Podcast Center
Video Center
Webcasts
Resource Center
Events
July 07, 2002 at 08:00 PM
Applaud IRS Ruling On HRAs For The New Options It Will Create
Health care costs are skyrocketing, physicians continue to rebel against health maintenance organizations, Congress remains poised to impose new mandates on health plans and employers are shifting more and more costs to their employees.
Are health reimbursement arrangements (HRAs) the harbinger of a revolution in the nations troubled health care system?
Advocates of these consumer-directed health plans believe so, particularly in light of the recent Internal Revenue Service interpretation that unspent amounts in HRAs can be carried over and used to pay for health care costs in future years.
In other words, the “use-it-or-lose-it” rule that applies to flexible spending accounts does not apply to employer-funded HRAs.
The belief among advocates of HRAs is that by giving individuals a direct stake in how their health care dollars are spent, they will become better consumers of health care.
As such, individuals will be more likely to comparison shop, demand generic alternatives to expensive brand-name medications and more closely examine their doctor and hospital bills.
This, HRA advocates say, will bring some much needed marketplace discipline into a health care system in which the actual consumers of health have, for too long, been essentially powerless.
“These new rules will promote personal ownership and health care savings in a way that will fundamentally change health care in America,” says Rep. Jim DeMint, R-S.C., an advocate of consumer-directed health plans.
Whether the implications of the IRS ruling are as sweeping as the HRA advocates suggest remains to be seen.
