|  | Healthcare Industry | Health Insurance

HRA Vs. OAP Insurance

Employer-sponsored health care coverage often appears in the form of managed care or fee-for-service health plans. Two less common, though emerging, plan types include Health Reimbursement Arrangements (HRAs) and Open Access Plans (OAPs). HRAs and OAPs combine features from managed care and fee-for-service plans to create alternative benefit and coverage options for consumers.

  1. Health Plan Options

    • Many employers offer managed care plans as a health insurance option for employees. A managed care plan requires employees to stay within a predefined provider network to benefit from plan coverages and reduced service costs. Plan benefits and coverages can vary depending on the type of provider network used and the amount of flexibility employees have in choosing their service providers. With fee-for-service plans, employees can receive services and treatment from any provider of their choosing, though they may incur hefty out-of-pocket costs as a result. HRA plans and OAPs provide a mix of benefit types and coverage options while incorporating similar features from managed care and fee-for-service plan structures.

    HRA Plans

    • Rather than set up a standard managed care or fee-for-service plan option, some employers offer Health Reimbursement Arrangements (HRAs), which exist as individual health plan accounts for each employee. Also known as a Defined Contribution health plan, HRAs operate as employer-funded accounts that hold a set amount of money per year. Employees can use account funds to cover out-of-pocket medical costs after submitting a claim for reimbursement. An HRA can act as a primary health care plan or supplement a high-deductible health plan. In effect, employees have their choice of health care providers on a fee-for-service basis, while employers receive tax deductions on any funds placed in HRA accounts.

    OAPs

    • Open Access Plans (OAPs) use a managed care framework made up of three levels, or tiers, of providers that operate as a network. These are employer-sponsored plans, and employees can receive services from providers within any one of the three tiers, with each tier covering a different percentage of health care costs. According to the University of Illinois website, employees receive 100 percent benefit coverage for services provided through Tier 1 providers, 90 percent benefit coverage through Tier 2 providers and 80 percent benefit coverage through Tier 3 providers. In effect, employees have more flexibility in terms of choice of provider, as some level of benefit coverage will apply at each level or tier.

    Considerations

    • As Defined Contribution health plans, HRAs exist as federally approved plans that must adhere to federal requirements. These requirements provide certain protections for employees in terms of how employers administer HRA plans. As an alternative health plan option, HRA plans are the fastest growing employer-sponsored health coverage at the time of publication, according to HealthInsurance.info, an insurance reference site. While OAPs incorporate a basic managed care structure, they can potential offer lower out-of-pocket costs for employees, much like traditional managed care plans do. On the other hand, limitations still exist in terms of choice of providers, even when using a three-tiered network.

Health Insurance - Related Articles