Health Reimbursement Arrangement. What Is It?


(Interview 12/2009. Oil on canvas, 40 ins. x 30 ins.)


Update 2021

The contact info I have for this subject is old. I have no idea where my email landed -- maybe in a spam folder somewhere or in some long-abandoned AOL account in PC hinterland.


When I started this project, I thought people needed anonymity to open up. Not true. Most people are fine if I use their names, especially just a first name. I haven't been able to follow up with this subject to get permission to use her first name So I won't.



Artist Note (2009)

When I co-owned a business in the mid-2000s, I remember my insurance broker pitching a high-deductible health plan (HDHP) for our small group as a way to save money on premiums. "And they're calling this insurance?" I said. "We pay thousands BEFORE the insurance company pays any of our medical claims? How is this good for people?" I brushed it off thinking, "That's a stupid idea and will never go anywhere." I couldn't have been more wrong.


My annual meeting with the broker was my most dreaded meeting of the year. I knew we'd be looking at less coverage for more money. Every. Single. Year.


We all try to decipher the small bit of the maze wall where our healthcare needs land. But very few understand the bigger maze in which we struggle. If we did, our combined outrage would cause a rebellion.

In 2009, a year or two after my broker peddled high-deductibles, the subject of this portrait story had a high deductible health plan or what's known as a consumer directed health plan (CDHP). With a CDHP, an employer, employee, or both usually set aside pre-tax money in a separate account for the employee to draw from to pay medical bills her health insurance does not cover.


In this portrait story, the subject's employer put money into a health reimbursement account...oops...sorry, strike that. I mean a health reimbursement a r r a n g e m e n t. An HRA is arrangement and not an account because there is not an actual account the employee owns and controls. An HRA is an employer-funded product. The employer reimburses the employee's eligible medical expenses not covered by insurance up to the limit established by the employer.


There are lots of accounts and arrangements that can be coupled with high-deductible plans -HRAs, ICHRAs, QSEHRAs, HSAs, FSAs. They all come with tax-advantages.


Yada yada yada...and this gobbledygook word slop is in the name of giving consumers choice?


No, it is not.


These for-profit concoctions are a way to lower premiums for employers and shift more healthcare costs onto the consumers. (And I'm not vilifying employers here. God knows they're besieged by the out-of-control forces that keep driving premiums up.)


Don't try to snowball us with all these insurance products giving us so much choice. These contrivances benefit for-profit corporations not everyday people. We may not be rich but we're not stupid.

By 2009 this subject had already worked 8 years for her employer which entitled her to $1800 in a health reimbursement arrangement. In other words, she had money to cover her high deductible if she ever needed to. But does the $1800 include unused money rolled over from previous years?


What if one year she had a medical event in 2009 and had to pay her full $1400 deductible After using $1400 of her HRA, the HRA then drops to $400. What if in 2010 she had more medical expenses? What does the employer contribute in year two? Was the employer always going to top off her HRA every year to get to $1800? Or did her employer have a set annual committment? Say $300/year? If she blows through the entire $1800 in the HRA, she would not have enough money in the HRA to pay her $1400 deductible in year two. And what if her health plan's deductible went up but the employer's HRA commitment did not? This subject would not have known the answer to any of these questions. And I did not know enough to ask in 2009.


This young woman didn't really understand what a health reimbursement arrangement was. (Neither did I at the time.) She said she knew what she had to do to use the benefit but she didn't really understand it.


~


The immense US healthcare jungle is is too complicated for the average person to understand (And why should we have to understand something this complicated? It's insurance. We buy it and it should pay the bills when we get sick. End of story.)


Healthline quoted John McDonough, professor of public health practice at the Harvard School of Public Health. "Our U.S. healthcare system is the most complicated and impenetrable to understand and make sense of on the planet.”


We all try to decipher the small bit of the maze wall where our healthcare needs land. But very few understand the bigger maze in which we struggle. If we did, our combined outrage would cause a rebellion.


The subject never complained to me about the arrangement. She may also never have had an expensive medical crisis that would have tested her high-deductible insurance and HRA's limits.


Here is the truth. Too many of us average folks are afraid to use our private insurance because doing so may cost us hundreds (if we're lucky), thousands (if the event is mildly serious). Or if we suffer a serious medical mishap, we're afraid out-of-pocket expenses may bankrupt us.


Even after I qualified for Medicare (Thank you, God! One of the best days of my life.) I was still in the mindset I-can't-go-to-the-doctor-It-will-cost-me-a-fortune. I crushed my finger in a log splitter. My first reaction was to run to the internet for medical advice. I iced my finger for 24 hours. The gash was clean and not too swollen but the finger was split open. I decided to stitch it up myself. I'm not a medical provider of any kind. And I had never given myself or anybody else stitches before. I consulted YouTube. I knew I could do it. I reasoned, "My grandmother pierced my ears using ice and a needle and thread. How bad could it be?"


I thought the procedure went well. I felt good about it. But then the finger started turning black. OMG! Will they have to amputate? It was Sunday. Urgent care was closed. Going to the emergency department was no longer optional.


