HRA Plan: A Customizable Health Benefit

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As healthcare costs continue to rise, employers are finding it more difficult to offer comprehensive benefits packages to their workers without spending a fortune. That’s why so many employers are choosing to offer an HRA plan, a powerful tool for providing cost-effective health benefits.

The federal government recently issued a ruling that lets employers offer two new HRAs: an Excepted Benefit HRA (EBHRA) and an Individual Coverage HRA (ICHRA).Click here to learn about the benefits and differences between these two new HRAs!

What is an HRA?

A traditional medical Health Reimbursement Arrangement (HRA) is an employer-funded savings account used by participants to cover out-of-pocket health-related expenses. These accounts were at the forefront of the consumer-driven healthcare movement in 2002. HRAs are tax-advantaged, meaning they are 100% deductible for employers and tax-free for employees. It can be a valuable addition to a benefits package for any company hoping to attract the most talented employees.

HRA Flexibility

Flexibility remains a key feature of HRAs, making them a valuable benefits tool. Employers can leverage this flexibility to create a plan that covers the unique needs of their staff in a cost-effective way. When designing an HRA plan, employers can determine which costs their plan can be used for, such as co-pays, co-insurance, dental and vision expenses, prescription drug coverage, or any combination of healthcare costs they decide is right for their plan. The flexibility of HRAs means they can also be used in conjunction with Flexible Spending Accounts (FSAs), giving employees another way to cut down pre-deductible medical expenses.

BASIC HRA has embraced HRA flexibility and expanded upon it. Employers can choose to carry over all or a percentage of leftover funds when the plan year ends. Giving employees the option to carry over unspent HRA funds into the following plan year could encourage participants to be more judicious with spending. BASIC also offers debit cards, when it would be beneficial, and the option to pre-fund or prorate deposits.

medical savings growing over time

Money saved in an HRA can be extremely valuable to employees down the line.

While many employers choose to pair an HRA with a High Deductible Health Plan (HDHP), it is not a requirement like it is with HSAs. Often times employers utilize an HDHP to save money on premiums and pair it with an HRA plan, offering a way for their employees to supplement out-of-pocket health care expenses.

Some examples of how we’ve seen HRAs implemented are:

  • Front end deductible: Employee pays the first $1,000, then the HRA pays the next $2,000
  • Co-pay off set: Raise the plan co-pay from $25 to $40 and the HRA pays the cost difference
  • Orthodontia: Employer doesn’t offer specific orthodontia coverage but instead fund an HRA
  • All 213b expenses: All medical expenses that are applicable to the health plan’s deductible, a co-pay amount, or a co-insurance amount qualify for reimbursement
  • Prescription expenses only: HRA only reimburses prescription expenses

Industry Leading HRA Administration

Employers who want to offer an HRA, or simply improve their existing plan, should look no further than BASIC HRA Administration. Whether we are establishing a new HRA plan or taking over the administration of an existing one, BASIC conducts a thorough review of your company so we can help you avoid implementing or offering a plan design that is cumbersome, or worse, discriminatory. BASIC Regional Directors are with you every step of the way to help design your fully customized plan, so your employees can take advantage of lightning fast claims processing and rapid reimbursement payments as soon as possible. Request a proposal for BASIC HRA Administration today!

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