(Q) What is involved in administering an HRA? Top
(A) Most HRAs self-fund all or part of a deductible. Claims are paid directly from Explanation of Benefit (EOB) reports provided to participants by insurance companies once a claim has been settled. FlexBank then reimburses the participant for eligible expenses per the HRA plan design.
(Q) Can an employer self-administer an HRA? Top
(A) Yes. However, the complexity of self-administering an HRA has increased due to CMS reporting requirements. Employers who sponsor an HRA must generally report, electronically, information on HRA participants and benefits to the Centers for Medicare and Medicaid on a quarterly basis. Failure to report may result in penalties of $1,000 per dependent per day.
(Q) What is the cost to outsource administration of the plan? Top
(A) Employers should call FlexBank for pricing on outsourcing the administration of the plan.
(Q) What HRA services does FlexBank perform for the associated fees? Top
(A) Fees Include:
Quarterly reporting to the Centers for Medicare and Medicaid (CMS) when required
Reimbursements processed within 24 business hours
Fax, mail, scan/email, upload via mobile site or walk into our office for reimbursement
Receive, review, and process all HRA claims upon receipt
Reimbursements made by check or direct deposit
Provide employee 24 hour Web access to personal HRA Account information
Provide employer with monthly and year-end Account Summary Statement
Provide Enrollment materials. The package includes:
Prototype Plans, SBC (Summary of Benefits Coverage) and SPD (Summary Plan Description) In Writing
HRA Claim form
HRA brochure detailing plan specifics
FlexBank, Inc. Service Agreement.
(Q) May an employee receive cash in lieu of a deposit to his HRA? Top
(A) No. The right to receive cash in lieu of an HRA deposit will disqualify the plan.
(Q) Must an annual 5500 report be filed for an HRA? Top
(A) A 5500 is only required where the plan covers more than 100 participants.
(Q) Must the employer report HRA benefits on the employees’ W-2? Top
(Q) Does an HRA affect employees who are eligible for Medicare Part D? Top
(A) If you have employees, or retired employees covered by the plan at the beginning of the plan year, who are eligible for Medicare Part D and who are enrolled in your group health plan and health reimbursement arrangement (HRA), the employer must provide them with a letter of creditable or non-creditable coverage. An employee is eligible for Medicare Part D if they are enrolled in Medicare Part A.
(Q) Does the employer need to offer COBRA continuation for an HRA? Top
(A) Yes, employers required to offer COBRA must include the HRA. The premium for the HRA component is calculated as the average benefit paid out in the last year plus cost of administration plus 2%.
(Q) Can a former employee who elects COBRA spend accumulated amounts on expenses incurred after employment? Top
(Q) What types of employers can establish an HRA? Top
(A) An HRA may be established for any single employer or certain “related” employers. The employer installing an HRA may be of any ownership form (sole-proprietor, corporation, partnership, etc.). However, only owners of a “C” corporation may benefit directly from the plan. Certain individuals within the company, however, are prohibited from participating in the plan. Owners: Only owners who are also employees of a “C” corporation may participate in an HRA. Sole proprietors, partners within a partnership, owners of an LLC (filing as an S or a partnership), owners of an LLP and more than 2% owners of an S-Corporation are prohibited from participating. Owners’ Family Members: Rules of attribution apply to S corporations, thus more than 2% owner’s spouses, parents, children and grandchildren may not participate. Family members of C corporations, sole proprietors and partners in a partnership may participate in the plan.