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Small Business Employee Benefits and HR Blog

48 HRA Health Care Terms: A Glossary

April 17, 2013
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When your company or clients are evaluating small business health insurance plans and Health Reimbursement Arrangements (HRAs), several health care terms will be used to describe the HRA benefit. Here is a glossary of the most common health care terms, as related to HRAs.HRA, Glossary, Terms

48 HRA Health Care Terms 

  1. Anniversary Date - The first day of any Plan Year.

  2. Balance - The amount of HRA funds available to a Participant to use for Eligible Medical Expenses.

  3. Benefits - Reimbursements paid to a Participant for Eligible Medical Expenses incurred during the Participant's Coverage Period by a Participant, spouse, and/or dependents.

  4. Business Owner - A sole proprietor, partner, or two percent S-Corp shareholder, and/or spouse.

  5. CAP - The maximum amount of claims that can be paid during a specified length of time to a Participant for Eligible Medical Expenses. 

  6. Carry-Over Amounts - Unused amounts under an HRA that are "carried over" after the end of the Plan Year according to the parameters set by the employer. Also called Unused Balance Rollover.

  7. Claim - A HRA claim is a Participant's formal reimbursement request sent to the HRA Claims Processor for adjudication.

  8. Claims Processor - The individual, third party, or other entity designated by the Plan Administrator to receive, substantiate, and recommend whether a claim should be approved for reimbursement or rejected by the Plan Administrator in accordance with the Plan Documents.

  9. Company - The company, business or partnership named in the Plan Documents.

  10. Consumer Driven Health Plan - Arrangement which gives the employee two or more choices of health plans, financial incentive to use health benefits wisely, and (usually) web-based decision support tools providing employee with access to general health information and specific provider services. The employee can select the health plan arrangement most suited to the employee's needs. Also see Defined Contribution Health Plan.

  11. Contribution Period - The Period during which the Employer will contribute to the HRA. For instance, the Employer may contribute on a monthly, quarterly, or annually basis. Also referred to as Allowance Frequency.

  12. Coinsurance - An HRA coinsurance splits the responsibility of medical expenses between the employee and the employer on a percentage basis. For example, an HRA reimburses 80% of the employee's Eligible Medical Expenses. Also referred to as a type of cost-sharing.

  13. Coverage Period - The Plan Year or portion thereof that the Employee participates in an HRA. An HRA is unlike an FSA in that the Coverage Period is not required to be 12 months.

  14. COBRA - The Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

  15. Deductible - An HRA deductible is an amount, set by the employer, that the employee pays out-of-pocket before the HRA benefit is available to the employee.

  16. Dependent - Any individual who qualifies as a IRC Section 152 tax dependent. If the individual is a relative, the employee must provide over half of the relative's support. If the individual is not a relative, the individual must also be a member of the employee's household and reside with the employee for the entire tax year.

  17. Defined Contribution (DC) Health Plan - A plan which sets employer contributions at a certain projected cost level rather than offering a specified benefit regardless of cost. Also referred to as a Stand-Alone HRA.

  18. Effective Date - The company's effective date of the HRA Plan.

  19. Eligible Medical Expenses - Medical expenses defined in IRC Section 213(d), incurred by the Participant, or the Participant's spouse or dependents, that satisfy any further conditions set by the Employer. May include individual health insurance premiums.

  20. Electronic Protected Health Information - Generally includes Protected Health Information (PHI) that is transmitted by electronic media or maintained in electronic media. Unless otherwise specifically noted, Electronic Protected Health Information shall not include enrollment/disenrollment information and summary health information.

  21. Employee - Any individual that the employer classifies as a common-law employee and/or who is on the employer's W-2 payroll, but does not include any leased employee (including, but not limited to, those individuals defined in IRC Section 414(n)), or an individual classified by the employer as a contract worker or independent contractor, temporary employee or casual employee, self-employed individual as defined in IRC Section 401(c), whether or not any such persons are on the employer's W-2 payroll or any individual who performs services for the Employer but who is paid by a temporary or other employment agency.

  22. Employee Class - A group of one or more employees that are similarly situated with respect to geography, job function, hire date, part-time or full-time status, collective bargaining status, or other objective business criteria. Additionally, an Employee Class may consist of one or more Employees who are similarly situated with respect to having one or more adverse health factors as defined in 29 C.F.R. §2590.702(g).

