PHA Additional Info

Detailed Explanation of How a Pooled HRA Arrangement Works

This program combines a fully-insured high deductible health plan with a Pooled HRA account.  Each individual member company of the pool purchases its own high deductible plan.  Our recommendation is to start with a plan which includes a $1,250 individual deductible and a $2,500 family deductible.  Companies then deposit a portion of the premium savings into a shared bank account.

Companies will proportionally share in the claims submitted by the employees of member companies in the PHA.  For example, if a company has a total of $25,000 in deductibles for their employees and the PHA pooled among several companies had a total liability of $250,000, this company would be responsible for 10% of all the claims submitted to the PHA.

Employees would submit claims for out of pocket expenses not covered by the health insurance plan to the PHA.  It is important to note that we are using the HRA model for the health insurance plan not the Health Savings Account model.  The HRA plan deductibles do not apply for services such as doctor visits and prescription drugs.  This is not the case for HSA type plans.  This greatly reduces the claims submitted to the PHA.

For many small companies, the HRA plans are risky because there is a chance that the combination of lower premiums with higher deductibles could actually cost the company more money than using a traditional low or no deductible plan.  This is a valid concern for a smaller company.  The PHA can almost eliminate the uncertainty of using such a plan by greatly increasing the number of employees.  By pooling employees of several companies, this gives companies the chance to more accurately predict their out of pocket expenses.  Here’s why:  It is commonly accepted by many different organizations both public and private that about 20 to 25% of the population will have no medical expenses for an entire year.  It is also commonly accepted another 50% will have medical expenses totaling less than $2,000 for the entire year.  In a small company, just a few employees can dramatically affect the “average” by incurring significantly more medical expenses.  By spreading out this out over a much larger base, larger companies are impacted less.

This is why many companies may actually be over insured when it comes to their health insurance benefits.  Employers are paying for coverage that a significant number of employees never use during the year.  Or, if the do use the coverage it is on a limited basis.

Contact us today to see how Zacherl Insurance Group may be able to help your company lower their health insurance premiums.  Mr. George J. Zacherl can be reached at 724-360-5000, via email at gzacherl@zacherlinsurance.com.