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.
HRA Administrators 101
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).
What is an HRA account?
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 & ICHRA Administration
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.
What is an HRA administrator?
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.
What HRA administrators do
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:
- Legal documents
- Onboarding employees
- Tax documents and year-end reporting
- HIPAA and privacy compliance
- A customized admin portal to review and approve HRA documents, view monthly reimbursement reports, add/remove employees, manage subscriptions, update payment information, and see overview information about HRAs.
We’ll also help employees get the most out of their HRA by:
- Providing helpful educational material to communicate to your employees the benefits of their new HRA and how to get the most out of it
- Supporting employees while they shop for an individual health insurance plan to use with their HRA
- Answering questions along the way
- Providing an easy platform to request reimbursements (like simply snapping a picture and uploading on phone)
Why do you need an HRA administrator?
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.
Using HRA Administration As A Robust Employee Benefit
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.
What to Keep in Mind Regarding HRA Administration Fees
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:
- Management and execution of all reimbursements enable your employees to quickly and easily have their claims processed and deposited.
- Maintenance of all paperwork is then distributed to you and your employees at the end of every year, enabling them to pay their taxes.
- Consultation and creation of a customizable HRA plan. This plan design will allow you to create an HRA program that best suits your needs.
- Access to our HRA platform and administration software, as well as appropriate support, enables you to manage the HRA program on your own and execute your HRA in a manner that best suits your business needs.
- There are various customer support methods for you and your customers, including chat, email, and phone.
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:
- Customized reports that show which benefits are being used, who uses them, and what products you may create to better suit the needs of your business.
- A consultative HRA design process that can work with your operation — regardless of how big that business is — to create the best product.
- A specific Client Success Manager who will work with your business to maximize its success.
HRA Administration Software Features
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:
- Creation of an HRA: The right HRA software should help you to create an HRA plan. You should be able to enroll employees, create eligibility restrictions, and set a start date that works for your business needs. You should also be able to determine a budget and how much employees can potentially save in their HRA.
- Sample HRA plan document and template: Some employers want to take the time and dig "under the hood" of an HRA plan, setting up highly specific documents, programs, and limitations. Other want to use what others have successfully used in the past. Regardless of your desires, functional HRA administration software should be able to help you set up an HRA plan that fits your needs.
- Managerial tools: HRA software is supposed to manage the program for you, not create additional hurdles and workloads. As such, you'll need this software to help you reach out to your employees, explain an HRA, and walk them through the enrollment process. Furthermore, HRA software should help employees decide on a plan (if your business offers multiple plans) and answer any questions related to the HRA.
- File for reimbursements: There was once a time when businesses could only manage HRA reimbursements by paperwork and maintaining paper receipts. Thankfully, HRA firms can now manage this process electronically. Your employees should be able to use the software via a simple portal and get reimbursed accordingly. That should be the only management your staff and team need to do. It is the job of software administrators to handle compliance and prepare reports for your business.
Autopay: Some programs are starting to experiment with payment solutions, in which your business will effectively front the cost of the out of pocket employee costs for premiums and automatically withdraw the remaining money from your employees' paychecks. Autopay is a voluntary aspect of newer HRA software components, but many employers and businesses have found it extremely useful. It ensures a better user experience much like a group health insurance plan.
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.
What the Best HRA Administrators Know
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?
- Specific rules of different plans: Understanding how to process paperwork isn't enough. A good HRA administrator knows the ins and outs of HRA rules for employers. They have developed a thorough understanding of what they can reimburse, what can't be, and how to work with employers and employees to ensure that all HRA plans are compliant.
- Different types of HRAs: Remember, all HRAs are not created equal. There are multiple types of HRAs, including Qualified Small Employer Health Reimbursement Arrangement (or QSEHRA) and Individual Coverage Health Reimbursement Arrangement (ICHRA). Both programs operate under the HRA umbrella, but ICHRA and QSEHRA administration software operate very differently. As such, the best HRA administrators can help you use software that helps you manage either of these programs. More importantly, the best administrators are experts in these programs, and they can help you determine which program works best for you and your business.
- How to create an intuitive, easy-to-use program: HRA, ICHRA, and QSEHRA programs are complicated to administer. If you are going to be able to fully understand what these programs are, you need a robust software platform that is flexible, intuitive, and easy to learn. As such, the software that administrators create is critical. Furthermore, you need access to the right support to get answers to your questions and have any problems addressed.
- Expanding functions and features: No HRA program should be comfortably resting on its laurels. Instead, an HRA company should ensure that it is constantly updating features and creating new systems that its members can use. As such, an HRA organization must create new technology, update enrollment features, provide additional customer support, and constantly strive to create a better product.
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.
Take Command HRA Administration
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!
A wife to one and mother to four, Keely does all of the things. She’s also dabbled in personal finance blogging and social media management, contributed to MetroFamily magazine, and is passionate about good food, treasure hunting and upcycling. With a B.S. in Psychology from the University of Oklahoma and a knack for a witty punchline, it’s no surprise that Keely’s social posts are as clever as they get. In her (very little) free time, you’ll find Keely with her nose in a book or trying out a local restaurant with her family.