The Health Reimbursement Arrangement (HRA) is fast becoming the popular solution for many businesses looking to explore new ways to offer employee benefits. HRAs can be managed entirely by the company offering them, including limitless funding. And there are different types of HRAs, making them attractive to organizations with different employee types, various benefits budgets, and regardless of company structure. Offering reimbursements on a visit-by-visit basis is gaining traction among individuals, too. Instead of paying hefty monthly amounts for marginal health insurance products, employees can pick their own plans via the Marketplace and submit claims for specific reimbursement amounts. The HRA is a win-win for both employer and employee.
HRAS, ICHRAs, and QSEHRAs are the flexible and cost-controlling answers to budget-savvy company leaders. And you may be working to develop such a plan for your business. But before you roll out your HRA plan, there are key considerations that will need to be addressed in your official HRA plan document. The HRA plan document is the roadmap forward and should include these three critical elements.
1. The Legal Agreement
In order to maintain HRA compliance, there are legal agreement steps you should include with your company HRA plan document. Some leaders may consult with legal partners in drafting the specifics. But there are sample language documents available, and the IRS is forthcoming about what should be included. Here the critical elements to have as you develop yours.
Naming the Players
The HRA plan document needs to establish and name key fiduciaries. Outline who the HRA administrators are, either internal or third-party. Be specific about the responsibilities of the role, as well. These pivotal people will be responsible for managing the claims and tracking the data. W3LL can help as a third-party administrator. Explore how incorporating a TPA partnership can improve participation, maintain compliance, and streamline HRA management ongoing.
Requirements & Timelines
It’s imperative to include effective dates of participation. Outline with specificity the various benefits provided as well as those that may be excluded. Precision with definitions for eligibility is also paramount when developing the HRA plan document. These official decisions should all be made prior to executing your company’s HRA.
Procedures in an Official Capacity
Each HRA plan document should present the step-by-step processes for everything. Dictate in writing how an employee should submit a claim and outline the process for claims approvals. But include exact steps for amending an existing plan, too. Employees may experience changes in health insurance needs and will need to know how to go about restructuring their HRA accordingly. And there should be an exit plan and a clear path for plan termination.
2. The Plan Summary
Every business exploring an HRA solution should also include a plan summary. Much like the official legal requirements, what you contribute here is also mandated for compliance. This section may be best presented in more layman’s terms, as a more user-friendly explanation.
How Funding Works
As part of your plan summary, you’ll want to be sure to outline how the HRA will be funded. The government does not impose limits on company funding. So, what you contribute to your organization’s HRA will likely be based upon your benefits budget. It’s here you’ll also discuss how payments will be made. Some companies reimburse staff on a monthly basis, much like an average expense reimbursement. Others choose to set schedules for HRA payments in conjunction with pay cycles. However you decide to structure your repayments, be sure to explain the dynamics in writing.
Human Resources & Privacy Protections
Every HRA plan document needs to include statements regarding the company’s plan for adhering to HIPAA privacy laws. Protecting the employees’ sensitive health information may require additional layers of human resources support. Employees need to be reassured that submitting claims for health-related expenses is a secure and private process.
The Federal Mandates
It is equally important to include details about federal mandates, including COBRA, that affect the HRA platform and processes. For example, employees cannot use an employer-sponsored HRA unless they enroll in a health insurance plan. There are timelines to keep for these enrollment requirements, as well. Make sure these federal guidelines are explained in detail, so employees understand what provisions bind the HRA and what federal rules may affect how they participate.
3. The Employee Introduction
Every HRA plan document should also offer an official employee introduction. If the HRA is new to your staff, this step of the process is especially important. You’ll want to present the benefits of such a plan, including benefit amounts per employee and official start dates. Here are a few other elements to include, as well.
There should be a statement informing the eligible employee of his or her next steps to engaging the Marketplace. Employees will need direction, especially if browsing for a Marketplace plan is new to them. Instructions for applying for the premium tax credits are also essential. A statement for the amount provided and how it may affect the premium tax credit is also necessary. Include additional statements about what qualifies as proof of eligibility calculations in writing.
Be sure these employee notices include clear guides about timelines. For example, an ICHRA must provide a 90-day window to eligible employees. Special enrollment periods allow for 60 days. Make sure your employees understand how much time they have to meet the HRA requirements for participation.
Most HRAs don’t require participant payments. However, if your HRA does require a contribution payment, be sure to include it in this portion of your HRA plan document. Be precise about participation steps within your company, as well, including any waiting period for new hires. Since ICHRAs, for example, can include part-time and seasonal employees, a company may have varying onboarding procedures for each class. Be mindful that your plan document includes information regarding any of these types of variances.
If an HRA offering is right for your business, you don’t have to develop your plan document alone. Contact us and let W3LL help you explore your plan options and create a compliant plan document. Connect with our team today to see how we can ensure your HRA rolls out without a hitch, and your employees understand how to participate.