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Businesses Are Not Required to Offer HRA to All Employees

Written by: JD Cleary
March 22, 2012 at 5:45 AM

A health reimbursement arrangement (HRA) allows an employer to design a health benefits offering that varies by employee and is not required to be provided to all employees at a company.employment resized 600

Federal regulations (45CFR146.121) state the following:

"A plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups is based on a bona fide employment-based classification consistent with the employer's usual business practices."

HRA Employment-Based Classifications

The following are the most common ways to create legal HRA employee classes based on bona-fide job differences:

  1. Job title

  2. Full-time vs. Part-time

  3. Length of service

  4. Geographic location

  5. Date of hire

HRA Employee Classes and Federal Law

To comply with federal regulations, employee classes within an HRA must:

  • Treat all "similarly situated" employees equally

  • Not discriminate against unhealthy individuals

  • Spell out the requirements for classes and benefits in the ERISA plan document

With salary and other types of compensation, employer routinely compensate groups of employees differently.  Since health benefits are such an important part of compensation, why not provide benefits that vary by class of employee?

 hra whitepaper 101

Topics: Health Reimbursement Arrangement

Additional Resources

Trying to decide which HRA is best for you? Take our quiz to find out.
Get our guide on how to offer health benefits with a small budget.