Use the HRA/FSA Administration Agreement to walk you through these questions that will help you set up your HRA.
1. Which expenses do you want the HRA to pay for?
HRA plans can be designed to cover different types of expenses. Here are some of the most common HRA plan designs:
Medical Only: Pays only health plan associated costs. (Note: For qualified high deductible plans, prescriptions are subject to the deductible.)
Ancillary: Covers a specific group of expenses, such as dental, vision, and/or prescription.
Comprehensive: Pays all qualified medical expenses, including some not covered by insurance.
2. How much do you want to fund?
Determine how much you want to fund at each contract level. Please note that small business plans can fund no more than 50 percent of the medical deductible.
3. Do you want to use the HRA to incentivize and reward your employees?
Select a Healthy Direction HRA to give your employees the opportunity to earn additional HRA funds (as determined by you) when they complete four simple, healthy steps:
Name primary care physician
Visit primary care physician
Get a biometric screening
Take the Personal Health Assessment (PHA)
NEW! Additional Healthy Direction HRA steps to choose from:
Watch a Health Dialog Healthy Conversation video
Take a free CDPHP community wellness class
Commit to quit smoking
Walk 200,000 steps in one month
Create your own activity (approved employer choice option)
*Please note that small business plans can fund no more than 75 percent of medical deductible if Healthy Direction HRA is selected.
4. Will there be an HRA deductible?
You may also choose to have employees pay some out-of-pocket charges before HRA funds can be used. Important note: If you select an HRA deductible, any money paid out of pocket for prescriptions does not automatically apply to an employee’s HRA deductible. The employee must complete an HRA claim form and submit it along with prescription receipts. This can be completed online through the secure site or via mail.
5. What percentage of each expense do you want reimbursed?
Once you determine what you want to reimburse, you can choose to reimburse 100 percent of each purchase, which is standard, or you can choose to reimburse a lesser percentage.
6. Do you want to allow carryover of unused funds?
You may also elect to let employees carry over all or a portion of unused funds from year to year. If you choose not to allow carry-over, a 90-day run-out period will apply in order to account for claims incurred that year.
7. What should you offer employees who enroll off-cycle?
This is referred to as off-cycle or the new hire allocation rule. If employees enroll after the plan effective date, you can allow them the entire year’s allocation, or you can prorate it by month. Alternately, you may also choose not to offer them any allocation until the next plan year.
Example - Plan year begins 1/1/2015 and annual allocation for a single contract is $1,200. Employer selects “prorate by month” for off-cycle allocation rule and hires a new employee 4/1/2015. New hire enrolls in a single contract and will receive $900 in their HRA.
8. Do you want to offer a debit card?
A debit card may be available with your plan. You can decide if you want to offer it, and if you do, you can determine for which services the card can be used. Talk to your broker or CDPHP representative for guidance. Please note: If prescriptions are subject to the medical deductible, as with qualified high deductible plans, then you may want to offer a debit card for members to use prescription purchases. CDPHP medical claims integration does not apply to point-of-sale purchases at the pharmacy. In addition, if you offer an HRA and a health FSA, your employees will receive one debit card for both.
9. If you are offering both an HRA and health FSA, choose an order rule.
Specify which account should pay first in instances where an expense is eligible under both HRA and FSA(section 4 of the Administration Agreement). Please note: If FSA pays first (uncommon setup), employees entire annual election needs to be spent prior to employee having access to HRA funds.