Comments on: Shifting the burden of medical coverage http://www.hrmorning.com/shifting-the-burden-of-medical-coverage/ Your daily dose of HR Thu, 18 Mar 2010 13:43:13 -0400 http://wordpress.org/?v=abc hourly 1 By: Laura http://www.hrmorning.com/shifting-the-burden-of-medical-coverage/comment-page-1/#comment-28888 Laura Wed, 14 Oct 2009 19:52:33 +0000 http://www.hrmorning.com/?p=5256#comment-28888 Our company is seriously considering changing to an HRA in 2010. In the 26 years I've been working in a benefits office I have had no experience with an HRA. Can anyone comment on their experience? Thanks! Our company is seriously considering changing to an HRA in 2010. In the 26 years I’ve been working in a benefits office I have had no experience with an HRA. Can anyone comment on their experience?

Thanks!

]]> By: Charlie T. http://www.hrmorning.com/shifting-the-burden-of-medical-coverage/comment-page-1/#comment-28256 Charlie T. Thu, 08 Oct 2009 19:30:16 +0000 http://www.hrmorning.com/?p=5256#comment-28256 It is a distortion to say that employees share of "premiums" went up more than employers share. You can't look at the out of pocket increase to employees as if the value of the health plan did not go up even more at the same time. Employers have been paying more and more of the total cost of healthcare every year since I got into the benefits business 30 years ago. This is because the annual increase in the value of coverage has always exceeded any increase in out of pocket costs to participants. If the average claim goes from $10,000 to $13,000 in a year, that is a $3,000 increase (30%) in total costs. If the employees average out of pocket ( including employee premiums ) goes up from $1,000 to $1,300, that is a 30% increase. However the employer plan that was paying $9,000 ($10,000 - $1,000) of the average claim is now paying $11,700. The employers increase is $2,700 while the employees portion is only $300. For an extra $300 in out of pocket exposure, the employee recieved a $2,700 increase in the value of their coverage. That is a net increase in the value of the health plan provided by the employer of $2,700-$300 = $2,400. The value of any insurance must take into consideration how much protection it buys. When the average health care claim goes up by more than the increase in out of pocket cost to participants, the value of the plan has gone up, not down. It is a distortion to say that employees share of “premiums” went up more than employers share. You can’t look at the out of pocket increase to employees as if the value of the health plan did not go up even more at the same time.

Employers have been paying more and more of the total cost of healthcare every year since I got into the benefits business 30 years ago. This is because the annual increase in the value of coverage has always exceeded any increase in out of pocket costs to participants.

If the average claim goes from $10,000 to $13,000 in a year, that is a $3,000 increase (30%) in total costs. If the employees average out of pocket ( including employee premiums ) goes up from $1,000 to $1,300, that is a 30% increase.

However the employer plan that was paying $9,000 ($10,000 – $1,000) of the average claim is now paying $11,700. The employers increase is $2,700 while the employees portion is only $300.

For an extra $300 in out of pocket exposure, the employee recieved a $2,700 increase in the value of their coverage. That is a net increase in the value of the health plan provided by the employer of $2,700-$300 = $2,400.

The value of any insurance must take into consideration how much protection it buys. When the average health care claim goes up by more than the increase in out of pocket cost to participants, the value of the plan has gone up, not down.

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