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Health Reimbursement Arrangements

Control Cost

In order to control their group insurance costs, some employers change their insurance programs to incorporate deductibles, co-insurance provisions, and other cost-saving measures. Simultaneously, they establish a Health Reimbursement Arrangement (HRA) to reimburse employees for some of their resulting out-of-pocket costs. Bottom line…the employer can limit premium costs, while avoiding a cost increase for their employees.

Plan Design Flexibility

Health Reimbursement Arrangements offer considerable design flexibility. Plans can provide for reimbursement of only certain types of expenses as well as the carryover of employee balances. Please note that HRA’s must only be funded with employer contributions. In addition employees are only reimbursed for their out-of-pocket costs, unlike an HSA which requires all employees to receive equal benefits. These plans must also be linked to an employer group medical plan.

In order to establish an HRA, a Plan Document and Summary Plan Description must be prepared to comply with statutory requirements.

For more information about offering Consumer-Driven Health Plans with your schools health plan, contact Linda Geist at 302-656-4944 or linda@isminc.com.

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