I was out of my depth. With a finger turning black, I no longer trusted internet advice. I was also embarrassed. How could I go to the emergency room with a finger I stitched up myself? I had trouble removing the stitches. "Oh fine," I thought. I'll just go to the ER with that last pesky stitch in place and face the music. The ER doctor removed the stitch, soaked and dressed the wound. I was fine. Turns out if there is stitching to be done, one must do it when the accident happens not 24 hours later. The finger healed. It is bigger than it once was but who cares. I still have a finger and it works fine.


I was new to Medicare. I was nervous about getting a surprise bill. I went into private-insurance-mode-fear and tried to treat myself. But no. No surprise astronomical bill with Medicare. I had to pay my very modest deductible.


THIS IS WHAT WE WANT FROM INSURANCE. Something happens and we're not afraid to use the insurance.


Don't try to snowball us with all these insurance products giving us so much choice. These contrivances benefit for-profit corporations not everyday people. We may not be rich but we're not stupid.


I always said that high deductible plans should be sold by investment brokers. There are a lot of tax benefits for the wealthy who can easily fund the healthcare savings accounts, enjoy the tax benefits, and not be bothered at all if they have to dip into these tax-free accounts to pay a high deductible.


From this... to this. Fun, right?

When the subject came to my studio to see the painting she threw her friends a puzzling look. "Does that look like me?" In unison they both said, "Exactly!" It happens all the time. People don't love their portraits. We only see ourselves in the mirror. We don't see the self the world sees.


This painting is an oldie from 2009. In those days all I could hear in my head was my art teachers saying "White is NOT light!" In other words, lay off the white. I now know how to do that but back in 2009 I was using yellow. A lot of my subjects look jaundiced. 😂 😂.


But I love this painting. It's so her. What a great face to paint. Couldn't she just jump off the canvas and slap us?


 

A study. Oil on canvas, 24 ins. x 20 ins.

(from a 2009 interview)

Supermarket Manager, age 24, Insured


The subject has a full time job as a supermarket manager for an upscale national chain. She has been working for the company since she was a teenager in 2001.


The subject gets health benefits through her employer-sponsored plan. Her employer also gives her a health reimbursement arrangement (HRA).


Her employer may have been self-insured. A well known insurer named on the card could be third party administrator, not the actual entity paying the claims. The premium dollars stay with the employer, and claims are paid with the employer's money. Self-insured employers outsource claim processing to a third party. Just an educated guess on my part.


This young woman didn't really understand what a health reimbursement arrangement was. (Neither did I at the time.) She said she knew what she had to do to use the benefit but she didn't really understand it.


The subject knew her insurance policy had a $1400 deductible (about $1800 in 2021 dollars) meaning that she pays the first $1400 in medical bills before her insurance plan starts to pay.


On top of providing a health insurance policy, the company committed $1800 for the subject's HRA. An HRA helps her pay some medical expenses her health insurance policy does not cover.


The subject's $1800 employer HRA contribution was more than what most employees got. The subject said, "I've been working at the company for so long." After every year of employment, the employer increased her HRA contribution.


I remember the subject telling me she had a HRA debit card. "Some things insurance covers 100%. Some things they won't." She would use the card to pay for out-of-pocket costs like some over-the-counter products, co-pays and many other eligible medical expenses.


There are pros and cons with HRA debit cards. Not all providers take them.(Perhaps more do in 2021) An HRA is not an account an employee can withdraw money from. With health reimbursement arrangements, expenses are incurred first, must be allowable under the HRA the employer set up, and the employee must keep good records to document and justify the expense. The employer pays only for medical expenses once incurred. The money in the HRA stays with the employer if the employee leaves or is terminated.


The subject never complained to me about the arrangement. She may also never have had an expensive medical crisis that would have tested her high deductible insurance and HRA's limits.


~

Health Reimbursement Arrangements have been around for a while. Employers responded to the rise in premiums and coverage exclusions in the 1960s - 1990s by starting arrangements to reimburse their employees for qualified medical expenses. In 2002 the IRS formally defined HRAs.


A health reimbursement arrangement like the one this subject has is often linked to a high deductible plan. The insurance plan has high out-of-pocket costs which can be offset by the money in an employee's HRA.


In 2009 Consumer Watchdog wrote a scathing piece in response to John Mackey's op-ed in the Wall Street Journal in which he supported high deductible health plans (HDHP) for his employees. Mackey was CEO of Whole Foods Market at the time and his opinions caused a stir.


Consumer Watchdog said. "High-deductible plans for low-wage workers are the next best thing to being uninsured: the upfront costs are so high that workers have to weigh getting health care against paying the rent, to the detriment of their health."

Kaiser Health News weighed in on the 2009 Mackey kerfuffle. While Whole Foods reported good results with a mix of incentives to steer employee healthcare spending, there were trade offs. "To pay for the new plan, employees had to agree to a reduction in other benefits, including fewer vacation days for some and lower employer contributions to 401(k) plans."