How employers save money with an HRA – Real-life example

All over the country, employers are learning how to save money with an HRA. That includes small companies wanting to help employees buy their own insurance through a Qualified Small Employer HRA (QSE-HRA) and mid-size companies wanting to save on group health premiums without putting the burden of higher out-of-pocket costs on employees.

Here’s one real-life example: In a recent meeting, the Highland, NY, Town Board supervisor reported savings of $30,000 thanks to their adoption of an HRA in place of their former traditional group health insurance plan. The way it works, according to the article, is that “the town pays upfront costs, and receives a refund for unused health services at the end of the term. There is no change in benefits to employees.”

While the report did not give details such as the number of employees or type of HRA plan installed, the description of how the plan works sounds like a Deductible-Gap HRA.

How the plan works

With a Deductible-Gap HRA, the employer saves on the group health insurance premium by selecting a high-deductible health plan (HDHP). The employer then deposits part of the premium savings into an HRA set up to provide reimbursements to cover the  ‘gap’ in deductible every employee will experience with the new insurance coverage. When an employee does not incur eligible deductible expenses during a plan year, or does require reimbursement for the full amount, the unused HRA amount set aside for that employee is returned to the employer at the end of the plan year for even more savings.

How to set up the plan

All you need to install a Deductible-Gap HRA for your employees is to have the IRS-required written plan document in place.

Core Documents provides employers with everything they need to establish an IRS- and DOL-compliant Deductible-Gap HRA plan in PDF format for just $299.

This cost reflects a one-time setup fee, not an annual charge. For an additional $50, employers can choose the Deluxe Binder option that includes the PDF email version plus a printed plan document in a 3-ring binder.

Deluxe Binder Version

The $299 Core HRA plan document package includes:

HRA Plan Document. Plan Documents are personally prepared and emailed to each client. Upon arrival, the Plan Document should be accepted and signed by the owner or officer of the company. The Plan Document should also be kept on file for review by employees, accountants, the IRS, and others upon request.

HRA Summary Plan Description (SPD). The Summary Plan Description must be copied and given to each employee. It explains the Plan Purpose, Eligibility, Enrollment, and other important information in accessible language. The SPD also contains all information required by the IRS, DOL, FMLA, and COBRA regarding Plan Year start and end dates, legal service agents, and federal I.D. numbers.

HRA Election and Claim Form. This document is personalized for the business and will include the Election and Claim Form required to submit bills for reimbursement by the company.

HRA Administrative Handbook. This invaluable handbook includes sections on Administration, Nondiscrimination Testing, and Reporting and Disclosure. The client will be provided with instructions regarding plan setup, maintenance procedures, and other important steps.

Resolution to Adopt a Section 105 Plan. This document includes the Minutes of the Meeting to Adopt the Section 105 Plan as an employee benefit and reference.

Start Saving Today!

Ready to Order? The HRA Plan Documents Package from Core Documents has all you need to establish your Deductible Gap Health Reimbursement Arrangement for a one-time fee of $299. There are no required renewals or annual subscriptions.

You can order the package online or by fax. Just click on a button for the form that best suits you:

More on how to save money with an HRA

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