A traditional group health plan can be difficult to manage with rising healthcare costs. If you’re offering a group health plan with a high deductible to save money, a special type of health reimbursement arrangement (HRA) has been specifically designed for employers like you: the integrated HRA.
With an integrated HRA, you can enhance your traditional group health plan while reducing the annual premium rate increases associated with traditional health insurance. But with any group health coverage benefit, it’s important to how an integrated HRA fits into your current health benefit.
In this blog, we’ll define integrated HRAs and discuss the following four considerations to think through when determining if this health benefit is right for your business:
- You have a group health insurance plan
- You’re looking to reduce healthcare costs
- You want to attract and retain top talent
- You want to customize your health benefit
What is an integrated HRA?
Integrated HRAs are so-named because they integrate with a traditional group health plan. They allow employers of any size to enhance their group health insurance by offering a reimbursable allowance to employees for qualified medical expenses that aren’t fully covered by their plan.
With an integrated HRA, an employer sets a monthly allowance for their employees to use on healthcare needs, similar to a spending account. Employers can offer their employees as much as they wish—setting it apart from the excepted benefit HRA, which has annual allowance caps.
When an employee incurs eligible expenses, they submit their receipt to be verified. If the qualified medical expenses are approved, the employee is reimbursed up to their allowance amount.
Unlike HSAs, if an employee leaves your organization, or has unused funds, your employer contribution funds stay with your company.
The integrated HRA that PeopleKeep offers on their HRA administration platform is called a group coverage HRA (GCHRA). Choosing a GCHRA over other integrated HRA options gives employers extra flexibility.
Unlike traditional integrated HRAs, employers aren’t restricted to compatible group health insurance coverage via a specific carrier, and you can keep your GCHRA at the end of your plan year even if you switch insurance companies.
Now that you know more about integrated HRAs, let’s go over the top four considerations to think through when deciding if an integrated HRA suitable suitable for your business.
1. You have a group health insurance plan
Whether you already have or are planning to have a group health plan, this is a must-have if you’re considering an integrated HRA. Integrated HRAs require that your organization has an Affordable Care Act (ACA) compliant group health insurance plan that meets minimum essential coverage (MEC), per the employer mandate.
Additionally, your employees must be enrolled in your group health plan to participate in the integrated HRA. For example, if you have employees covered by their spouse’s insurance plan, they aren’t eligible to receive reimbursements from your HRA.
A critical difference between a GCHRA and other HRAs, like qualified small employer HRAs (QSEHRA) and individual coverage HRAs (ICHRA), is that you can’t reimburse employees for their insurance premiums.
But even so, your employees will be saving a bundle by using their HRA funds on other out-of-pocket healthcare expenses under your group plan that are eligible for reimbursement.
2. You’re looking to reduce healthcare costs
Surging group health insurance prices can make it challenging for businesses to care for their employees. Fortunately, switching to a high deductible health plan (HDHP) can help you achieve significant savings, and pairing the plan with an integrated HRA allows you to provide a more compelling benefit.
While an HDHP isn’t required to have an integrated HRA, it comes with a big advantage. HDHP coverage tends to carry lower price tags in exchange for higher deductibles. Still, because you can set your integrated HRA allowance as high as you want, you can maintain or even improve health coverage for your employees with the added reimbursement capability.
For employers looking to be extra budget-conscious, integrated HRAs provide additional cost control options. Employers can establish their own unique rules regarding minimum deductibles, cost-sharing, or even the expenses your HRA will reimburse.
A few ways you can control costs with an integrated HRA include:
- Limiting reimbursements by requiring an explanation of benefits (EOB) for expenses.
- Requiring employees to pay a deductible, coinsurance, and copays (separate from those in the group plan) before receiving reimbursement.
- Reimbursing employees for a certain percentage of their expenses.
These rules can help employers take greater charge of their budget while allowing their employees to enjoy the affordable premium of an HDHP, paired with tax-free reimbursements through an integrated HRA.
3. You want to attract and retain top talent
Aside from salary, health benefits are the top consideration applicants make before accepting a job offer. If you have an HDHP, HRA coverage can help make your HDHP more attractive to prospective employees. HRAs are also tax-advantaged, so employees won’t pay income taxes on their HRA reimbursements, saving even more money.
For example, an employer might already pay 100% of their group health insurance plan’s premium and still use an integrated HRA to cover deductibles, copays, and out-of-pocket expenses as an added benefit for their employees.
As quality employees are increasingly expecting great benefits packages, an integrated HRA is a great way to entice employees to accept your job offer and stay with your company for the long run.
4. You want to customize your health benefit
An integrated HRA is entirely customizable for your business, from requiring an EOB to setting your allowance. For further personalization, you might consider setting up unique employee classes to get even more bang for your buck.
Employee classes divide employees into groups according to job-based criteria, such as full- and part-time status. Employees in different classes can be offered benefits with varying amounts of allowance and other cost-sharing options.
With an integrated HRA, you can divide your employees into seven different classes, including:
- Full-time employees
- Part-time employees
For example, you can lower premium costs by removing hourly employees from your group health plan coverage. Instead, you can offer them an allowance through an ICHRA or health stipend to buy individual health insurance. Or, you can celebrate your executive-level employees by providing them with a larger allowance than your other staff members.
Employee classes are optional, but if you want more personalized health benefit coverage while using your health benefits budget to its fullest potential, they can work to your advantage.
To maximize an HRA for you and your employees, you’ll want to make sure you choose the right one. If you have a group health plan, a customizable integrated HRA helps control costs and attract talent by allowing you to design a health benefit that meets your business’s needs.
PeopleKeep’s integrated HRA can provide an all-in-one solution to give your group health plan an extra boost. If you think a GCHRA is right for your company, contact our team and we’ll get you started!
This article was originally published on July 2, 2020. It was last updated on March 7, 2022.