In the news: The Wall Street Journal

Written by: JD Cleary
Originally published on July 30, 2007. Last updated November 21, 2013.

Front page feature story on how thousands have chosen Defined Contribution Employer Health Benefits See entire article

Selected Quotes:

Helen Griffin, owner of IT Pros in Overland Park, Kan., was fed up with soaring premiums her insurer was demanding. The technology firm this year began offering a $100-a-month HRA allowance, plus an additional $200 a month for workers with a spouse and children. Ms. Griffin says all five of her full-time employees were able to find individual coverage. She and her husband paid a combined $330 a month for their policies, down from $800 a month paid by the company when the business had a group plan.

Sam's Club, the warehouse chain of Wal-Mart, has been selling HRA-based plans to small businesses since January 2006 in a tie-up with Extend Health Inc., a company started by Mr. Pilzer. Barnett Well Services LP in Cresson, Texas, joined the Sam's Club program in April 2006. The oil-industry trucking firm says group insurance was too expensive at $420 a month per employee. Instead, each of the 28 workers gets $100 a month of HRA money to put toward insurance premiums or, if they prefer, other medical expenses.

It's better for individuals to buy their own health-insurance policies because, under state and federal laws, the policies can't be terminated for health reasons. By contrast, workers who lose group coverage when they're laid off or change jobs may not be able to replace it.

Employers set aside a certain sum every month, say $200, that employees can use for health expenses. The employer can write off the expense for tax purposes, just like traditional health benefits, and the money doesn't count as taxable income for the employe

Originally published on July 30, 2007. Last updated November 21, 2013.


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