You Should Know:

• HRAs, employer-funded accounts that employees can draw upon to pay qualified medical expenses, are usually offered as part of consumer-directed health plans (CDHPs), a fast-growing marketplace solution to rising health care costs.
• HRA-based health plans provide employers with an important new benefits option, one that helps raise consumer awareness of the real costs of health care while empowering consumers with greater decision-making control over their health care spending. HRA health plans usually include a high deductible, and research shows that total health spending is reduced when consumers bear more responsibility for their health care expenses.¹
• Members of an HRA plan who do not use all of their fund or account in one year can roll over unused funds for use at a later time for medical expenses, COBRA benefits, long-term care or Medicare premiums.
• HRA-based plans facilitate access to quality care because preventive care, such as routine physicals and child immunizations, typically is covered 100 percent and is not charged against the employee's fund.

Background
With health care premiums continuing to rise at double-digit rates (11.2 percent in 2004), many employers have been forced to reduce benefits, shift more cost to employees or drop coverage entirely. Less than two-thirds of all employers now offer health insurance to their employees. The marketplace is ready for increased consumer accountability, and the popularity of HRA plans is growing fast. In fact, HRA enrollment is expected to reach 2.6 million in 2005 - more than double the enrollment in early 2004.²

How HRAs Work
As most commonly constructed, HRAs are linked with high-deductible health plans that include preventive care not charged against the deductible and access to information tools that help consumers make informed decisions. Members can use the fund to pay qualified medical expenses or roll over unused funds at year end for future use. Most HRA members who use up the fund then have to meet a deductible for medical expenses before major medical coverage kicks in. With the opportunity to determine how and when their health care dollars are used, HRA members have an incentive to become informed and value seeking health care consumers.

The Aetna Difference
In 2001, Aetna became the first national, full-service insurer to introduce a consumer-directed (HRA) plan to the market. The company now offers a full suite of consumer-directed health care products (Aetna Health Fund®) including HRA plans. Access to powerful online information resources and self-service tools is an important part of the Aetna HealthFund experience for these popular consumer-directed products.

Results
Aetna studied its own Aetna HealthFund HRA and found that members in 2004 experienced low single-digit medical cost increases (3.7 to 6 percent) in the first year of adoption, which was significantly below the industry average. Also, use of preventive care increased by as much as 23 percent, compared to 8 percent for similar members (based on demographics, coverage, health status, health severity and geography).



Questions & Answers:

Q. Aren't HRAs and other Consumer-Directed Health Plans (CDHPs) really just cost-shifting in disguise?
A. No, that is not our experience. First, most HRA plans provide 100 percent coverage of preventive care upfront, which is a strong incentive for consumers to get the quality care they need. Second, HRA plan premiums are more affordable than most traditional plans. Third, our experience also shows that employers seldom offer HRAs alone - employees have other coverage choices. However, employees increasingly are ready for the choices and responsibilities of this new age of "consumerism." Hewitt Associates, which administers benefits for more than 18 million employees and their families, found that 93 percent of 39,000 employees surveyed (Nov. 17, 2004) indicated they are comfortable taking on more responsibility for health care decisions.

Q. Will HRAs be replaced by the new Health Savings Accounts (HSAs)?
A. While HSAs are becoming increasingly popular, the marketplace continues to look for a full complement of health products and services to effectively meet the needs of today's employers and consumers. As a result, Aetna has developed a comprehensive suite of products and services to address the diverse needs of today's marketplace.

Q. Are HRAs really just for the young and the healthy?
A. No. HRAs and other consumer-directed health plans are well-suited to a wide age range of people, as our own 2005 employment enrollment demonstrates. Among Aetna HealthFund members overall, the average age of members who chose Aetna HealthFund is about 42, the same average age as those who opted for other products.

Q. What kind of information is available to help consumers make medical decisions that are appropriate for them?
A. Consumers who take a more active role in health care decision-making need access to information that can help them make good choices. As a leader in consumer-directed health care, Aetna provides members with access to a host of health and benefits management information online through Aetna Navigator™, the company's member self-service website, and via telephone. Aetna's member tools include an interactive online health and wellness program that uses health risk assessments, tailored health reports and action plans with wellness counseling to help participants make positive health changes at their own pace. An innovative health information source that provides access to evidence-based, clinical information on 5,000 health topics helps members choose health care treatment options that best suit their needs and preferences. Another tool provides information that helps members compare hospitals on certain diagnoses and procedures. Aetna also makes available a suite of cost tools called "Estimate the Cost of Care," which provides cost information for prescription drugs, medical and dental procedures, office visits, medical tests and a variety of diseases and conditions.