Every employer is faced with increasing premiums for their health insurance and an HRA is a viable option to combat those rate increases.

With HRAs, you can . . .

• Have the flexibility to design plans to enhance your employees' benefits,
• Cut your monthly insurance premium expenses to a manageable level,
• Have the Carrier Independence that is critical in today's market, and
• Implement an affordable healthcare expense budget.

HRAs provide the employer with increased choices and greater control over expenses.

How does an HRA provide more choices and control?

An HRA's flexibility gives an employer the opportunity to design the HRA with the features that the employer designed. Here are some of the choices that an employer can make.

Linked vs. Stand-Alone (Unlinked).  The first decision is whether the HRA is or is not linked to the employee's health insurance policy. A linked policy is designed to pay deductibles and/or co-pays under the policy and the employee is required to participate in the health insurance. A stand-alone or unlinked policy is not connected with an insurance policy in any way.

Tiers, Deductibles, and Co-Pays.  Now you need to decide on how the HRA is set up. Are you going to have tiers--that is, are you going to have different limits for single employee, family, and so on? Do the employees have a deductible to meet before reimbursement begins? Are there co-pays required?  You can set all these variables up for HRAs.

Carry-Over Option. The regulations permit, but do not require unused funds to be carried over to the next coverage period. You have the right to decide whether carry-over is allowed and to put restrictions on the carry-over. For instance, you can set the maximum carry-over to be a certain amount or a certain percentage, and you can set a limit of the amount of accumulated carry-over.

Maximum Reimbursement. You can set the maximum reimbursement an employee may receive during a coverage period. This is a moot point when you first set up an HRA, but after a length of time participating in the HRA and accumulating carry-over funds, an employee may accumulate sufficient funds to create a cash-flow problem if the employee tries to claim reimbursement for the entire amount. By setting a maximum reimbursement, the funds can be reimbursed over time.

Spend-Down Option. While you do not have control over COBRA regulations, you do have the option of offering, as an alternative, Spend-Down Option where employees losing eligibility under the HRA are given a period of time where they can be reimbursed for eligible expenses incurred after the eligibility loss from accumulated funds. (This does not replace COBRA, but gives the employee the right to choose between COBRA or Spend-Down.) No employer or employee contributions are made after loss of eligibility. You have the choice of deciding what events trigger eligibility, how much of the accumulated HRA funds are converted into Spend-Down funds, or how long the employee has to draw out the funds.

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What do you mean by Carrier Independence?

HRAs are not dependent on the insurance carrier. Changing insurance carriers does not mean that you have to change HRAs. In fact, you can carve out certain parts of the policy such as vision and dental, and set up an HRA to handle those expenses.

Your insurance premiums will decrease, and you will have complete control over the Health/Vision HRA.

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