Healthcare Reimbursement Arrangements (HRA)

1. What is a Healthcare Reimbursement Arrangement?

An HRA is an arrangement that employers set up and completely funds to cover certain out of pocket, co-pays, co-insurance, and/or deductible expenses employees may incur associated with their health insurance plan. It is an arrangement whereby employers promise to pay certain expenses on behalf of the employee to help reduce their cost of medical expenses, for themselves, their spouse, and dependent children. This arrangement is 100% paid for, funded, and designed by the employer for the employee’s benefit.

 

2. Why Would A Company Consider AN HRA?

Companies consider implementing HRA’S as a way to reduce the cost of health insurance premiums.  By increasing the deductible of the health insurance plan, the premium to purchase the coverage can be reduced considerably.

 

3. How Does A HRA Work?

HRA’s are designed to work in conjunction with a high co-pay, high co-insurance, or high deductible health plan offered by the employer. Traditional health insurance plans have low co-pays, low co-insurance, and/or low deductibles, but because the health insurance rates and medical expenses continue to rise, employers are deciding to design and implement HRA’s to reduce employees’ cost. By increasing the co-pay, co-insurance, and/or deductible, the cost of your health insurance premiums will decrease, but an employee’s out of pocket costs may increase. This is why employers implement an HRA to help employees reduce their potential out of pocket expenses while still providing them with a health insurance policy that offers complete coverage. HRA’s are effective in managing employees’ expenses, but they will be required to submit receipts or understand how to get reimbursed for an eligible expense covered by the HRA.

 

4. How Does The Deductible Get Paid?

There are several ways an employee can get reimbursed from the HRA depending on the options an employer allows. Here are examples of how to get reimbursed: 

 

1. Many insurance companies will provide the claims data directly to HR Concepts so employees will not have to submit to HRC for reimbursement. This will allow HRC to process and pay the claim directly back to the employee without them ever having to submit any paperwork to us for reimbursement. After the claim has been processed, the funds will be disbursed in accordance to the methods as outlined by your plan.

 

2. An employee can submit a claim online, mail it, fax it, or drop the claim off to us along with the proper documentation necessary to prove they have incurred the expense. Proper documentation may consist of a letter that they will receive from the health insurance company. This letter is called a letter of explanation of benefits (EOB). In some cases, a receipt from the pharmacy may be all they need to submit. The proper documentation will be outlined by the employer.

 

3. An employer may authorize the use of claims submission through the use of a Visa card. If an employer authorizes this form of reimbursement, an employee will receive a Visa card from HR Concepts after they are enrolled. To use the Visa card, an employee simply presents it at an eligible location for an eligible expense. They may only use this card for eligible expenses and they must keep receipts, they may be contacted to verify the expense.

 

 

5. Should An Employer Outsource The Administration?

There are many factors to consider when deciding to outsource the administration of paying the deductibles.  Though pricing is important, it isn’t the only consideration to focus on.  The employees will be submitting their claims for deductible reimbursement, and all of their personal information of what they had done will be on the EOB.  Many employees will find this information private and may not want it shared with their employers.  By outsourcing, the employer can get the claims paid, and the employee can rest assured that their information is kept confidential.  It is also important to consider a Third Party Administrator who is setup for paying these types of claims.  Employees are going to need an efficient streamlined process to receive their deductible money.  Failure to reimburse an employee expediently could result in the employee receiving additional charges from their provider.  Employers should consider using a TPA who can offer debit card processing for reimbursing the deductible.  This would allow the employee to pay for their deductibles directly to the provider without having to submit claims for reimbursement.

Outline of Services

Initial Setup / Installation / Take-Over

1. Initial Consultation

Whether you have a HRA program or not, HR Concepts will take the time necessary to analyze and develop the right HRA program to fit your company’s budget and benefit needs.  We will integrate with your existing benefit programs and implement our procedures, which you customize, to keep your employees satisfied.

2. Suggested Legal Documents

Whether it is a new plan or take-over, HR Concepts will provide you with suggested plan documents, summary plan description, and corporate resolution.

3. Interface With Existing Broker / Benefit Consultant

After we have analyzed your current Health Insurance design, HR Concepts will interface with your existing broker / benefit consultant to research available health plans and their costs. 

4. Setting Up Of The Systems

In order to process the claims efficiently and accurately, HR Concepts, along with your input, will design the best procedures in order to manage claims.  Your Health Insurance plan design and outline of benefits will be inputted into our systems and if your company chooses to utilize the debit card for payment of deductible, the cards will be ordered and programmed.  

Employee Eligibility

• HRAs may only reimburse participants for expenses incurred by employees, former employees, retired employees, their spouses and/or their dependents.

Employee Communications

1. Enrollment Forms / Materials

HR Concepts will provide you with a customized outline of Health Plan Letter and enrollment brochure that will be given to the employees during the enrollment process. 

2. Enrollment Meetings

Upon the initial setup or takeover, HR Concepts will provide enrollment meetings and education sessions to introduce the HRA to the employees.  After this initial time, HR Concepts will conduct enrollment meetings for employees annually and when there is a significant amount of new hires.

3. Claim Forms

If employees decide to not use the HRA Debit card, or for expenses not covered by the card, HR Concepts will provide claims forms that can be submitted for reimbursement from the account.

On-Going Administration Services

1. Daily Claims Administration

HR Concepts provides employers with a HRA Debit card for each employee.  These cards are considered Visa cards; however, they can only be used at predefined locations.  If an expense cannot be put through on the card, then the employee can submit this claim by mailing, faxing, emailing, or dropping it off to HR Concepts.  Upon receipt, the claim will be processed and a check will be dispensed.

2. Online Employee Account Balances

Employees will have access to checking their balances of their HRA accounts online.  They will also be allowed to download claim forms off of our website.

3. Online Employer Account Statuses

Employers will have access to periodic plan activity and employee’s account balances via the web or by calling HR Concepts.

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