumer-driven healthcare. Consumer-Driven Health Plans (CDHPs) include a broad range of health plans that encourage greater consumer awareness of health care costs and offer tools and resources to help you make better decisions about your health care choices, including HRA, FSA, HSA,
Health ReimbursementAccount (HRA) - Health Reimbursement Accounts consist of funds set aside by employers to reimburse employees for qualified medical expenses, just as an insurance plan will reimburse covered individuals for the cost of services incurred. A health reimbursement account provides "first-dollar" medical coverage until funds are exhausted.
Flexible Spending Account (FSA) - Health care Flexible Spending Accounts are employer-established benefit plans that reimburse employees for specified medical expenses as they are incurred. These accounts are allowed under section 125 of the Internal Revenue Code and are also referred to as "cafeteria plans" or "125 plans." The employee contributes funds to the account through a salary reduction agreement and is able to withdraw the funds set aside to pay for medical bills. The salary reduction agreement means that any funds set aside in a flexible spending account escape both income tax and Social Security tax. Employers may contribute to these accounts as well.
Health Savings Account (HSA) –. Health Savings Accounts are set up in conjunction with High Deductible Health Plans (HDHP). To be eligible to establish an HSA, you must be enrolled in a HDHP. Yearly contributions to an HSA cannot exceed the deductible under the HDHP and are used by the enrolled individual and covered family members to cover the cost of the deductible and other out-of-pocket expenses. If all of the HSA funds are not used within a calendar year, the unused amount is rolled-over to the next year. HSA accounts can also earn interest.
An HSA is like an IRA (Individual Retirement Account) for medical expenses. An HSA belongs to the enrolled individual and goes with you when you change employers.
