A recent trend in employee benefit planning is the development of Consumer-Driven Health Plans. This is a term used to describe a change in employer-provided plan where the employee is asked to assume greater responsibility for first dollar health expenses and the employer provides access to funds to help the employee meet these expenses. There are several different approaches that can be used to achieve this type of plan:

Medical Reimbursement Plans – With this approach the employer provides a specific benefit amount for each plan year. The benefit amount can be available for all medical expenses allowed by the IRS (medical, dental, and vision). Alternatively the employer can restrict the benefit amount to eligible expenses under the medical plan or only deductible expenses.

With proper documentation, the benefits are tax-deductible to the employer and tax-free to the employee. The employer holds the funds until the employee files claims. This plan can be used with any type of medical plan. EBSC provides claims administration services.

Health Reimbursement Accounts (HRAs) – This approach is the same as the Medical Reimbursement Plan except the benefit is expressed as a monthly deposit to the employee’s account. Funds that are not used by the employee are carried over to subsequent plan years. HRA’s can be used in conjunction with Flex Spending Accounts.

Employees have a greater incentive to save their funds for future expenses. This plan can allow the employee to submit claims after their termination of employment. COBRA premiums are an eligible expense. The employer retains any funds not claimed by the employee after the end of the employee’s eligibility period.

Health Savings Accounts (HSA's) – These accounts were authorized in January 2004. They require a very specific type of high deductible medical plan. This plan has no copays for any services, including prescription drugs. The minimum deductible is $1,000 per individual and $2,000 per family. There are a limited number of insurance plans available for this approach at this time.

Both the employer and the employee can make deposits into the account. The contribution each year is limited to the deductible amount up to a maximum of $2,600 for the individual and $5,150 for families. The funds are held by a Bank or fiduciary in an IRA type account. The funds can be used at any time for any IRS authorized expense.