RHA Key Attributes
RHA has been designed to address an array of key employer and retiree needs. It
includes comprehensive and competitive pre- and post-65 coverage options. All RHA
solutions are fully insured, allowing employers to avoid taking insurance risk for
their retiree medical offerings. RHA offers pre- and post-65 retirees access to
guaranteed-issue, catastrophic coverage levels without requiring employers to meet
minimum subsidy or enrollment rates. These solutions are fully integrated with the
recently enacted Medicare changes that became effective in 2006. Employers have
the flexibility to offer RHA as a side-by-side offering with their current retiree
medical choices, a total replacement, or to future retirees only. RHA is also designed
to provide a long-term, sustainable solution with carriers and other program vendors
entered into multi-year agreements. RHA has unique underwriting rules that take
advantage of a large pool of retirees to promote a stable and sustainable risk pool.
Pre- and Post-65 Coverage Options
To enhance their risk management and budgeting capabilities, employers have expressed
a clear preference to shift the insurance risk for retiree health care coverage
to other parties. RHA has been designed to feature carriers who have agreed to bear
this risk through fully insured arrangements.
Pre- and Post-65 Retirees
RHA 2008 offers an array of comprehensive and competitive pre- and post-65 coverage
options. Pre-65 options include up to five standard plan designs, including two
health savings account compliant designs, and two more traditional major medical
coverage options that provide comprehensive coverage.
Standard post-65 options include Medicare Part D prescription drug coverage options,
including enhanced options to cover the "donut hole" gap in standard Part D coverage
options. In addition, standard Medicare options include Medicare Advantage (Medicare
HMOs) in select markets. Aetna, the primary RHA national carrier, also offers a
50-state comprehensive coverage option under the Medicare Private Fee-for-Service
rules. This plan is reimbursed on a fee-for-service basis rather than the fixed
per-enrollee fee that is used in Medicare Advantage plans. Medicare Integration
plans, designed to offer benefits similar to traditional Medicare Supplement plan
are also available. In certain circumstances, employers may customize post-65 offerings.
Customization of post-65 coverage options will be considered on a case-by-case basis.
Fully Insured Products
All pre- and post-65 RHA coverage options are fully insured. That means that participating
RHA carriers bear the risk for the cost of claims for RHA enrollees, not the employers.
This allows employers to more aggressively manage their retiree medical obligations
than self-insured arrangements tend to allow. Insurers set premiums for RHA coverage
options, and they are at risk for the actual health care costs that accrue against
those premiums.
Though subsidies are not required, if employers choose to, they can help cover the
cost of RHA premiums. Employers that choose to do so are still able to more aggressively
manage their FAS 106 obligations by establishing fixed contributions to offset RHA
premium costs.
Guaranteed-Issue Without Employer Subsidy or Minimum Participation Requirements
One of the major goals of RHA is to provide employers with a solution that provides
all eligible retirees access to comprehensive coverage regardless of individual
health status or employer subsidy and participation level. RHA does that. This is
particularly critical for pre-65 coverage, where carriers have consistently refused
to offer employers access to guaranteed-issue coverage without substantial subsidy
requirements that trigger unacceptable FAS 106 obligations.
RHA has contracted with one of the nation’s premier carriers – Aetna - which has
agreed to offer guaranteed-issue pre and post-65 coverage without subsidy requirements.
We are not aware of any other solutions that offer the favorable terms available
through RHA and Aetna as its exclusive carrier.
RHA has also been designed to make the program more viable by pooling the risk of
participating employers and retirees over time. Initial rates are employer specific,
but renewals are based on a unique combination of pooled and individual employer
experience to promote long-term affordability and rate stability.
Integrated With Medicare
The Medicare Modernization Act which took effect in 2006 has proven a highly effective
public policy change that has enhanced coverage options for Medicare eligible retirees.
Employers want a retiree health care solution that effectively integrates with these
new Medicare rules and coverage options. RHA meets that goal. Post-65 options include
all forms of Medicare coverage, including Medicare Advantage, Private-Fee-for-Service,
Part D prescription drug options, as well as more traditional group coverage options
that integrate with Medicare. Employers have two options. They can apply for the
new Part D federal subsidies, or have participating RHA carriers take these subsidies
directly from the federal government in exchange for reduced Medicare premiums for
RHA enrollees.
Long-Term, Sustainable Solution
Both retirees and employers want retiree health care coverage options that are built
to last. The enhanced RHA program has several unique features to support this goal.
First, Aetna has agreed to initial five-year contract terms. The RHA administrator
is also contracted for a period of seven years. Participating RHA employers are
required to offer RHA for a minimum of three years. These long-term contractual
commitments are designed to build a long-term, sustainable platform that gives retirees
and employers the security they are seeking in a robust solution.