HRA administrators help employers offer employees tax-advantaged health reimbursement arrangements. While they've been around for a while, HRAs have recently gained traction among businesses of all sizes due to regulatory rule changes that make them more accessible and easy to use. The key to successfully administering an HRA lies in implementation, including remaining compliant with all the rules and regulations that govern it. Here's what to keep in mind when considering HRA administrators or HRA administration software.
An alternative to traditional group plans, these 401(K) style benefits put the power in the employees' hands and offer more personalization. They are also an effective recruitment and retention strategy. However, it's best to outsource the administration functions of the HRA.
The right HRA administrator makes reimbursing employees for health insurance simple, quick, and effective.
Let’s check out some of the specifics of what HRA administrators do (and why you need one).
HRA stands for health reimbursement arrangement. These are tax-advantaged tools that are built on a series of regulations that help to ensure they are being offered fairly and are achieving their intended aim, which is to help employees pay for benefits tax-free.
A health reimbursement arrangement works pretty much exactly how it sounds: the employer reimburses for premiums and medical expenses on a tax-free basis, and the employee chooses a plan that fits their needs. Employees are reimbursed when they submit a claim.
Super simple, right?
QSEHRA administration and ICHRA administration pertain to two specific types of HRAs. Let's break that down.
QSEHRA: The qualified small employer HRA is designed specifically for small businesses (i.e., companies less than 50 employees) who do not offer a group plan. The QSEHRA has annual contribution limits which change from year to year.
ICHRA: The individual coverage HRA is similar to its predecessor but has fewer limitations- it is available to companies of any size, has no contribution limits, and has greater design flexibility with its eleven classes, which allow for differing reimbursements to employees.
For almost everything you could possibly want to know about these HRAs, check out our in-depth guides for the QSEHRA and the ICHRA.
HRA administrators are the software or platform that bridges between business owners offering an HRA and the employees using the HRA. They receive the administrative burden of offering an HRA, ensure that employees get reimbursed, and keep businesses compliant.
A good HRA administration tool will do all the heavy lifting for you and help you navigate the process from start to finish. Ours will help you with:
We’ll also help employees get the most out of their HRA by:
We are often asked whether an employer can administer their own HRA. Our best advice? Don't even think about it. For one, when dealing with health insurance and employees' health, privacy is a big deal. Things could get pretty uncomfortable for everyone involved. Then there's the whole issue with the HIPAA Privacy Rule, which is another layer of protection for employees' private health information.
It's also time consuming for business owners to keep up with the medical receipts, maintain all the health information in a secure way, and handle the paperwork that comes with it.
Need more convincing?
This post walks you through more of the specific penalties and fees an HRA administrator can help you avoid.
In the current economic environment, your business may be struggling to recruit employees and ensure that you have the best people working for you. In addition, your business is likely constantly looking for employees who are happy with your company and excited to help you fulfill your business mission. In an environment like this — where workforce shortages remain remarkably persistent — that can be a major challenge.
As a business owner, you must create value for your employees. That means offering them excellent pay, flexible working conditions, and the best possible benefits. An HRA - or Health Reimbursement Arrangement - can be a critical component of these benefits. When managed right, HRAs can keep your employees happy by ensuring they can pay for healthcare while reducing their taxes. Your challenge is finding an HRA administration platform that is responsive to your needs and keeps its fees to a minimum.
There is no doubt that there are major pros and cons to using an HRA administrator. The right HRA agency can enable flexibility for businesses of any size, provide a valuable arrangement for employees to help them achieve major tax savings, and integrate with QSEHRA programs or ICHRA programs to increase their benefits. However, that's not to say that all HRAs are easy to operate or inexpensive for employers, and you must weigh these potential challenges against any benefits.
It is important to note that different HRA products apply to different businesses. For example, if you are a small business, you likely make HRA decisions independently, while larger businesses may work through a broker and need different HRA products. However, HRA benefits can be perfect for a small or large operation.
So, where does that leave your business? How does this impact your ultimate desire to create a robust and useful employee benefit? First, you must find the best HRA Administration to achieve your business goals. As such, you must understand specific HRA fees and software while also knowing the different HRA administrators which exist and can help you achieve your business goals.
Any HRA program you enroll in will charge your business HRA administration fees. These fees will vary based on the HRA platform you use, but you should work to keep them as low as possible, and ensure that you fully grasp what you are paying. You'll also need to understand how an HRA administrator levies these fees, where there may be opportunities for negotiation, and what you get for the fees you pay.
First, you should understand that pricing usually varies by employee. For example, at Take Command, we charge $20 per employee per month with a $40 per month platform fee. This price covers various services, including:
These options typically suit the needs of smaller businesses with a set requirement for their employees. However, additional options and price flexibility may be required for businesses of fifty employees or more. In these instances, Take Command can offer specific programming, including:
HRA administration software will help you manage your HRA for employees. However, you can find HRA administration software from any number of companies. What is much harder to find is high-quality software capable of managing a vast array of needs for your business.
What sort of functions and features should your HRA software have?
Consider the following:
HRA software must be simple, convenient, and intuitive. In other words, properly designed and configured software should allow end-to-end HRA management for your business and your employees.
The best HRA administrators should be able to set up HRA accounts and help your business manage HRA-related needs. Ultimately, this is about more than just an affordable price.
So, what should the best HRA administrators handle?
The field of HRAs can be highly complex, but there is no doubt that employers have amazing opportunities to use HRAs to provide real value to their employees. You just need to pick the right partner.
Are you ready to make the change and enroll in an HRA? Make sure to check out our website to read up on the latest HRA news to learn more about how we can bring HRAs and all their value to your organization.
As you research the best benefits software for companies like yours, remember that we are the only HRA administrator that also provides support for individuals shopping for health insurance. We can help your employees shop for off- and on-market plans, compare plans side by side, and see what works best for them, their preferred doctors, and their prescriptions.
Check out our reimbursement platform to see how easy it is to start designing the best HRA for your business or give our new HRA Guide a read. Our team of HRA experts is standing by to help you get started!