Why SBA for HRA Plan Administration?
HRAs, while not a particularly complicated concept, have some tricky provisions and can be confusing for participants. Three versions of the HRA, the Qualified Small Employer HRA (QSEHRA), the Individual Coverage HRA (ICHRA) and the Excepted Benefit HRA (EBHRA) provide employers of all sizes more flexibility in offering an HRA to employees regardless of the presence of a group medical plan.
Additionally, as HRAs are a COBRA eligible benefit, if SBA is also the COBRA administrator, we can automatically calculate the HRA COBRA premium.
What should you know about HRAs?
- HRAs are traditionally used to help employers offset the costs to employees of higher deductible medical plans.
- The premium savings from the higher deductible plan often times will cover expected HRA claims and administrative expenses.
- With respect to employee utilization, a PPO medical plan will typically see between 7% – 15% of covered individuals submitting reimbursement requests in a calendar year.
- By IRS rules, company owners often cannot participate in an HRA. Only C Corporation owners can participate. And, if you are a Sub-Chapter S Corporation, employees who are related to you cannot participate.
- You may match a PPO high deductible medical plan or a Health Savings Account (HSA) medical plan with an HRA. Special considerations must be addressed when using an HSA-qualified medical plan in conjunction with an HRA.
QSEHRAs, ICHRAs & EBHRAs
There are three forms of HRAs that provide the ability for employers to reimburse various healthcare-related expenses and premiums.
- QSEHRAs are for smaller employers with under 50 employees and have annual statutory limits on the amount of reimbursement allowed. Individual and Medicare premiums, as well as out-of-pocket medical/dental/vision expenses can be reimbursed.
- ICHRAs can be used by employers of any size and have no cap on the amount of reimbursement. Individual and Medicare premiums, as well as out-of-pocket medical/dental/vision expenses can be reimbursed. An ICHRA can be offered to specific classifications of employees who are not eligible for the group medical plan.
- EBHRAs can be used by employers of any size for reimbursement of dental & vision premiums, as well as medical/dental/vision expenses subject to an annual statutory limits. Participants in an EBHRA must be eligible for the group medical plan.
Please see our side-by-side comparison for an outline of the differences between these programs.
For ongoing HRA administration, SBA will:
- Create enrollment materials, plan documents and Summary Benefits Coverage (SBC).
- Conduct required annual non-discrimination testing.
- Send monthly statements of account showing the calendar year claims to date.
- 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.