Array Bulletin: Service & Market Updates for November 2007
In this issue we examine how a new client will benefit from our services; share two new features added to the Array platform; and discuss the cost challenges of covering children under traditional group plans.
Array Offers Simplicity, Enrollment Efficiency, & Compliance
Array recently signed a client in the financial services industry which had previously been paying for individual health insurance policies on behalf of its employees.
In addition to the compliance issues related to this arrangement there were several other problems:
- The employer paid FICA taxes on their payments. Employees paid both FICA and income taxes on the employer's payments.
- Employees manually submitted their premium bills. The employer wrote and submitted individual checks to each carrier.
- New hires were referred to the employer's broker to purchase individual policies.
The client chose to use Array's services, including our HRA, application tools, list billing, and administration. This client will enjoy the following benefits:
- Neither FICA nor income taxes are paid on employer contributions to the HRA.
- Employees no longer receive individual premium invoices. The employer receives one monthly withholding and reimbursement report from Array and writes a single check.
- New hires who want health insurance are directed to the Array site where they can apply for a policy.
In short, this client will benefit from plan compliance, administrative simplicity, and enrollment efficiency.
New Features
We recently added two features to the platform:
- Invoice View: Employers can now view their monthly invoices electronically. This speeds invoice delivery and offers greater security.
- Claim View: Employees are now able to view their HRA claims from their individual portals. A "Claims" tab has been added for employees to see a list of claims and their digital images.
HRAs and Coverage for Children
We consistently see poor dependent participation on employer plans especially when employers do not contribute toward dependent coverage.
According to a recent EBRI report, over 40% of children are either uninsured or significantly subsidized by the government. The report presents the following data about children:
- 57% are insured through an employer
- 30% have public coverage
- 12% are uninsured
One major cause is that the average monthly cost of family coverage on a group plan is $1,009. If an employer does not contribute toward family coverage, many employees cannot afford the employer plan for their children.
All the major carriers in Washington offer comprehensive individual policies to children for around $100. According to Kaiser, the average employer contributes $313 toward employee health insurance. $313 can buy multiple individual policies, especially when a child policy is considered.
Options exist. Instead of contributing $313 to insure a single person, in certain situations it may be better for employers to put the money in an HRA. Employees can then purchase individual policies for themselves and their dependents and be reimbursed with HRA funds.
Source: EBRI Issue Brief #310, Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2007 Current Population Survey, October 2007.
If you have questions or requests, please don't hesitate to give us a call.
Sincerely,
Christopher Moneta
Director of Sales
1-800-640-7086
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