RHA Frequently Asked Questions

1. Why did the HR Policy Association develop the RHA Program?

Rising health care costs and unsustainable FAS 106 obligations are driving significant change in the employer sponsored retiree health care market. Many employers that have historically offered subsidized retiree benefits are capping or eliminating subsidies. Employers that have not offered a benefit want to do so without creating new liabilities. Employers are also seeking to reduce or avoid the administrative burden associated with retiree health benefits. To meet these needs, RHA was developed offering employers and their retirees access to a fully insured, guaranteed issue solution that includes an array of comprehensive pre- and post-65 coverage options that do not require an employer subsidy.

2. What is the value of RHA to employers?

RHA offers several advantages to employers. Because it is fully insured, employers do not assume the risk for offering coverage to their retirees. RHA offers all eligible employers access to fully insured, comprehensive guaranteed issue coverage for pre- and post-65 retirees without any subsidy or minimum participation requirements. RHA also offers employers the option to outsource program administration to the RHA administrator with those costs included in RHA premiums and without set-up fees. RHA’s unique pooling features allow employers to promote a more stable and sustainable long-term retiree risk pool by pooling their retirees with those of other participating RHA employers. RHA is also fully integrated with the recently enacted changes in Medicare to take full advantage of the new rules.

1. How will employees and retirees benefit from RHA?

As unsustainable FAS106 obligations force employers to cut back on retiree health care coverage, more and more employees are struggling to find access to coverage if they want to retiree before they are eligible for Medicare. Existing retirees are also facing rising costs as premiums continue to rise. RHA allows employers to offer coverage while guaranteeing that all eligible pre and post-65 retirees have access to an array of comprehensive coverage choices regardless of their health status or level of employer subsidy. RHA also offers comprehensive communication, enrollment and call center support to retirees. The unique pooling features of RHA should help make RHA premiums more stable and affordable over the long term.

1. What are the basic design and strategy options that RHA offers employers?

Employers may offer RHA on a side-by-side basis with current legacy plans, as a total replacement, or to future retirees only. Employers may choose from an array of standard pre- and post-65 plan design options, and have the flexibility to offer customized plan designs to post-65 retirees. Employers may use their existing administrator, or use the services of the RHA Administrator.

2. What RHA features are standard?

RHA offers standard pre- and post-65 plan designs. It also offers turnkey communication and enrollment materials, a dedicated web site and call center. The underwriting and rate setting methodology for RHA is also standard, offering a unique combination of individual employer and pooled rate setting to promote premium stability over time. Standard administrative support services are also available through the RHA administrator for those employers that elect to use that service. All RHA plan years run from January 1 to December 31. However, employers may launch RHA mid-year in the first year.

3. How much flexibility do employers have as they consider how RHA might address their retiree health care needs?

Employers can offer RHA as their only option, or as an additional choice to their legacy plans. They can choose from an array of standard plan designs and can also offer customized post-65 designs. Employers determine the contribution approach that meets their needs and have the option to use their own administrator or the RHA administrator if they offer RHA as their only option. Employers choose which population they want to offer RHA to. They also set their own eligibility rules within certain standard RHA parameters.

1. How many employers are currently offering RHA to their retirees?

As of March 2008, twenty seven employers are participating in RHA

2. How many retirees are currently enrolled in RHA?

As of March 2008, approximately 52,000 retirees are enrolled in RHA.

1. Will employers and retirees save money through RHA?

In many cases, employers who currently offer a retiree benefit will not see an immediate reduction in their pre-65 costs. This is particularly true for employers that offer self-insured coverage options to early retirees with benefit coverage that is comparable to RHA plans. As they move to an insured solution that includes certain taxes and risk charges, many employers will gain lower costs for their post-65 retirees. In the long term, employers and retirees should save money due to the pooling that helps establish rate stability, economies of scale for administrative and other carrier services, and the collective leverage of the coalition.

2. What kind of premiums can employers and retirees expect from RHA?

Initial premiums are set on an employer-specific basis. Employers with subsidies and relatively good experience may be quoted 2008 premiums as low as $400 to $500 per month for single coverage for pre-65 retirees. Employers without subsidies for their early retirees will receive higher premiums because of adverse selection caused by healthier retirees opting for medically underwritten individual policies. Post-65 premiums are competitive with what is currently available in both the group and individual Medicare market.

3. How do RHA's costs compare to other options in the market?

RHA post-65 rates are competitive relative to other options available in the marketplace. Pre-65 rates are also competitive relative to the group market, but may be more expensive than medically underwritten individual policies for healthier retirees. Pre-65 rates may also be more expensive than the cost of offering self-insured plans with comparable coverage due to risk charges and premium taxes.

4. How much does it cost employers to offer RHA to their retirees?

Employers must be a member of the HR Policy Association or the Pacific Business Group on Health and pay their appropriate annual membership fee. The Health Care Policy Roundtable requires that employers pay a one time coalition access fee of $30,000 plus an annual program maintenance fee of $30,000 to offer RHA. In addition, $.75 per member per month is included in RHA premiums to cover program costs. Companies that participated in the research and development of RHA receive reductions in the coalition and maintenance fees. Beginning in 2008, midsized employers with between 1,000 and 2,000 employees can also take advantage of RHA’s unique features at a special price.

