Want to use a fully insured haelath insurance plan but want to reduce your costs ?Explore the use of a HRA (Health Reimbursement Arrangement)

1. Strategies For Increasing Health
Insurance Cost For Small and
Mid-Sized Companies
Raymond J. Gianantoni, FLMI
Premium Analysis, Inc.

2. Your Renewal Just Arrived
What are your options ?
– Absorb the increase
Too expensive
– Share the increase with your Employees
They can’t afford it
– Explore Self-Funding
Are you large enough ?
Do you have the risk tolerance ?

3. Your Renewal Just Arrived
What are your options ?
– Select a plan with dramatically increased
deductibles

4. Your Renewal Just Arrived
What are your options ?
– Select a plan with dramatically increased deductibles
Rate increase becomes somewhat manageable
– Seeing 15-20% reduction going from
$1,000 ($2,000 Family) to $2,000 ($4,000 Family)
But: Hard/Impossible for the Employees to handle
the deductibles

5. Handling the High Deductible
Implement an Employer Health Reimbursement
Arrangement (HRA) on a pay-as-you-go basis to
absorb some of the deductible
– What is your exposure ?
As low as $0 if no one uses it (very unlikely)
As high as the Amount Reimbursed times the number of
exposures – much higher than the number of covered
Employees (very unlikely)
Somewhere in between… what is it ?

6. Quantifying your HRA Exposure
We will calculate your maximum exposure (easy)
We will calculate your likely exposure
– Access to huge database of actual experience
Provide a probability curve (using Monte Carlo
Simulation Software with 10,000 iterations) of your
exposure
Quantify the unknown for better decision making !

7. Example
Health Insurance Renewal
Proposed
"Old" Renewal $1,000 Ded
Single 33 33 33
Family 61 61 61
Covered Members: 155 (for HRA purposes)
Cost 279.06 367.95 296.65
748.44 987.05 801.15
Monthly 54,864 72,352 58,660
Annual 703,915
658,366 868,229 703,915
Gross savings 164,314
Amount before HRA "activates": 200
ER HRA Maximum Reimbursement: 800
Projected
Savings /(Cost)
HRA Maximum 124,000 40,314
HRA Projected (Tabular): 29,776 134,538
See Probability tab
Raymond J. Gianantoni, FLMI
Tel 413-732-2888
Email rayg@premiumanalysis.com

8. Example
HRA Results Probability
New Plan New Plan New Rates
Probability of HRA Cost: Premium Total Cost Old Plan Savings
5% < 10,658 703,915 714,573 868,229 153,656
10% 14,022 703,915 717,937 868,229 150,292
15% 16,815 703,915 720,730 868,229 147,499
20% 19,440 703,915 723,355 868,229 144,874
25% 22,078 703,915 725,993 868,229 142,236
30% 24,310 703,915 728,225 868,229 140,004
35% 26,715 703,915 730,630 868,229 137,599
40% 28,988 703,915 732,903 868,229 135,326
45% 31,370 703,915 735,285 868,229 132,944
50% 34,081 703,915 737,996 868,229 130,233
55% 36,764 703,915 740,679 868,229 127,550
60% 39,409 703,915 743,324 868,229 124,905
65% 42,438 703,915 746,353 868,229 121,876
70% 45,756 703,915 749,671 868,229 118,558
75% 49,783 703,915 753,698 868,229 114,531
80% 54,210 703,915 758,125 868,229 110,104
85% 59,416 703,915 763,331 868,229 104,898
90% 66,650 703,915 770,565 868,229 97,664
95% 79,183 703,915 783,098 868,229 85,131
100% 124,000 703,915 827,915 868,229 40,314
34,081 50.0% of results are equal or lower
50.0% of results are greater
Raymond J. Gianantoni, FLMI
Tel 413-732-2888
Email rayg@premiumanalysis.com

9. End Result – Actual Example
Employees have no change in benefits from carrier
– Must file for HRA reimbursement
Employer:
– Has a 0% probability that HRA expenses will exceed
premium savings (unusual)
– 50% probability that there will be a 15% premium savings
– 75% probability that there will be a 13% premium savings
Note: Each case will be different

10. Cost Of The Analysis
40 Basis Points (.004) times your annualized
renewal (in-force plan)
– Minimum of $1,000
Or
Broker of Record Letter (Normal
Compensation)
Hold Harmless Agreement

11. Presented By:
Raymond J. Gianantoni, FLMI
20 Maple Street, Suite 3
Springfield, MA 01103
Tel 413-732-2888
Email rayg@premiumanalysis.com