The goal of LyfeBank is basically to serve as a 401(k) for health insurance. Employers can make contributions to the employees health insurance into a fund and workers can use this money to buy various health insurance products, reimburse themselves for co-payments or deductibles, or pay for medical costs directly.
LyfeBank has two key innovations. The first is that part-time workers can still receive money for health insurance on a pre-tax basis. Further, multiple employers can contribute the the worker’s health insurance premiums as these funds go directly into the employee’s LyfeBank account. Second, workers can apply for a LyfeBank Visa which will automatically deduct covered medical expenses from their bill. If this credit card works well, it could reduce paperwork needed to reimburse providers. However, there will likely still be arguments from benefciaries about what is or is not covered by the insurance company they choose.
The main drawback of Lyfebank is that workers must purchase health insurance on the individual market. There is no pooling mechanism. Thus, although part-time workers can now receive funding from multiple employers, the cost of their health insurance premiums will still be much higher than it would be if they worked at a large firm.
LyfeBank thus helps reduce the health insurance complexities for individuals working multiple part-time jobs. It does not, however, offer these individuals a mechanism to pool their risk with other part time workers. It will be interesting to see how this innovation will evolve when Health Insurance Exchanges appear in a few years.
Great article. Just wanted to clarify a few items for your readers. LyfeBank customers do use individual policies, but in most states individual policies are actually cheaper than group insurance. We have many customers who have discovered this fact. In addition, our customers, purchasing individual plans, get to pick the plans that meet their health and financial objectives. We find a high level of satisfaction when the consumer is allowed to make the selection on their specific needs.
On the LyfeBank VISA, just to clarify, the card is a “smart” card. It has programmed logic that knows when an item or service is considered an IRS eligible expense and then allows for the payment. If the item is not eligible customers will be prompted for another form of payment. As you discussed this eliminates a great deal of paperwork for all involved.
I welcome comments or questions from your readers. Leslie Parker, LyfeBank.
I work 24/week and receive no healthcare insurance benefit. I am currently under COBRA with my ex-spouses Cigna plan…approximately $570/month, for one person. That runs out August 2011. WHAT can I do to cover my expenses between now and then and afterwards?
Each state has different options for their citizens in regards to health insurance, both in the commercial market and state subsidized programs. A local health insurance agent may have some suggestions. If you have the agent review individual plans in your state there may be a program that is less expensive than the $570 you are paying now.
Our program would only apply if your employer were to sign up as a LyfeBank member and then your employer could offer if they choose benefits to part-time workers.
Sounds like an excellent “upgrade” to the traditional MSA. The same problem will derail it just as with MSA accounts. It puts control into the hands of the individual and the politicians will not stand for that as it reduces the opportunities for graft and political favors.
Interesting perspective. We are actually getting significant traction among units of city and county government in several states. They have classified a significant percentage of their employees as part-time and are all, in general, in financial distress. Our platform helps them offer contributions to part-timers in an affordable fashion and better control and predict their healthcare spending. A win-win.
Lee, thanks for the response. I truly hope something like this will become a realistic option. I would like to even see this become the standard for full time employees as well. The more individuals are exposed to the real cost of health care, the more incentive there will be for increased efficiencies and true competition. There are so many problems with the way our healthcare system is structured that I’m afraid a collapse of the system is what will be required to cause the necessary restructuring. Of course as you point out, the governments you cite as responding favorably are in financial distress. Maybe we have finally reached the tipping point.