5. How are RHA premiums determined?

Initial RHA premiums are employer specific. They are based on current and expected experience and the plan designs that each employer elects to offer their retirees. Subsequent rate adjustments are based on a combination of pooled and individual employer experience. All employer rates are adjusted annually based on the aggregate experience of the entire RHA pool. Individual employer rate changes may vary within a defined range based on each employer’s actual experience and overall enrollment level.

6. How can employers get the best possible rates for their retirees?

Employers that offer RHA on a total replacement basis will generally secure the more favorable rates. In addition, employers with retiree subsidies will also receive better rates as the subsidies tend to keep relatively healthy retirees from optioning out of RHA for less expensive, medically underwritten individual coverage.

1. Which employers are eligible to offer RHA to their retirees?

All employers who are members of the HR Policy Association or the Pacific Business Group on Health are eligible to offer RHA to their retirees. Midsized employers with between 1,000 and 2,000 employees are also eligible to offer RHA to their retirees.

2. Which retirees are eligible to enroll in RHA?

Retirees must be at least age 55 with five years of service to enroll in RHA. Dependents may be enrolled at the time the employee retires, and new dependents may be added after retirement unless RHA is offered on a total replacement basis and this is the current employer policy. Retirees may opt out of RHA coverage and enroll at a later date with guaranteed issue as long as they demonstrate proof of continuous coverage in an alternative group policy. In addition to the carrier requirements, an employer may place further eligibility requirements that are based on their own company policies.

3. How does RHA address split families in which some retirees are eligible for Medicare and some are not?

RHA is designed to accommodate split families, allowing Medicare eligible family members to enroll in Medicare coverage options, and non-Medicare eligible retirees to enroll in pre-65 coverage options.

4. What happens if an employer elects to stop offering RHA to their retirees?

The employer must make alternative coverage arrangement for any retirees already enrolled in RHA if they decide to stop offering the program. Employers that elect to offer RHA to their retirees must make a three year commitment to offer the program.

1. What carriers are participating in RHA?

Aetna is the exclusive RHA participating carrier. RHA may add more staff and group model HMOs to RHA in the future.

2. What happens if a carrier drops out of RHA?

Any retirees enrolled with that carrier will be offered coverage through an alternative RHA carrier if one can be secured. Aetna is contractually obligated to offer RHA coverage until at least 2012. Aetna is also obligated to offer RHA participants alternative coverage if it ceases participating in RHA.

1. What options do employers have to meet their administrative needs?

Employers can continue to use their own administrator, or use the RHA administrator (Accenture). All employers, including those that use their own administrator, will have access to the RHA web site and an array of downloadable communication and enrollment materials. Employers that use the RHA administrator will also receive comprehensive billing, enrollment, call center and other functions with all costs included in RHA premiums. Employers who use their own administrator may include the cost of their administrator in RHA premiums up to certain limits.

2. What administrative functions are employers responsible for?

If employers choose, they may retain responsibility for all administrative functions and still have access to the RHA web site and downloadable communication and enrollment materials or they may outsource virtually all administrative functions to the RHA administrator. Employers are required to provide RHA carriers with certain claims and enrollment data to support initial rate setting, and are also responsible for SPDs and 5500s on all group RHA coverage options. Employers must provide regular eligibility and enrollment files to the RHA carriers as well. Employers with subsidies must also provide subsidy information to the RHA carriers.

3. Are there any set-up costs for use of the RHA administrator?

There are no additional set-up costs associated with using Accenture to administer RHA.

4. How are administrative costs paid?

Employers have the option to include administrative costs in RHA premiums within certain limits.

1. How are standard plan designs developed?

The RHA coalition works with participating RHA carriers to develop a diverse and competitive array of pre- and post-65 coverage options. Employer feedback is vital to the ongoing evolution of standard RHA plan designs to assure they evolve to meet employer and retiree needs.

2. Which standard designs are available for pre-65 retirees?

Employers can choose from up to five standard pre-65 design options, including two major medical plans modeled after more traditional employer coverage options and two high deductible health plan designs. The high deductible designs are HSA compliant. All designs include in and out-of-network benefits. They cover inpatient and outpatient services as well as prescription drugs and medical devices. Optional dental coverage may also be added on an employer by employer basis.

3. Which standard plan designs are available for post-65 retirees?

Post-65 designs include several Private Fee for Service options, Medicare Advantage HMOs, Part D prescription drug coverage options, and Medicare Integration plans that can be designed to offer coverage similar to Medicare Supplement plans.

1. Who is responsible for developing a communication campaign and materials to support the introduction of RHA to an employer's management and retirees?

RHA offers a comprehensive pre-enrollment, enrollment and post-enrollment communications kit for retirees, company leaders and managers. These materials are available as a standard service for all RHA participating employers. Employers may use these standard materials, or modify them to create a customized communication campaign.

2. Does RHA have a dedicated call center?

Yes. All employers offering RHA have access to the dedicated RHA call center. The RHA call center operated by Aetna is located in the United States.

