As employers increase the medical deductible and coinsurance limits on their group medical plans, they are electing to self-fund some or all of these expenses for employees and covered dependents in the form of an Health Reimbursement Arrangement (HRA). As long as the offer is the same for “similarly situated” employees (same amount offered to everyone), it will pass non-discrimination testing. Note that owners often cannot participate in an HRA (with the exception of the C Corporation owner).
Why SBA for your clients’ HRA Plan Administration?
HRAs, while not a particularly complicated concept, have some tricky provisions and can be confusing for participants. Additionally, HRAs have been affected by the Affordable Care Act by limiting HRA plan designs and integrating them with group medical plans.
To keep your clients HRA in compliance, SBA will:
- Calculate the PCORI fees (another consequence of the ACA) that must be paid on HRA benefits.
- Present a signature-ready IRS Form 720 to employers by July 1, for the once-a-year required payment. The fees are nominal but the paperwork requirement and reminder is our responsibility when we administer their HRA.
- Send statements of account once a month to our HRA clients showing the calendar year claims to date.
- Conduct required non-discrimination testing.
- Assist HRA participants who are confused about where to find the deductible or coinsurance figures on their EOBs. Employees can call us and we will help them read their EOBs and complete the paperwork to start the reimbursement process. Often participants will ask, “Can I just send you everything and will you sort it out?” and the answer is yes, we will do everything to have a satisfied participant and therefore a satisfied client.
Better together: HRA and COBRA administration
Working with SBA for both your client’s HRA and COBRA administration provides additional advantages. Did you know that an HRA is a COBRA-eligible benefit? When SBA provides your client with COBRA administration, we don’t have to ask the client how much was reimbursed in order to calculate the HRA COBRA premium, that information is already in our system, saving your client time and effort.
Just how is the HRA COBRA premium calculated? We use our experience from administering many other HRAs to estimate first year utilization vs. the group’s actual HRA utilization to calculate future year COBRA premiums. An HRA should not be made available to terminated employees without charging a premium, they don’t get health insurance under COBRA without charging a premium!
Let’s get started!
Click “Get a quote” for your clients today.