Updated Jul 2022
While all HRA (Health Reimbursement Arrangement) administrators assure quality coverage and affordability, understanding what they bring to the table objectively will help clarify why employers benefit from HRA admins – especially outside ones.
Basic Benefits of an HRA Administrator
- To begin with, HRA admins take a huge load off of business owners by settling the medical expenses of their employees. Medical billing is not just a minefield for the unsuspecting emergency-room user; the intricacies of medical billing have required skillful navigation since well before the 70s (if you can imagine it…).
The two responsibilities of managing the available funds escrowed for HRAs, as well as the responsibility of settling medical expenses, and filing associated claims, are enough reason for employers to consider hiring an HRA administrator.
- HRA administrators pride themselves on their ability to discern risk, ever-changing environments, and each company’s unique culture – and how these factors play into choosing and adapting the right carrier or plan.
- Reduce the rush! HRA administrators will ensure your company’s compliance with state and federal regulations, in timely, prepared fashions.
But Why Hire a Third Party?
- An outside agency, brokerage, or service for HRA and employee benefits at large, will always yield more unbiased and transparent reports than in-house staff will.
- An independent third party that manages and administers your HRA plans will be able to offer advice and insight, with (usually) a more impressive track record than hireable employees.
- Third party administrators are able to amass and maintain an exponentially larger network of insurance carriers than individual producers are able to..
Those are some of the main reasons companies hire outside agencies to manage and administer their HRA plans for their employees. If you haven’t yet chosen a good HRA group health plan to begin with, take a look at some of the options below.
Types of HRA
With size, revenue, and location all playing factors in the ultimate cost, employers have an expansive menu of HRA “versions” to choose from.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
This is a type of HRA that employers opt for when they have less than 50 employees.
The IRS sets the yearly limit for QSEHRA and employees can be reimbursed to the tune of up to $5,300. Other employee benefits include family coverage of up to $10,700. The reimbursement is tax deductible for employers.
Coverage Health Reimbursement Arrangement (ICHRA)
This was only introduced in 2022, and it gives employers the ability to cover individual health insurance. Employers can offer as much or as little as they want for this type of coverage. There are also no limits to the number of employees you can put under an ICHRA plan.
Expected Benefit Health Reimbursement Arrangement
With this plan, employers can reimburse employees for up to $1,800 per year for qualified medical expenses. However, employees cannot use this plan to buy comprehensive health insurance but can pay for dental and vision plans.
As simple and gratifying as HRA can be for employers, it can be a complex process that requires you to understand some details. But why learn a whole new skill (almost a whole new trade of its own), when you’re already hiring a broker to get you the right group health plan in the first place?
An HRA professional specifically, might cost you anywhere from $150 to $1,500 an hour, but of course, like all things, we get what we pay for. If you are ready to hire an HRA admin, it’s important you know the steps to take to fulfill compliance when administering HRA.
- Create a legal document that clearly states eligibility, claims, allowances, and other structures.
- Safeguard employees’ private health information by adhering to HIPAA privacy laws.
- Keep records intact to avoid any issues with the IRS.
- Conduct annual testing to ascertain that your HRA does not favor certain employees over others.
Must A Third Party HRA Admin Be Hired?
Actually, as an employer, you can administer an HRA plan alone / in-house, if you insist. There are three ways through which an employer can administer an HRA:
- Self-Administration: Most companies will have an in-house administrator that can help administer the HRA. But sometimes self-administration does not work well because employers often neglect certain regulations that could prove costly in the end.
- HRA Administrator Software Provider: They help to set up the HRA, create the HRA plan documents, and review reimbursement claims, among other services.
- Traditional TPA: TPA means third party administrator, and they do the same thing as the HRA administrator software provider. However, the major difference is that a TPA requires pre-funding while the software does not.
Employers benefit from HRA admins because they’re:
- Saving on trial and error in-house
- Exponentially more cost-effective than a full-time staff
- (HRA advisors) Are ready with tried and true methods of administering plans to large groups effectively, and with little-to-no interruption
Yes, we believe you need an expert by your side.