RHA enrollment works just like other group programs. Each employer sets an annual enrollment period, during which retirees sign up for coverage. Mid-year enrollments due to retirement or qualifying changes in family status are also accommodated. Enrollment services are handled by the RHA administrator for those employers that elect to take advantage of that optional service.

4. Where do retirees go if they need help with and RHA issue?

They may contact the RHA call center, or go to the RHA web site. Employers that use the RHA administrator may direct all retiree inquiries to the administrator, but will still be responsible for retiree inquiries relative to certain company-specific issues such as retirement and employer subsidy eligibility. Employers using their own administrator direct retirees to that administrator with questions about enrollment, billing and eligibility. Participating RHA carriers also have call centers available to assist retirees with carrier specific questions on coverage, provider networks, claims status and disease management and health promotion programs.

1. How long are participating RHA carriers obligated to participate in the program?

All participating RHA group policy carriers enter into a five year agreement with the Health Care Policy Roundtable, which acts as the contracting agent for the HR Policy Association and the Pacific Business Group on Health. Carriers are required to notify the Roundtable three years in advance if they intend to terminate participation in RHA.

2. How long are employers obligated to offer RHA to their retirees?

Employers must enter into agreements with RHA group carriers and the Health Care Policy Roundtable committing to offer RHA for a minimum of three years.

3. Who holds the contracts with RHA carriers and the RHA administrator?

The Health Care Policy Roundtable holds five year master agreements with all RHA group carriers. Accenture, the RHA administrator is under a seven year agreement with Aetna.

4. What performance guarantees are included in RHA vendor contracts?

RHA group carriers place 1% of premium at risk based on claims turnaround time, eligibility files, ID cards and network stability and employer and retiree satisfaction. The RHA administrator also has .25% of premium at risk based on call center and web site availability and response times and customer satisfaction measures.

5. Is RHA a Multiple Employer Welfare Plan (MEWA) and what are the implications for employers if it is?

It is unclear if RHA will be considered to be a MEWA. However, the Health Care Policy Roundtable is undertaking required actions to assure that all MEWA compliance issues are addressed in the event that RHA is deemed to be a MEWA. The Roundtable will be responsible for MEWA compliance issues on behalf of participating RHA employers. Even if RHA is determined to fall under MEWA rules, the impact will not be material on employers or retirees. Because RHA coverage options are fully insured, they must already comply with state insurance regulatory requirements even if RHA is not a MEWA.

6. What happens to RHA if Medicare rules change substantially?

RHA carrier agreements include language requiring all parties to work in good faith to revise RHA as needed due to Medicare rule changes. RHA group carriers can withdraw from certain markets if Medicare rule and reimbursement changes make them unattractive, but only if they are withdrawing from that market for their entire book of business.

1. What is the recommended timeline to support the successful implementation of RHA?

Employers should submit their initial data to RHA group carriers to establish rates about 6 months before the coverage effective date. It generally takes the RHA group carriers about 3-4 weeks to provide rates once they receive data and employer plan design choices. Employers are requested to commit to offering RHA for a January 1 coverage effective date by August 1.

2. Can employers define their own plan year?

Employers may do a mid-year launch of RHA in the first year they offer the program, but must convert to a January 1 to December 31 plan year after that.

3. What implementation support is available for employers?

All employers have access to downloadable standard RHA communication tools, the RHA web site and the RHA call center. Employers that elect to use the RHA administrator have access to comprehensive implementation support services. In certain circumstances, the RHA carriers may also participate in enrollment meetings if employers have sufficient populations to make this cost effective. Health Care Policy Roundtable staff is also available to address any significant implementation issues encountered by employers. Roundtable staff is also available to meet with employers’ retiree advisory councils to explain RHA on a case-by-case basis.

1. Who decides when RHA's standard features will change?

All participating RHA employers are encouraged to provide ongoing feedback on how the program can be improved. These will be considered by the RHA Steering Committee, which is comprised of several PBGH and HR Policy Association member employers. In addition, RHA conducts ongoing retiree and employer satisfaction surveys that provide input on how the program is viewed. Program changes are ultimately approved by the Health Care Policy Roundtable and the HR Policy Association's Directors within the parameters defined by employer and carrier contracts.

2. What expert and technical resources are available to support RHA development?

The Roundtable staff is available to help employers assess the merits of RHA. Roundtable staff will also participate in any discussions regarding RHA rate development at the employer's request to assure the each employer is receiving rates that are appropriate for their situation. In addition, PricewaterhouseCoopers, which is under retainer to provide technical and strategic consulting for RHA, may also help individual employers with strategy and rate development for a standard added fee. There are extensive resources available through participating RHA carriers and the RHA administrator to assist with plan design selection, rate development and implementation and communication needs.

3. What resources are available to help individual employers assess RHA and assure they are getting the maximum value out of the program?

It is recommended that all employers stay in close contact with the Roundtable as they consider RHA, establish initial rates, and go through the annual renewal process to assure they are getting competitive rate quotes. In addition, employers may use their own internal or external consulting resources, or take advantage of optional support services available through PricewaterhouseCoopers for a standard additional fee.