HRA Administrator 101
If you are relatively new to what an HRA is – a health reimbursement arrangement – and how they work, consider this your ‘HRA for dummies’ crash course. In this article, we’ll discuss the role of an HRA administrator, what some HRA rules for employers are, as well as the primary differences between an HRA vs. HSA.
Traditionally speaking, an HRA administrator is an individual or entity which oversees the daily activities involved in managing a health reimbursement arrangement. This can include basic things like ensuring secure and proper documentation storage, providing compliance services, and managing reimbursements from IRS Publication 502.
As more and more companies are looking to optimize their services, modern HRA administrators are generally software applications or some kind of web-based or cloud-based tool. And a decent HRA administration software or tool ought to provide sufficient guidance to help employers and employees navigate their HRA benefits from the beginning of the process to the very end.
An organization looking to invest in good HRA administration tools or software must keep a few things in mind: is it compatible with your business’s existing plan, and will it streamline your operation moving forward? HRA administration software is capable of many things like set-up, creating and distributing plan documents for employees, persistent and accurate tracking of available HRA funds, privacy compliance, producing tax documents and annual reports, as well as providing electronic storage of employee invoices and receipts related to HRA funds.
From an employer’s perspective, HRA administrators can provide an invaluable service to you and your employees. And when it comes to your employees’ healthcare, it’s vital to treat them with dignity and respect while also making an effort for them to be able to access the healthcare they need quickly and easily. It can be overwhelming for moderate- and small-sized businesses to oversee an HRA plan without the use of an HRA administrator, but there are so many steps in the process, and many of those steps require secure, careful handling of private information.
A good HRA administrator tool or software can help business owners ensure that all the proper documentation is recorded and stored securely. Due to HIPAA (Health Insurance Portability and Accountability Act of 1996) regulations, any employee medical records or records of medical expenses qualify as PHI (or protected heal information), so the use of HRA administration software will insulate employers and keep employee reimbursement claims and medical information private and secure.
HRA Rules for Employees
It’s also important to understand the basic HRA rules for employees when utilizing an HRA platform. While employees don’t need to worry about paying HRA administration fees (since the employer covers those), there are a few things for employees to consider if their employer intends to utilize an HRA to help employees with out-of-pocket medical expenses.
For instance, if you are wondering, “Can I withdraw money from my HRA account?” The answer, unfortunately, is no. However, unused HRA funds can roll over to the following calendar year at the employer’s discretion. Employees might also wonder whether or not they need to have health insurance in order to make use of an HRA. The answer there is a bit more complex; in short, it depends. Sometimes, an employer may offer an HRA plan to supplement a high-deductible health plan, or an employer may offer an individual coverage HRA (which we’ll cover in more detail later on).
Other important items to note for employees include the fact that the HRA is owned entirely by the employer. Only the employer can add funds to an HRA account, and depending upon the stipulations of the plan, some of those funds (if left unused) can roll over to the next year. Funds in an HRA do not typically accrue interest, and how much money gets contributed to an HRA is at the discretion of the employer.
Another common question employees have is whether or not they are eligible to utilize HRA funds to help pay for a family member’s medical expenses. The answer, in a word, is yes. HRA monies can be used to cover eligible medical expenditures of any family member who could be considered a “dependent” on the employee’s most recent tax filing documents. Depending on the stipulations of the HRA, however, the dependent may be required to have health insurance.
