Organizations that offer traditional group health insurance often feel they’re at the mercy of their insurance providers, spending more and more each year just to maintain benefit levels. A group coverage health reimbursement arrangement (GCHRA) lets employers reimburse employees for out-of-pocket expenses, such as copays and other qualified medical expenses.
At first glance, it might seem like this is an additive expense—and indeed customers certainly use them to offer feature-rich health benefits packages. However, it can be used as a powerful tool for employers to gain control over both cost and quality. Let’s take a closer look at how.
Restructure benefits to curb costs without sacrificing quality
With a GCHRA, organizations can reduce insurance costs by increasing deductibles and then reimbursing employees the difference or more. This approach often gives employees a much lower “effective” deductible, while reducing the organization’s net health benefit costs.
Take control of your health benefit with flexible plan designs
Health reimbursement arrangements (HRAs) offer employers much more flexibility when it comes to designing their health benefits. Key features that PeopleKeep GCHRA plan designs offer include the following:
Allowance amount by job classification
Organizations can decide how much they want to offer employees based on job classifications. This allows them to better control how much they spend on each employee class. Available classifications are:
Organizations can decide if they want to offer employees their full allowance at the start of the benefit period or offer them a smaller amount each month. Offering employees a full allowance upfront ensures they won’t have to wait for an allowance to accrue if they get hit with a big bill. Offering them a monthly allowance mitigates the employer’s risk of an employee taking a full reimbursement at the start of the benefit period and then leaving the company.
Organizations can keep costs in check with the following features:
- Requiring an Explanation of Benefits (EOB). By default, employers reimburse employees for any expense the IRS considers eligible. If they choose, employers can limit eligible expenses to only those their group health insurance provider considers eligible by requiring an EOB with employees’ expense documentation. For example, an employer might not want to reimburse employees for a high-priced prescription unless their group health insurance provider also agrees it is necessary.
- Cost-sharing. Cost sharing reduces unnecessary medical expenditures by employees by making them responsible for paying a certain percentage of their own expenses. This works similar to insurance companies' co-insurance, where the cost of expenses is shared between the insurance company and the employee.
- HRA deductible. An HRA deductible can reduce employer liability by making employees responsible for all expenses up to a predefined threshold. For example, an employer might require that employees pay $2,000 of their own expenses before the employer begins to reimburse them.
Whether you are looking to provide employees a feature rich health benefit, maintain current benefit levels at a lower cost, or take the sting out of a necessary cut in quality, a GCHRA is a great way to help you meet your goals.