30 Second Insurance Tips©

Tip 228- The Cost of Copays Continued


In last week’s Tip, we reviewed how a client achieved a $110,000 annualized premium savings by raising their deductible from $2,000 to $5,000 AND, by eliminating co-pays for office visits ($35 PCP/$70 specialist) and prescriptions ($10/$50/$75).

With 37 enrolled employees paying 50%, the premium savings alone would have made up for most of the higher deductible. In this case however, our client was concerned about his employees having to shell out cash for office visits and prescriptions.

Problem solved with a Health Reimbursement Arrangement (HRA) that pays for 65% of all claims up to $5,000. (Review costs for common medical services here.)

Under this new arrangement, individuals pay nothing at the time of the office visit. Instead, they wait for their insurer to adjudicate the claim and send an EOB; which likely will show the discounted office visit costing $ 130. The EOB is sent to the HRA administrator who reimburses (within 7-10 days) all but $45; before the doctor bill is even due!

At the pharmacy, the discounted cost of the drug is put on a charge card. Receipts are sent to the HRA administrator, who reimburses 65% of the cost; again, before the credit card payment is due. (Click here to see the cost of commonly prescribed drugs.)

End result: across the board savings and a heightened awareness of the cost of care.

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