Benefits Renewal - HRA or not?
HSH38 5 Posts
We are looking at offering an HRA for our medical renewal effective January 1st. If we offer this plan, the overall increase to the health care plan is only 1.6%; however, the administrative fees for the HRA plan is extremely high as they charge a monthly "employee usage" fee and annual administrative fees. I'm curious about others experiences have been with an HRA, the costs to the company, and the general pros and cons.
I have worked with plans that have HRA's and HSA's. I've found the the HRA is a pain- the HRA administrator denied reimbursement for just about everything, they required a ridiculous amt of documentation and receipts before issueing reimbursement. It was a nightmare. On the other hand the HSA has been much better. I prefer the concept of the HRA over the HSA, but from the administration side and employee satisfaction side the HSA ranks #1. I also think that you should shop around for the adminstrator of the account, as different administrators offer different fees, customer service, etc.
Hope this helps
Its a bit late for a response but....
While I haven't had any experience wiht an HRA, we implemented an HSA about 3 years ago. (I wasn't involved in the review/selection of plans.) The HSA was received extremely well with the employees. I think to the surprise of mgmt - we had higher enrollment than they anticipated.
We are a small group and I don't think we even have true "group" rates. Because of a few employees in the 55+ category some of the costs were higher. The execs decided to go the HSA route for these folks (as one of three options - PPO, HMO & HSA PPO) and offered to reimburse for the deductible. I think they expected just the 1 -2 people to enroll - it was geared to certain staff but had to be offered to all.
1/12 of the deductible is placed in the employee's HSA account each month. So while the upfront cost to the employee is higher, the overall cost is less and has some tax benefits. (The employee portion is pre-tax as usuall but in addition I believe the employer-paid deductible is excluded as income at federal level but included at state.) Plus additional funds can be placed in the HSA account (with a tax benefit) and the account can be used for other medical needs; it travels with the employee and its not a "use it or lose it".
How the plan would have been rec'd without the paid deductible ? - probably a lot less well received.
We currently use Anthem and they have an HRA that covers 100% of any charges once the deductible has been met. It is also a pretty low deductible which keeps the employees out of pocket to a minimum.
The good thing (for the company) about the HRA is that the money remains with the company if someone leaves or is terminated whereas with the HSA any money contributed to an employee's HSA remains with the employee after they leave.