Employee Hra Account: Best Employee Benefit Plan Around?

Employee Hra Account: Best Employee Benefit Plan Around?

It just seems that employee HRA account ( Health Reimbursement Account, or Medical Reimbursement Account, a. k. a. Healthcare Reimbursement Account, or Health Reimbursement Arrangement ) is one of the best kept secrets in the small business benefits mart.

If you are a small business owner or a HR supervisor, you have workaday realized that, consumer directed health care is a de - facto most popular way for companies to reduce their health expenditures and remain competitive in the international markets. And while HSA accounts, or health savings accounts, have been widely publicized by the previous administration, HRA accounts, or health reimbursement accounts have been kept in the keep secret.

And both HSA and HRA account were recently overshadowed by the Affordable Health Care Act of 2010. While the nemesis of that new act is debatable, there is no issue about the benefits to the bottom line of any small and big business of consumer directed health plans.

We will focus here on the benefits of HRA plans and will compare them with the better known HSA plans.

The main advantages of HRA plans are: Highly flexible and maleable plan design, highest level of broad control of expenses by the company, and, as a consequence, an effective feedback loop for future HRA plan improvements.

Highly flexible HRA plan design

In the country where health care expenses are growing at three times the swelling degree for over the 15 - 20 year period of time, having high discretion in health benefit plan design is a big advantage.

Compared to both HSA plans and fully insured plans, HRA plans have total abandon in choosing an accompanying health insurance plan. Equaling with HSA, you can choose a high deductible health insurance. Indeed, a high deductible medical health plan is what most companies pick. Comparable with fully - insured plans you can choose a low - deductible health insurance. You can choose, a PPO, a HMO, or an indemnity type plan.

You can even not sign on with any health insurance at all. It is all up to the plan designer, in collaboration with HRA administration company, and offer a self - insured plan based on an HRA plan.

Other flexibilities in HRA plan design build the choice of conditions on the employees, compatible as chronology of employment, before the employees become eligible.

Broad control of expenses by the company

With a HRA plan, the company is subject that the HRA funds are used for the agreed - upon services and products only. The agreed - upon expenses can inject or except payment of insurance premiums, health insurance deductibles, payment of supplemental health services consonant as dental services, prescription drugs, and ancilliary services according to as various tests.

Thus, the company can adjust the allowable health services to its cashflow needs, and to the requirements of the employees.

Effective feedback loop

Through employees always getting reimbursed for health expenses, company has a good idea of what types of health services are in greatest demand by its employees. When it comes time to redesign the plan in collaboration with HRA administrators, which could be as often as onece a year, this information can be used to create an effective feedback loop that can enable the company to adjust the benefits to the needs of its employees, while at the same time conserving cash in the time of need.