The Difference Card: A Different Way to Structure a Health Plan

We are always looking for creative ways to control health care costs.  I think The Difference Card is a company that’s doing some really cool things using a medical expense reimbursement plan (MERP), so I am pleased that Bryana Bradley, our local representative, agreed to answer a few questions about their product.

PM: Can you tell me about The Difference Card and what makes the company, well…different?

BB: For almost 20 years, The Difference Card has helped companies build the most cost effective medical plans.  Our clients are saving an average of 18%, off their medical spend, without reducing employees’ benefits. The employer has the ability to stay with the same health insurance carrier, but would purchase a plan with much higher copays and deductibles than they’ve seen in the past.  The employer would then “self-fund” the difference in benefits to the employees.  Each member would receive a Difference Card MasterCard to use at point of service, which is funded by the employer, to cover a portion of their copays, prescriptions, etc.  Our customer care/claims team and dedicated account managers help enhance that experience for the clients as well.  They are located in White Plains, NY, while our local office is in Mansfield, MA.

PM: What is the difference between an HRA and a MERP?

BB:  A medical expense reimbursement plan is a filing that allows for more flexibility in reimbursement strategy.  Unlike an HRA where you typically reimburse deductible only, the MERP filing allows us to reimburse copays, coinsurance, prescriptions, and prescription deductibles as well.  Premium equivalent rates, or “working rates” are produced from our on-staff underwriting and actuary team.  This allows cost sharing between the employee and employer for the total cost of the plan.  Instead of having an HRA that is 100% employer funded – employees can now contribute towards the cost of administration.

The MERP also allows the employer group to purchase one underlying plan from the carrier and to build back to multiple plan designs.  For example, if the client purchased one HMO plan from the insurance carrier, they can create a gold/silver/bronze plans.  This gives employees choice as not all healthcare plans are one size fits all.

PM: How do you save employers money, and how much do you typically save them?

BB: We have employers look at purchasing more “bottom of the barrel” insurance plans with their same carrier, with higher copays, and higher deductibles.  We take those plans and construct a reimbursement plan to keep employee benefits the same, and underwrite the risk on the reimbursement costs.  On average we save our clients around 18% annually, without changing benefits.

PM: It’s very cool that you save clients 18% on average.  What percentage of your clients over the past several years have actually saved money?

BB: 100%!  In our 20 years of business we have never saved our clients less than 5%

PM: When you talk about saving 18%, what are you measuring against?  Pre-renewal rates or post-renewal rates?

BB: The net savings figure comes from the renewal pricing.  We are calculating the savings, versus the plan they would have purchased if they had renewed as is, and keeping benefits the same for employees.

PM: As you know, owners of many types of companies, such as S – Corporations, LLCs, partnerships, and LLPs, are not able to participate in a traditional HRA.  Can they participate in a MERP?  If so, how is that possible?

BB: Yes, owners can participate in the MERP because it is a section 105 plan, but they should be reporting our premium equivalent rates as imputed income.  However, we do always recommend they consult with their tax professional to determine impacts on reporting of imputed income.

PM: How large must an employer be to use The Difference Card?

BB: We typically work with fully insured groups with 25-500 lives, but will work with groups over 500 lives as well.  Groups under 25 we don’t see enough of a decrement in savings.

PM:  What do you charge for your services?

BB: Our administration fee is upwards of $9.95 PEPM, but depending on the product it can impact the fee structure.

PM:  Thanks Bryana.  This has been really informative!

We recently quoted a client’s health plan with The Difference Card in concert with a very low cost HMO plan, and the projected savings from the combined plan was substantial.  We were able to secure a “break even” guarantee as well.  In other words, the worst case scenario if claims absolutely exploded was no worse than the fully insured renewal.

The Difference Card is one of many creative solutions that we can employ to help employers control health care costs.  If you’d like to discuss some creative strategies, give us a call at 866-724-0008 or click the link below.


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