High health insurance premiums and the plight of uninsured Americans have federal and state politicians again talking about universal coverage. But two local companies are taking a different tack: helping employers contribute something toward health care for their workers, even if they can’t afford a full health-care plan.
LyfeSystems Inc., of La Conner, and Array Health Solutions, of Seattle, are offering Health Reimbursement Arrangements (HRAs) that help employers create savings accounts their employees can use to pay for medical insurance or services. The plans differ from the more widely known Health Savings Accounts (HSAs), which can be used only to pay for medical expenses, not insurance.
The LyfeSystems HRA can be geared toward part-time workers with several jobs, allowing all of their employers to contribute. And family members can arrange for their employers to make contributions to a joint HRA.
Employers typically retain the money committed to an HRA, unless the employee spends it. But LyfeSystems said employers can allow employees to retain unspent HRA funds, and employees can take those funds with them when they leave for other jobs.
“We believe in ownership, portability, choice and affordability,” said Randy Ray, founder and CEO of LyfeSystems, which was founded last year.
Providers say HRAs fill a gap created by the soaring cost of health insurance, which has forced many small businesses to forgo employee coverage. In Washington, the National Federation of Independent Business says roughly 55 percent of its 8,500 members with 50 or fewer employees do not sponsor coverage.
In addition, the U.S. Census Bureau says 26 million of the 46 million uninsured Americans either own a small business or are employed by one, said NFIB state director Troy Nichols.
But so far HRAs aren’t widely used. “There is some interest,” Nichols said. “It’s an option we’re exploring” as a possible way to “provide something for employees.”
LyfeSystems’ Ray and Array Health CEO Jonathan Rickert see a substantial market.
“There’s pent-up demand by employers who want to help pay for health care but can’t afford the traditional group (health insurance) market,” Ray said. “The market is just huge.”
Hit with unaffordable rate and benefit changes to its health insurance plan, five-employee P Ponk Aviation, on Camano Island, last August signed up with LyfeSystems, which charges $10 per employee monthly for its services. Said P Ponk owner Norma Knopp, “We’re very pleased with it, at this point.” She declined to say how much the company contributes to employee HRAs.
At Array Health Solutions, CEO Rickert figures that although many Washington employers can’t afford conventional group medical plans, they would consider contributing something on the order of $100 to $250 a month toward employee HRAs.
Run Studios, a young Redmond business specializing in motion graphics, visual effects and character animation, signed on with Array Health in May. The company had tried flexible spending accounts, which allow employees to set aside pretax money from wages to pay for medical expense. But President Darrek Rosen said the accounts lacked flexibility. Group coverage by health insurance companies was too expensive. Array Health gave Run “the most for our health-care dollars,” Rosen said.
Nothing prevents employers from setting up HRAs on their own. But the LyfeSystems and Array programs help with the details: substantiating claims, managing accounting, handling billing, distributing plan documents and complying with legal requirements.
Many companies, Rickert said, “don’t want to deal with the heavy administrative burden.”
Array also offers online tools to help employees compare individual health-insurance policy benefits and prices and to ease the application process. Array charges a monthly fee of $8 to $20 per employee, depending on the group size and services rendered.
“Array,” Rosen said, “provides a really clean wrapper for it all.”
Array Health started up in Seattle two years ago. Privately funded and backed by angel investors, the company now has five employees and 20 clients. LyfeSystems opened for business last June. Ray said the 13-employee firm now has clients in eight states but declined to say how many.
“This is a competitive business right now,” Ray said, “and we’re the only ones in the nation doing this. We’re doing good, and we’re adding more people every month.”