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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


HRA Plans and the Young Invincibles

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Question: I have been offered a job that only offers HRA insurance and I don't understand it fully, so I am hesitant to accept the job. What should I do?

Answer:: One of my group clients is in the game business. Most of the employees there are young people - under 30 for the most part. The company was providing a defined contribution per month for each employee to pay for group health insurance coverage but found that many of the employees did not value the benefit. We quickly found that the "young invincibles" were healthy and they felt the insurance was too expensive. They believed that they'd never meet the deductibles required before they could get medical expenses paid for. Moreover it wasn't even medical services that they needed. Rather it was treatment for that nagging toothache that the health plan didn't even cover.

So the employer initiated an HRA plan that reimburses medical, dental and vision expenses as well as health insurance premiums. The employees love it and the employer is actually spending less than before.

Answer:: If your prospective employer offers a Health Reimbursement Arrangement (HRA) without health insurance, I wouldn't be hesitant to accept the job -assuming that it's attractive to you in more significant ways. Unlike the Flex Account with which you are familiar, an HRA is funded entirely by the employer. The HRA is a very flexible instrument that can be used to reimburse the same type of expenses you used your flex account for - chiropractor, dental and vision expenses, but it also can be used for the reimbursement of medical expenses and health insurance premiums. So if you are healthy and want to purchase health insurance for yourself for the peace of mind of knowing you are protected for major medical expenses, you can do so and use the HRA to pay for some or all of your premiums. A big plus of this strategy is that you own the health insurance and it's not tied to your job.

When you think about it, isn't the purpose of "employee benefits" to provide services that actually benefit the employees, that attracts good people and helps retain the best contributors?

One of my corporate clients is in the video game business. Most of the employees there are young people - under 30 for the most part. The company was providing a defined contribution per month for each employee to pay for group health insurance coverage but found that many of the employees did not value the benefit. We quickly found that the "young invincibles" were healthy and they felt the insurance was too expensive. They believed that they'd never meet the deductibles required before they could get medical expenses paid for. Moreover it wasn't even medical services that they needed. Rather it was treatment for that nagging toothache that the health plan didn't even cover.

So the employer initiated an HRA plan that reimburses medical, dental and vision expenses as well as health insurance premiums. The employees love it and the employer is actually spending less than before.

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