A health reimbursement arrangement (HRA) is an IRS-approved health benefit that allows organizations to offer employees tax-free reimbursement of medical expenses and insurance premiums. An HRA must follow certain requirements, including having formal plan documents in place, to be compliant with current regulations.
HRA plan documents outline the terms and conditions regarding the operation and administration of the benefit. In this post, we'll discuss plan document requirements employers must follow while offering an HRA.
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HRA plan documents and ERISA
The HRA is subject to general ERISA requirements, including the need to provide a legal plan document in writing. A Summary of Benefits is not considered an HRA Plan Document or HRA Summary Plan Description (SPD). If an HRA exists without a written HRA Plan Document—it is out of compliance.
What are the HRA plan document requirements?
HRA plan documents should contain each of the following:
- Name of the HRA Plan Document Administrator
- Designation of any Named Fiduciaries other than the HRA Plan Administrator under the claims procedure for deciding benefit appeals
- A description of the HRA benefits provided
- The standard of review for HRA benefit decisions
- Eligibility criteria (e.g., classes of employees, waiting period for new hires, and hours worked per week)
- The effective date of participation (e.g., next day or first of the month following satisfaction of the HRA Plan Document eligibility waiting period)
- Amount the HRA Participant must pay towards the cost of HRA coverage (typically $0)
- HRA Plan Sponsor's amendment and termination rights and procedures, and what happens to HRA Plan assets, if any, in the event of HRA Plan termination
- Rules restricting and regulating the use of Protected Health Information (PHI), if Plan Sponsor uses PHI
- Coordination of Benefits provisions
- Procedures for allocating and designating administrative duties to an HRA TPA or committee
- How the HRA plan is funded
- Information regarding COBRA, HIPAA, and other federal mandates*
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Where can I get HRA plan documents?
Drafting HRA plan documents on your own can be difficult and risky. When documents fail to meet ERISA requirements, the business is subject to fines of up to $100 per day per employee.
Many small employers contract with an attorney or other legal service to draft HRA plan documents. While effective, attorneys can bill $2,000 or more for this service. Even purchasing pre-written plan documents can be expensive. In addition, pre-written documents can’t be changed if the organization decides to alter the benefit in a new benefit year.
A good HRA administration tool should provide personalized plan documents, free plan amendments, online benefits administration, the ability to easily approve reimbursements, and tools that ensure organizations remain compliant with federal and state rules.
A better solution: get your plan documents instantly with Peoplekeep
PeopleKeep offers employers an easy way to navigate online benefits administration and the ability to approve reimbursements from anywhere. PeopleKeep’s software automatically generates custom HRA plan documents that can be updated to reflect changes in an employee’s allowance or to revamp the benefit for a new benefit year. With PeopleKeep, documents are kept secure and can be accessed at any time. An HRA administration tool, like PeopleKeep, allows employers to offer a valuable benefit, remain compliant, and stay on budget.
This article was previously published December 3, 2018. An updated version was posted on January 4, 2021.