HRA Administration

Health Reimbursement Arrangements Administration

Every administrator looks at HRA administration differently in regards to the services they perform or the consultation that they do. However, there are some common components to quality administration.

One of which is a properly designed plan. There is no way a cookie cutter approach to HRA plan design can work for every client. This is why consultation and design are extremely important.

After the right plan is designed, employee education is a must. If an employee does not understand the specifics of the HRA, then they cannot be expected to use it correctly. Claims submission and reimbursement processes should be covered in addition to any specifics such as deductibles or co-pays.

Once those components of administration are addressed, the physical administration is very similar to FSA administration. The actual process for receiving claim forms, claim adjudication and processing reimbursements along with monthly or quarterly reporting still vary between different administrators.

Will I be required to be a licensed TPA?

This requirement varies from state to state. You may need to contact your State Insurance Commissioner for more details. They may also be able to address any questions on bonding.

How can I offset my reduction of commissions on high deductible plan sales?

Many brokers / agents have begun to offer administrative services in addition to their insurance products. This diversification allows the agency the flexibility to change with market trends and adapt to different environments easier.

How do the employees and employers stay informed of the HRA?

One of the most popular forms of continued communication is the Internet. Web portals like www.myrsc.com provide employees with up-to-date account information and a document management system which allows a person to log on and download any desired form. This form of continued communication is a necessity when trying to operate a more efficient and paperless office.

Will I have to pay the providers and issue 1099s?

Most HRA administrators will not disburse payments directly to the healthcare provider. If you do choose to direct pay the provider for eligible HRA expenses, then IRS 1099 issues need to be addressed.

What kind of fees can an HRA administrator charge for services?

This depends on the level of service you provide. HRAs, with their flexibility in plan design, need more consultation with your clients than FSAs need. As a result, the administration fees for HRAs are generally higher.

After a TPA has developed a comprehensive Health Reimbursement Arrangement, it is not unusual for the TPA to receive a monthly fee of $20 - $30 per employee. This may seem a bit higher than expected, but in a properly designed solution, the savings will certainly justify these administration fees.

For an HRA not requiring consultation or plan design, the TPA charges fees similar to those charged for FSAs.