Optional Benefit Structures

Dual Option - offer 2 fully insured plans

Pros:	Employer able to fund at lower benefit; employees buy-up Employees are more involved in cost / benefit analysis of coverage
Cons:	Change in cost shift but no real change in behavior

Medical Expense Reimbursement Plan (MERP)

Pros:	Employer funds predetermined amount of employees’ out-of-pocket Employer able to offset some of employee out of pocket with premium savings Employees are more aware of spending Employer receives detail as to where claims dollars are spent
Cons:	Requires employees to submit claims to Employer for reimbursement Some additional internal administration for company

Health Reimbursement Arrangement (HRA)

Pros:	Employer funds predetermined amount of employees’ out-of-pocket Employer able to offset some of employee out of pocket with premium savings Employees are more aware of spending Potential for employees to rollover a portion of some or all unused funds
Cons:	Requires employees to submit claim to TPA for reimbursement Additional setup / education / fees to employer Employer allocates funds regardless of claims experience

Flexible Spending Account (FSA)

Pros:	Employees set aside pre-tax $$ for Qualifying Medical Expenses Reduces payroll tax for both employer and employee
Cons:	Employees must forecast upcoming expenses “Use it or lose it” applies to funds not used before end of plan year

Health Savings Account (HSA)

Pros:	Employees are more aware of spending Employees have opportunity to use pre-tax $$ to pay Qualifying Medical Expenses Allows funds to rollover – no “use it or lose it” provision Can be funded with Employer &/or Employee $$
Cons:	Requires employees to setup and use special account for paying claims Increased amount of employee education versus traditional plans Employees responsible for ‘up-front’ costs