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Friday, 23 October 2020 10:28

Fall River Client Saves $200,000 with Health Reimbursement Arrangement

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Fall River has written in past articles about how Health Reimbursement Arrangements (HRAs) can be a valuable cost-containment strategy while effectively rendering employees’ benefits unchanged. We recently completed an internal analysis of one client who was able to slash their effective renewal increase down from 15% to 5% by adjusting and expanding their HRA.

A last dollar Health Reimbursement (HRA) is a way to baby-step into the self-funding world without actually purchasing a self-funded plan from the carrier. The employer can buy a less costly plan with a higher deductible and promise to reimburse a portion of the employees’ deductible, making their net deductible the same as it was. Fall River’s client was facing a tough renewal increase of 15% due to a few ongoing high claims. Using Fall River’s actuarial model to predict HRA costs, we presented an expanded HRA strategy that would save the client money on initial premiums and kept benefits effectively unchanged for the members. Employees responded positively to our communication campaigns around the HRA, and felt that they understood how the HRA worked.

Our actuarial model initially estimated that this HRA strategy would take the renewal from 15% down to 11%, saving the client $80,000, even after accounting for the administration and claims costs incurred from expanding the existing HRA. But after evaluating the first full year of data with the expanded HRA, we were able to confirm that this new strategy had actually saved the client a total of $200,000 due to lower than expected HRA claims expenses!

Some employers are fearful of the risks HRAs may present their bottom line. However, with Fall River’s actuarial models, we are able to conservatively predict how much your organization will spend in HRA costs based on your employee demographics.

This is one more way we are helping employers cut their healthcare costs without cutting their benefits. If you’re interested in learning more about how an HRA strategy could save your company money, talk to your Fall River Client Manager to see if an HRA could be a winning strategy at your next renewal.

Read 91 times Last modified on Wednesday, 28 October 2020 14:00