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.