Why haven't we heard about this?

In 2002, the U.S. federal government made it explicitly legal for employers to reimburse employees, tax-free, for the premiums on personal health insurance policies.

However, when this first became legal back in 2002:

• States were not yet required by federal government to offer state-guaranteed personal health policies to employees with preexisting medical conditions.

All states are now required under HIPAA to offer state-guaranteed personal health policies to employees that lose their group coverage (called "HIPAA-eligibles"). Forty (40) states go far beyond this federal mandate and offer state-guaranteed personal health policies to all of their residents with preexisting medical conditions even if they were never covered under an employer group plan.

• Personal health policies in 2002 were not as popular as they are today.

The number of personal health policies doubled from 12 million members in 2002, to 24 million members in 2008, and is expected to reach 30 million members by 2010. United Healthcare, the largest health insurance carrier in the U.S. offering group plans to employers, purchased several personal policy carriers (Golden Rule, AMS, PacifiCare, etc.) and is today the largest carrier offering personal health policies.

• The significant price advantage for healthy participants in personal health policies vs group health plans was not as large in 2002.

45 states have changed their laws allowing carriers to sell personal policies at much lower prices to healthier and/or younger applicants-the last three states to liberalize their personal policy insurance laws were Kentucky, New Hampshire and Washington. The price of small employer group policies keeps escalating as more healthy employees and/or dependents leave group and switch to permanent, portable, personal policies.

• When the tax-free reimbursement of employee premiums for personal policies became legal in 2002, there was no software platform or TPA (Third Party Administrator) capable of helping employers help their employees obtain personal policies and provide tax-free premium reimbursements to employees with personal policies.

ZaneHRA was launched in 2006 in response to the enormous demand by employers for Defined Contribution Employer Health Benefits. ZaneHRA is SAS 70 approved and complies with all HIPAA, ERISA, and U.S. Treasury regulations. See What is ZaneHRA?

• Employer group health plans in 2002 were not as expensive as they are today, especially relative to personal policy plans.

The cost of group coverage has more than doubled since 2002, and is on target to double again in just the next 5 years. Each year since 2002 there are 2 million fewer employees receiving employer group coverage because of cost.¹

Why don't some state officials want employers and employees to know about Defined Contribution Employer Health Benefits?

• States are under increased pressure today to balance their budgets and keep their portion of healthcare costs under control.

Each private sector employee with a preexisting medical condition covered by a private employer group plan is potentially one less employee and/or dependent that the state is legally obligated to cover under federal law.