CA Employer Self Funding Wrap Guidelines 2-50 employees

Some employers have been told by agents to buy a high deductible health plan and to tell their employees that they have a lower deductible.  The employer then decides to reimburse the employee for a portion of any expenses incurred between the lower deductible and the high deductible health plan.  The insurance carriers price their high deductible plans assuming insureds will pay the cost under the deductible.  So when employers reimburse the employee by giving them a low deductible, the employee will tend to utilize more care than what the insurance company was expecting.  This is why carriers limit the plans that employers may self insure or “Wrap” underneath a high deductible health plan. 

Definition of a “Wrap Plan”

A “wrap plan” includes any employer-sponsored plan, which is:

(1) Paid for or funded in whole or in part by the employer and/or the employee;

(2) (a) provides reimbursement for health plan deductibles, copayments, coinsurance, or medical expenses, or (b) provides for the payment of set amounts in the event of hospitalization.

Examples include: an employer-funded flexible spending account (FSA), a health reimbursement account (HRA), self-funding of the deductible, an IRS Section 105 plan, a medical expense reimbursement plan (MERP), or a hospital confinement policy. As defined herein, a wrap plan does not include a health savings account (HSA) or employee-funded general purpose flexible spending account (FSA).

CARRIER “WRAP GUIDELINES 

Aetna

Only allows the following to be wrapped:

• HMO Deductible plan
• MC HRA 3000

For all other Aetna MC plans, including the HRA 5000 and the MC 10,000 plans, the only funding allowed is through Aetna’s HealthFund HRA. The maximum amount of the deductible the employer can contribute is 50%

NOTE: existing business currently funding through a qualified HRA other than Aetna HealthFund can continue to do so provided no plan changes are made. If plan changes are made, the HRA administration will need to transition to Aetna HealthFund HRA

Blue Shield

Only allows the following plans to be wrapped:

• Shield Savings Plan 2250/4500
• Shield Savings 1800/3600
• Shield Spectrum 3000

No rules to how much of the deductible is funded 

HealthNet

Only allows the following plans to be wrapped:

• HRA 3000
• HRA 5000

No rules to how much of the deductible is funded  

UHC

Only allows the following plans to be wrapped:

• Definity HRA 1500/80%
• Definity HRA 2000/70%
• Definity HRA 2500/80%
• Definity HRA 3000/70%

May use United HealthCare or another HRA administration company

The maximum amount of the deductible the employer can contribute is 50% 

Sharp

No plans at this time are HRA compatible and/or allow HRA self fund wrapping