Supplementing HMO co-pays/deductibles

CJinNM · August 2005

Hi - I'm new to the forum. HR Manager in NM. I'm looking at raising out/inpatient hospitalization co-pays to help reduce premium costs. I'd like to design a plan where we agree to cover up to $500 per covered person for in/out patient co-pays per year. Has anyone done anything like this and does it have to be part of a formal plan?

marc · August 2005

If you do not wish this to be taxable income to the EEs, then it would have to be part of a formal plan. There are a couple of ways you can go to make this happen, each with it's own benefits and drawbacks.

FSA's - Flexible Spending Accounts.
HRA - Health Reimbursement Arrangement.
HSA - Health Savings Account

The latter two are ordinarily coupled with a high deductible health insurance plan, but do not have to be.

The FSA is a part of our Section 125 Cafeteria plan - it is employee funded.

You will need to research details to determine if any of these will work for you and if so, which one will fit your company best.

CJinNM · August 2005

We already have a health FSA which is employee funded. What I'd hoped to do was essentially self-fund the additional co-pays as needed with required documentation of the in/outpatient charge. We don't want to put $500 per person into each acct. unless they've had the admission. I wonder if I could do this as part of the FSA as long as it's available to all with insurance and passes non-discriminatory standards.

marc · August 2005

I am not the end point expert, but I do not believe the employer can contribute into the FSA, that is why I suggested looking into the HSA or HRA. The HRA cannot accept employee contributions, but I think the HSA can take either.

The benefit of the HRA is it does not travel with the employee and only needs to be funded if and when the need arises. It is hard to tell from the information given so far, but the HRA may be a better fit for you. Discuss it with your insurance broker or the Third Party Administrator (if you have one) of your FSA - they can probably tell you all you need to know and probably would be a good bet for administering whatever plan you choose.

irenesmsaclaims · August 2005

[font size="1" color="#FF0000"]LAST EDITED ON 08-23-05 AT 07:15PM (CST)[/font][br][br]Actually, I believe that there has to be an HDHP with an HSA. Companies can subsidise the co-pay for hospitalization, but I'm not sure that if would have to be taxable absent a formal plan - that's a good question!

nietra · August 2005

We contribute $300 to the employee's FSA monthly but we can not put the restrictions on the money as discussed. As long as it is an acceptable expense the employee has access to the money.

Supplementing HMO co-pays/deductibles

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