If you are still unsure and on the fence about health insurance and transitioning your company’s benefits program away from offering a group health insurance to a Health Reimbursement Arrangement (HRA,) keep reading. Today, we’ll highlight three of the most significant business benefits of embracing the HRA platform. And it may be just the list of ‘pros’ you need to realize the next step for your organization.
It Makes Bottom-Line, Financial Business Sense
The Health Reimbursement Arrangement (HRA) makes business sense, both on the bottom line and with year-end finances. Considering the tumultuous financial year many companies endured in 2020, an HRA could be a more cost-effective way to augment the employee benefits program. And it may just be the game-changing solution for your business, as well. And the tax benefits of leveraging an HRA budget can be just the nudge you need to move forward with your HRA transition.
Businesses Design Their Own Budgets
Adopting an HRA plan means businesses can design their own guidelines for reimbursements based on a fixed budget. Decide what contributions your company can afford to make, and you won’t have surprise costs, fees, or premiums to contend with throughout the year. This kid of predictability is ideal for any business budget.
Businesses Can Reduce Health Insurance Costs
Employers are recognizing, especially this year, that the high and unpredictable costs of group plans just aren’t feasible anymore. Group plans can be complex to manage, and many enforce significant rate hikes annually. The HRA solution can save thousands by instead offering precise reimbursements for actual costs and according to a company’s determined budget.
HRAs Translate to Less Administrative Burdens
There are substantial administrative burdens to Human Resources departments that manage the nuances and complexities of a company’s group health insurance plan. There are open enrollment periods to manage and onboarding new hire protocols to oversee. There are often countless forms and steps to keeping up with changes and health insurance cost management, as well. With an HRA, managing the reimbursements internally, including self-setup, can be less of a burden on a business’s HR teams. There are compliance requirements and employee communications that will require their attention. But it won’t be as time-consuming as the process for managing the traditional group plan.
It Can Be More Beneficial to Employees
Adopting an HRA benefits option offers considerable benefits to employees. They may not be familiar with how it works at first, so communicating with your teams about a change is critical. But once staff members understand the process, you’ll find they’ll love the benefits.
Employees Enjoy Direct Reimbursements for Expenses
Instead of siphoning premiums out of employee paychecks to maybe cover medical expenses that haven’t occurred yet, employees get to keep their hard-earned cash. Any out-of-pocket healthcare costs that fall within the guidelines of the HRA type in place will be reimbursed specifically. To an employee, they’ll only pay for the health services they need and be reimbursed for many, if not all of their costs.
Employees Can Select an Affordable Marketplace Plan They Want
Employees traditionally don’t have a say in which group plans their employer offers. With an HRA offering, staff members can browse the ACA Marketplace directly and choose an affordable health insurance plan that they prefer. The employer-funded HRA will only offset those out-of-pocket costs, in some cases, even covering monthly premiums.
HRA Administrative Dashboards Make Submissions & Reimbursements Easy
The process at the employee-level can be easy. Proof of expenses might include an actual bill from a health facility or an explanation of benefits from the insurance provider. A quick copy submission, either electronically through an HRA-specific dashboard set up or even a paper trail, can be quick and effortless. Reimbursements can be authorized weekly, bi-weekly, or monthly and can be added to an employee’s paycheck.
There is Flexibility with Customized HRA Options
No two business operations are alike, and there are HRA options designed to complement the different sizes, needs, and budgets of various companies. So whether you’re a two-person service provider or a bustling call center of over 200, there’s an HRA that might make sense for you.
Many HRA Structures to Complement Business Sizes & Needs
Based on the size and budget needs of your business, you can select from a few different types of HRAs. The Qualified Small Employer HRA (QSEHRA) is ideal for companies with 50 or fewer employees. Allowances can be up to $5,250 for individual staff members and $10,600 for those with families (based on 2020 benchmarks.) The Individual Coverage HRA (ICHRA) is also a popular platform choice that offers greater flexibility. There are no allowance caps, and benefits can be provided to full-time, part-time, seasonal, and even contracted workers.
Transition to an HRA Exclusive Plan or As a Supplemental Offering
There are Group Coverage HRA (GCHRA) options for those employers that want to maintain a group health insurance plan but also want to offer the reimbursement benefits of an HRA. In this type of HRA, only those employees currently enrolled in the company’s group plan can benefit from the HRA. But it’s designed to also help offset staff members’ deductibles, copays, and expenses that aren’t covered by the group coverage.
Third-Party Administrators Ease Compliance & Management
To make the adoption of an HRA even easier, there are third-party administrators (TPAs) who can help companies set up, administer, and manage the submissions and reimbursements ongoing. Businesses can completely outsource the dashboard management, analytics, and employee communications burdens to a knowledgeable contact who can handle it all. And more importantly, because the ACA requirements and compliance guidelines are always shifting, a TPA can ensure that your company’s HRA is always on the right side of the benchmarks and conditions, helping to avoid inadvertent penalty fees.
Even after reviewing these three key benefits, if you find yourself still uncertain of where or how to begin towards a transition to an HRA platform, contact us! We can help you get started, set up, and be the third-party administrator to help you manage reimbursements ongoing. Connect with us today to discuss your questions and carve out a plan that makes the most sense for your business in 2021.
