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February 06, 2008

Some Calif. Health Plans Use Questionable Tactics

A group of insurance brokers in California contend that health plans in that state are employing questionable tactics to stifle the marketing of “wrap-around” health reimbursement arrangements (HRAs), and steer employers instead to more profitable products. But the health plans maintain that they are within their right to prevent outside firms from administering HRAs tied to their products.

Teresa A. St. Clair, a broker with Route Three Insurance and Financial Services, based in Paso Robles, Calif., suggests that some health carriers are trying to preserve profit margins by steering small groups toward high-deductible products that have higher premiums and no HRA option. “Carriers are dealing with the loss of premium by telling agents what plan the HRA can be paired with,” St. Clair says.

At issue are policies that restrict the availability of stand-alone HRAs sold independently of a carrier’s benefit plan, generally a high-deductible product. Interest in these wrap-around HRAs is growing as self-funded small groups seek ways to rein in premiums and health care costs, sources tell ICDC.

While most carriers market qualified high-deductible health plans (HDHPs) with HSAs, some of them restrict the use of HRAs to a limited number of products. Blue Cross of California, Health Net of California, Inc. and Kaiser Permanente require self-insured companies to sign a form acknowledging that the employer will not offer its employees a wrap-around HRA except as they are available with designated products.

Blue Cross of California markets one high-deductible product with an HRA, while Kaiser offers two HRA-based products and Health Net markets one HRA product.

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Posted by healthinsurance at February 6, 2008 05:16 PM