Healthy Options

The Principal Financial Group is pushing competition in consumer-driven healthcare with an integrated HRA and HSA product.

As part of an initiative to gain an edge in the consumer-driven healthcare market, The Principal Financial Group (Des Moines; $205.3 billion in assets under management) has created what it says is the first integrated health reimbursement arrangement (HRA) and health savings account (HSA). The offering, which The Principal Financial Group built in-house, allows employers to design flexible deductibles, reimbursement percentages and rollover options that meet the budgeting needs of their employees. The service also deducts HSA and HRA contributions from employees' paychecks electronically.

"The Principal is continuing to expand in the consumer-driven healthcare space, and this program is a result of looking for ways to help meet employers' needs," says Jerry Ripperger, director of consumer health for The Principal Financial Group. "With both of these systems, we can build HRAs and HSAs on the same plan, and employers and employees can manage their eligibility and funds online."

The HSA platform, called Direct Connect Service for Health Saving Accounts, offers an administrative infrastructure that helps employers manage employee benefits online. To create the product, the carrier integrated its HRA platform with its proprietary claims adjudication system. Next, The Principal's IT organization built an HSA platform, using components of Fiserv's (Brookfield, Wis.) Comprehensive Banking System and the vendor's Communicator product for bank transactions, and PFPC's (Wilmington, Del.) Global Enterprise Platform for mutual funds.

"Originally, our HSA platform was missing the administrative infrastructure that allowed the employer to manage their employee benefits," says Ripperger. "When we integrated the HRA and HSA products, we added that functionality."

HSA employee contributions are sent electronically from the employer's payroll to Principal Bank, The Principal Financial Group's banking arm, using the Automated Clearing House system. Interfaces from the systems to the Web also were constructed to enable employees to check their accounts online. Integration of the HRA and HSA systems was completed in January 2006.

The Direct Connect Service was rolled out in May 2006, and the combination of HRAs and HSAs went live in July. Ripperger notes that The Principal Financial Group plans to expand its consumer-driven healthcare program over the next year with additional offerings, which he declines to specify. "Consumer-driven health plans are going to continue to grow in importance, and we will continue to make advancements," Ripperger adds.