At Take Command, we are passionate about helping employer reimburse for health insurance and reimbursing for medical expenses with HRA reimbursement. Reimbursing employees for health insurance is a fundamentally new model of employer sponsored health insurance, and it’s a BETTER model. In fact, we see this as the first step to fixing the healthcare system. Group plans have been around a long time, and they used to be the only way to get insurance, but now they are an outdated model that hides the true costs and responsibility from your employees.
There’s a better way. Let’s talk about HRA reimbursement.
Reimburse for health insurance: what does it mean?
To reimburse for health insurance, an employer will want to set up an HRA, or health reimbursement arrangement. This is also commonly referred to as health reimbursement accounts, HRA reimbursement, or health reimbursement plans. Regardless of the terminology, what this model of benefits does is allows employers to reimburse their employees for health insurance rather than buying it for them. Employees choose their own individual plan that works best for their family and it's tax-free for everyone.
It's a win-win!
See more here: Can Employers Reimburse Employees for Health Insurance?
Employer-sponsored group plans vs. HRA reimbursement
Let's learn about HRA reimbursement, or health reimbursement plans, compared to traditional group insurance.
Our current healthcare system perpetuates a terrible myth—it’s the idea that if people get on a group health plan, we will all be better off by saving money and streamlining care.
But the reality is, group plans not only inhibit this concept from being realized, they actually are one of the primary contributors to why the healthcare system is so dysfunctional in the first place.
Think about this:
When was the last time your group plan experienced a decrease in premiums?
(Spoiler alert: Never.)
When you negotiate your new rates every year, are you really negotiating to get better deals?
What about your broker on your behalf?
Or your carrier for that matter?
The answer is “no”.
What you, the employer, are really doing is negotiating to minimize the damage. The reality is those growing year-after-year costs are getting dumped right back onto you.
Group plans fall short; use an HRA
Today, we believe that group plans are the primary cause for such a confusing and expensive market.
And it’s because incentives are misaligned for everyone in the entire system.
Think about your experience on a group plan. When your employees need to see the doctor, they go, they get care, and then they close their eyes, hand over their insurance cards and HOPE.
A few months later, a bill comes that they HOPE is correct and HOPE is for a fair amount. This doesn’t seem like a very good way to manage costs.
Promote consumerism with an HRA
Employees aren’t compelled to be smart consumers of care because the decision is ultimately made without their specific input.
Because individuals do not have clarity into the true cost of the care they seek, they seldom visit the highest quality, lowest cost doctors.
And why would people care when all they do is show a card to gain access?
“My insurance will cover it,” they think.
Therefore, because people do not demand it, doctors are not incentivized to be judicious with their care. And why would they be when they know that employees won’t actually be paying the bill.
“Your insurance covers it,” they say.
A few weeks later, employees get bills in the mail they hardly recognize. They complain about it, but don’t really do anything about it.
All the while, these reckless economic behaviors have real consequences when group plan premiums increase the subsequent year because of the previous year’s high cost of care.
Group plans put all the responsibility and risk on the employer.
When employers buy insurance for their employees through group plans, employees are not empowered to shop or manage their care; they are rudderless and at the mercy of what has already been negotiated on the group plan.
Think of it this way:
If you were shopping for a car or a TV, you wouldn’t pay ahead of time and THEN go negotiate, right?
Health reimbursement plans to reimburse employees for health insurance
In all fairness, group health insurance plans used to be the only way to buy insurance. But that is no longer the case!
Now there is an option that correctly aligns incentives and empowers employees to be savvy consumers. It’s through reimbursements.
When you reimburse your employees, you’re putting them in the driver’s seat. When they need to see a doctor, they aren’t swiping their cards and hoping for good results, they will be asking questions.
They’ll be interested in what costs what and who are the high value providers.
A great analogy is the shift from pension plans to the 401k model in retirement benefits. In the 1980s, large companies began moving away from pension plans and started matching employee’s contributions to a 401(k).
Within a few years, we saw personal investment tools and advisors explode. Individuals took more interest in their investment products and became smarter about how those dollars were leveraged and invested.
Now we have an opportunity to do that with healthcare. We believe empowered employees are critical to fixing the problems in our healthcare system.
Empowered consumers ask questions and seek answers.
Empowered employees are also healthier employees.
It’s a fact.
Rather than making all the decisions to find a one-size-fits-all group health insurance plan, employers can leverage a few different HRAs.
They’re powerful and flexible and free up employers from the burden of managing employees’ healthcare options.
Reimbursing employees for health insurance encourages consumerism and can help fix the problem.
HRA Reimbursement Benefits
Here's why HRA reimbursement is so great.
- When you reimburse, you’re aligning incentives correctly
- Employees are empowered to to shop smartly for the care they need
- They won’t walk into the ER when urgent care will do because they are paying
- If a doctor bills them for something that’s not right, they’ll notice and work to fix it
- They will get to choose an insurance plan that suits them—if they want the big expensive network, they can buy it. If they want the less expensive one, they can opt for that
- Insurance is there to back them up so they are protected
- Instead of the group model that “dumps” costs onto employers who are a few steps removed from the transaction, reimbursing allows employers to support employees and provide great benefits, but puts the employee in the driver’s seat.
Doesn't all of that sound great? THAT’s how we’ll start to fix healthcare.
This model of reimbursing employees is the first major step towards fixing our healthcare
system. It empowers employees and releases employers from the undue burden. And once more people enter the individual marketplaces—scrutinizing plans, comparing costs, and taking ownership of their health care—the market will accommodate.
It is this increase in clarity and scrutiny in the healthcare system as a whole that will bring about broader, systemic changes. Changes which bring about a simple-to-understand system that not only is easy to navigate but also more realistic and affordable.
That’s why we care. That’s why we’re passionate.
Reimburse for medical expenses with Take Command
Our mission is to help you turn your employees from helpless card swipers into savvy healthcare consumers. We’d love to get to know you and help you explore reimbursement options for your business.
And if you feel intimidated or don’t know what to do?
That’s where we help.
Let’s do it!
A wife to one and mother to four, Keely does all of the things. She’s also dabbled in personal finance blogging and social media management, contributed to MetroFamily magazine, and is passionate about good food, treasure hunting and upcycling. With a B.S. in Psychology from the University of Oklahoma and a knack for a witty punchline, it’s no surprise that Keely’s social posts are as clever as they get. In her (very little) free time, you’ll find Keely with her nose in a book or trying out a local restaurant with her family.