8 Crucial HRA Design Questions
Whether it's a branded product like The Difference Card, or an HRA from one of the many other Third Party Administrators, you need to be prepared to ask several crucial plan design questions:
Who will be eligible to participate?
As long as the HRA passes nondiscrimination testing, employers have flexiblity when it comes to eligibility.
Will this be the new base plan? Will it be "opt out" or "opt in?" Is this the new base plan for new employees? Employees without tenure?
What expenses are reimbursable?
Medical and Prescription Drug Copays only?
All eligible 213(d) expenses (medical, rx, dental, vision, and more).
How much will the employer contribute?
With The Difference Card all employee copays/ded/coins are contributed towards.
If paired with a high deductible health plan, the employer can fund some of the deductible, or all of the deductible. There are many unique structures available.
How will the HRA be funded?
Typically HRAs are funded via reimbursements made from the employer general asset funds.
It is also possible to make contributions through a voluntary employees' beneficiary association (VEBA).
Who gets the leftover funds?
If there is money left at the end of the year, does the employer keep it in their general asset fund, or is a portion of it allocated to the employees HRA "balance" so that they have more money available to them next year?
How does this pair with my FSA?
If you are using the same vendor for your HRA and FSA, the two accounts can be connected.
If you are using separate vendors, then the two accounts do not interact.
Keep in mind if the employee has an HRA (your money) and an FSA (their money) they have an incentive to use the HRA money first.
Often times if the HRA is limited to medical/rx reimbursements only, an employee will use an FSA for dental or vision benefits (very common for to use for orthodontia i.e. braces)
How are reimbursements processed?
Is the employee able to swipe their card at the "point of service" i.e. in the doctors office?
Does the employee have to wait for a bill to arrive in the mail and then manually submit for reimbursement?
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