HMRA: A True Safety Net

It is a difficult situation when we feel trapped. For many business owners, simply meeting their revenue expectations is sometimes not enough now with taxes and health care expenses eating into an ever-increasing portion of profits. When was the last time that we saw realistic projections of annual health care costs decreasing? I often have thought how I might lower my expectations one day and even accept premium increases if they could just be less than the median wage increase!

How many employers feel capable of reducing deductibles, co-pays, co-insurance, and out-of-pocket maximums with health care costs increasing on an annual basis? The answer is not many. A family can incur premiums of $16,000 per year or more, and that is prior to meeting deductibles and paying for co-pays and co-insurance.

With median, annual household income nationwide hovering around $52,000, health care expenses are eating a sizable chunk of security away from families. Health Matching Accounts can help both employers and employees alike stop hoping for different results and seize a real and effective opportunity for change in regards to the cost of their health care.

The Health Matching Reimbursement Account (HMRA) can reverse the trend of increasing, employer medical costs while also rewarding employees with lower deductibles and out-of-pocket cost-sharing. Through the HMRA, NPHM is not only able to decrease the employer’s annual health care costs but also help them fund millions of dollars of medical reserves that will be on hand for future claims in the process.

National Prosperity Life & Health is offering employers a net to catch an increasing burden of their employee health care obligations with a program that provides protection and insulation against high claims years. The HMRA is a product which liberates employers from a barely tolerable present and a virtually unbearable future.

Employers have grown accustomed to rate increases even when their claim costs drop. With annual medical claim costs spiking around 30% every 5 years, it becomes easy to predict how insurers will respond. There is now a way to plan for these inevitable, high claim years with the HMRA.

The HMRA pre-funds individual, group member balances (employee, spouse and dependents). These individual balances are awarded a monthly interest crediting on the employer contribution that increases 10% every month (assuming no claims) until capping out at a 300% crediting on the employer contribution being allocated to that member’s balance. Account balances build very quickly and are used to reimburse the employer for the entire first-dollar claim amount up to the member’s HMRA account balance at the time of filing regardless of the employees’ and families’ deductibles and cost-sharing obligations.

Typically, 20% of group plan participants incur 80% of the claims. This means that 80% of the participants will have HMRA account balances, which are growing faster than their respective claim outlays. Using those statistics, what are the odds that a high percentage of participants utilizing the HMRA program, who incur a spike in claims every 3-5 years, will have account balances that can pay a significant portion of those claims? The answer is many of them.

The best part for the employer is that they only had to spend a fraction of the amount to fund those group member balances to levels that reach three and four times what they actually contributed. For employees, the employer’s HMRA program can result in decreased premiums and cost-sharing through the reserves that are building up for the employer to be reimbursed with when claims are filed.

The HMRA is also a great safety net for employers during years with high claims occurrences. These high claims years will result in lower HMRA account balances across the group, but employer reimbursements for claims through HMRA are significantly larger and the balances themselves would not be depleted like a traditional HRA for example.

Contrastingly, when claims are lower than expected, average HMRA account balances for group members are growing larger, providing more insulation against future increases in claim costs while still providing additional savings for the employer through the monthly claims reimbursements. The projected, employer contributions towards their HMRA program annually begins to reduce substantially once member begin to reach their target, account balance caps starting in year 3 of the program.

The HMRA works as insulation to protect an employer in any type of environment. Isn’t it about time when the terms and conditions of a health product provides winners all around, including employers and employees, regardless of claims experience, and irrespective of time? Wouldn’t it be nice to see both employers and employees experience reduced costs and lower deductibles?

The HMRA is quickly making its impact. If I am going to be entangled in a net, why not select a safety net, a net that frees you not only from present restraints but provides a promising outlook for the future as well?

Don Levit
CLU, ChFC