  23. Employer - The company and any other related employer that adopts the HRA Plan with the approval of the company. 

  24. Enrollment Form - The form provided by the Plan Administrator for the purpose of allowing an eligible employee to participate in the HRA Plan, which may be electronic.

  25. EOB or Explanation of Benefits - A statement sent by a health insurance company to covered individuals explaining what medical treatment and/or services were paid for on their behalf.

  26. ERISA - The Employee Retirement Income Security Act of 1974, as amended.

  27. FMLA - The Family and Medical Leave Act of 1993, as amended.

  28. FMLA Leave - A leave of absence that the Employer is required to extend to an Employee under the provisions of the FMLA.

  29. Gap - The portion between a High Deductible Health Coverage (HDHC) and the HRA for which the Employee has responsibility. Applicable to Integrated or Linked HRAs.

  30. High Deductible Health Coverage ("HDHC") - Group Health Plan with High Deductible Health Coverage. Also referrec to as a High Deductible Health Plan (HDHP).

  31. Health Insurance Plan - The plan(s) that the employer may maintain for employees and their spouses and dependents that may be eligible under the terms of such plan, providing major medical type benefits through a group insurance policy or group health plan. An HRA may specify that employees must be enrolled in the Health Insurance Plan to be eligible for the HRA.

  32. Health Reimbursement Arrangement ("HRA") - A health reimbursement arrangement as defined in IRS Notice 2002-45.

  33. Health Savings Account ("HSA”) - A health savings account established under IRC Section 223. HSAs are individual trusts or custodial accounts, each separately established and maintained by an employee with a qualified trustee/custodian.

  34. Highly Compensated Individual - Any individual defined under IRC Section 105(h), as amended, as a "highly compensated individual" or a "highly compensated employee."

  35. HIPAA - The Health Insurance Portability and Accountability Act of 1996, as amended

  36. Integrated HRA - An HRA that is connected to a major medical health plan, usually a High Deductible Health Coverage (HDHC) policy/plan. The Employee must be a Participant in the health plan to participate in its associated (linked) HRA. An Integrated HRA is also called a Linked HRA.

  37. Participant - Any employee who becomes covered by an HRA.

  38. Period of Coverage - The Plan Year, with the following exceptions: (a) for employees who first become eligible to participate during a Plan Year, it shall mean the portion of the Plan Year following the date participation commences, and (b) for employees who terminate participation during a Plan Year, it shall mean the portion of the Plan Year prior to the date participation terminates. A different Period of Coverage (e.g., monthly) may be established by the Plan Administrator and communicated to Participants.

  39. Plan Administrator - The Company, who has full authority, discretion, and responsibility to manage and direct the operation and administration of the Plan, or the third party, entity, or person whom the Company designates to direct one or more elements of such operation and administration.

  40. Plan Sponsor - The Company

  41. Plan Year - The Plan Year period specified the Plan Documents.

  42. Premium Reimbursement Arrangement (PRA) - A Section 125 plan that is employee-funded, allowing employees to reimburse themselves tax-free for their individual health insurance premiums.

  43. SPD - A Summary Plan Description describing the terms of this Plan.

  44. Spend-Down Option - Continuation coverage that may be offered by the Employer. A Participant has a choice of electing the Spend-down Option instead of COBRA continuation coverage.

  45. Spouse - An individual who is legally married to a Participant as determined under applicable state law (and who is treated as a spouse under federal definition).

  46. Stand-Alone HRA - HRA designed to pay for certain eligible medical expenses, including individual health insurance premiums. Not tied to any major medical health plan. Also referred to as an Unlinked HRA.

  47. Two Percent S-Corp Shareholder - An individual who owns on any day during the taxable year of the S-Corporation more than 2 percent of the outstanding stock of such corporation or stock possessing more than 2 percent of the total combined voting power of all stock of such corporation, in accordance with Code Section 1372(a).

  48. Waiting Period - A time frame that new employees must wait after being hired before becoming eligible for HRA benefits. The time period is set by the employer, not to exceed 90 days.

For more HRA and health care terms, visit the small business health insurance glossary.

The Comprehensive Guide to the Small Business HRA
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