• John DiMartino

The Rise of "The Difference Card"

With a 13% increase to the School Employees' Health Benefits Program (SEHBP) for 1/1/2018 and Year 4 Chapter 78 employee contributions as high as 35%, there has never been a better time to consider alternatives to the same old way of doing health insurance. This is perhaps the reason that many New Jersey public entities are turning to a relatively new player in their market - The Difference Card.

The Difference Card (both the name of the company and name of their premier product) offers employers a Health Reimbursement Account. In short, the employee gets what appears to be a credit card (Difference Card) which is connected to a bank account loaded with funds from the employer. The employee may use these funds for eligible healthcare expenses. Typically, the employee swipes the card at the doctors office or uses it to pay a medical bill online. The employer keeps the money left in the bank account at the end of the year.

This may sound farfetched, but The Difference Card can help Schools save as much as 18% annually on their healthcare costs. In fact, on average, the Difference Card saves their clients $2,000 per employee, per year, without reducing member benefits. One of the general agents I work closely with, Fiduciary Intermediary, ltd, provided a list of New York Difference Card clients since 2009. You can see the de-identified list here, which shows savings of over $9,000,000.


The Difference Card is a Health Reimbursement Account, which is a health care benefit. Accordingly, under Chapter 78, employee contributions are based on their annual base salary and the cost of coverage including "any other health care benefit." Under this law, the employee would have to contribute towards the amount placed in an HRA - thus eliminating their incentive to pursue an HRA as a solution.

Now that Chapter 78 is sunsetting, HRA contributions can be removed from an employee's contribution calculation. It is once again a strategy that could provide both sides of the table with much needed relief.

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