September 2003              return to newsletter contents page

NAW Forges Agreement with Humana, Inc.

New Member-Only Health Reimbursement Account (HRA) Plan Available to AVDA Members

The National Association of Wholesaler- Distributors (NAW) has introduced a new, affordable multi-state Health Reimbursement Account (HRA) insurance plan that will arm more than 40,000 companies with practical cost-containment strategies -- while enabling them to offer comprehensive health insurance coverage to their employees. In partnership with Rosemont, IL-based Flexible Benefit Service Corporation (FBSC), NAW has entered into a new agreement with Humana Inc. to underwrite a Consumer Driven Health Plan available exclusively to NAW and its industry members.

With this customized new plan, more than 40,000 business owners – including all AVDA members-- can immediately realize 30-40 percent savings on premiums by pairing a high-deductible, lower premium major medical policy with the employer-funded HRA. “This new plan will have a significant impact on the health care bottom line of the wholesale-distribution industry,” says Dirk Van Dongen, President, NAW.

A recent NAW member survey found the industry is averaging 19 percent premium increases, and employers with 50 or fewer employees experiencing 23 percent increases. “Faced with these severe economic challenges, the only recourse for the majority of our members has been to raise employee contributions and deductibles,” Dirk Van Dongen continues.

The NAW/FBSC Health Reimbursement Account (HRA) calls for a $3,000 individual deductible, which means, for example, a business employing 100 can slash premium out-of-pocket by $240,000. To cover all or part of the deductible, the employer then establishes a tax-advantaged HRA for employees. The account does not need to be pre-funded and, thanks to a favorable IRS ruling last June, unused funds roll over year-to-year. Employees are reimbursed for their out-of-pocket medical expenses from the HRA up to the maximum. Once the deductible is met, network services are covered 100 percent by the Humana major medical policy if an insured seeks care within the designated network of Doctors and Hospitals. The plan, underwritten by Humana and administered by Flexible Benefit Service Corporation, also includes a prescription drug plan.

“This is a significant accomplishment to be able to create a single, affordable and comprehensive new health insurance plan design that is available exclusively to NAW and its industry members,” says Dirk Van Dongen. “Our preferred provider relationship with Flexible Benefit Service Corporation has opened the doors to offering our members access to one of the nation’s leading insurance carriers, Humana. And, through Flexible Benefit Service Corporation, our members have a single, turnkey source for premium quotes, claims filing, renewals, HRA management and distribution. For smaller companies, we are unburdening business owners from the day-to-day management of health care administration. For larger companies, we are giving them a valuable, experienced partner to craft customized strategies to take control and reduce their health care costs.”

Both Flexible Benefit Service Corporation and Humana immediately recognized the potential of Consumer Driven Health Plans to help employers cut and contain escalating health care costs. Simultaneously, these two companies pioneered and supported Consumer Driven Health Plan legislation and design – and, in fact, Humana has gone beyond just offering Consumer Driven Health Plans to their clients. They have actually put into practice what they preach, making available a Consumer Driven Health Plan to their nearly 10,000 Louisville-based employees and their dependents for the plan year 2001-2002. After the first year, the company’s medical claims for that group rose only 4.9 percent -- instead of the projected 19.2 percent -- representing a savings of more than $2 million. Since that time, the plan, SmartSuite^sm, has been sold to nearly 40 groups with an estimated 90,000 members nationwide.

 “The major design challenge of our current health care system is that people are over-insured,” says Allen Wishner, CEO, Flexible Benefit Service Corporation. “The third-party payment plan that has infiltrated corporate America has only led to excess consumption, which in turn has created an environment burdened by runaway costs, third-party rationing and limited supply of services. Consumer-driven health care models, like the new NAW HRA plan, helps restore the role of insurance to providing protection against major medical catastrophes. The HRA not only empowers NAW members to control and define their health care expenditures – but also encourages consumerism in a system that has been cloaked in mystery when it comes to price and service. Patients now have incentives to become partners in fighting healthcare inflation.”

AVDA members looking for more information about this new plan or to get a quote can visit the NAW/Flexible Benefit Service Corporation co-branded website at http://naw.flexiblebenefit.com or call toll-free at 1-888-345-7990.