Plans

HRA plan design decisions

Ask your clients these questions when they're choosing PriorityHRA for the first time:

How much to allocate?
Who pays first, and how much should they pay?
What expenses with the HRA pay for?
Should they limit the amount that one person in the family pays first?
Should they limit the amount that one person in a family can receive from the HRA?
Does the employer want to allow employees to carryover the HRA balance for use in subsequent years?

How much will the employer allocate for those with single coverage? For those with family coverage (two or more)?

Example: $1,000 in the HRA for employees with single coverage and $2,000 for those with family coverage

Optional for large groups: How much will they allocate by premium tier (employee only, employee+1, family)?
Does the employer want separate reimbursement amounts for different classes of employees?
Should the contribution be a percentage of the deductible? Or a flat dollar amount? Either will work.

The employer can choose one of three options or combine two of the three:

Employee pays first (our most popular HRA payment design) - The employee must pay a portion of the deductible expenses (for example, $1,000) before they can access their HRA allocation. That amount is called the "HRA deductible."

How much will those with single coverage have to pay first? Those with two or more (or family) coverage?
Optional for large groups: How much will those in each premium tier have to pay first?

HRA pays first - The employee can access HRA funds right away. When the HRA funds are used up, the employee has to pay any remaining deductible out-of-pocket.
Split payment - The employer selects the percentage level at which the HRA will reimburse expenses.

Example: The employer allocates $1,000 and sets reimbursement at 50%. When an employee goes to the doctor and is billed $100, the HRA will pay $50 for that visit. The employee must pay the remaining $50. The HRA will pay 50% of all bills until the deductible is met or the HRA is exhausted.

The employer can choose to reimburse medical deductible or coinsurance and deductible expenses. They may also exclude out-of-network expenses.
The HRA will reimburse all deductible expenses (and coinsurance, if chosen).
The HRA does not reimburse:

For large groups, we will consider excluding certain categories of services from HRA reimbursement.

Example: Services that are covered at 50% once the deductible is satisfied (like bariatric surgery, DME and P&O) apply to the deductible. These services will be reimbursed from the HRA when they apply to the deductible. As a result, the employee could be fully reimbursed for these services when the HRA pays as opposed to having 50% covered at the medical plan coverage level.

Applies only to the "employee pays first" payment option because it has an HRA deductible.
The HRA deductible is different from the medical plan deductible.
Adding an HRA embedded deductible could potentially increase employer liability because the family could access their HRA money as soon as one individual in the family reaches the individual limit ($500).
Example: Start with an HRA with a $500/single and $1,000/family allocation, and an "employee pays first" payment design of $500/single and $1,000/family. Add the HRA embedded deductible, and this means a family must pay the first $1,000 with no man, woman or child in the family paying more than $500 each.

Popular when the HRA is paired with a point-of-service (POS) or preferred provider organization (PPO) medical plan because HRA dollars can reimburse both in- and out-of-network deductible expenses.
Avoids issue of having one person in a family using the entire family HRA amount.
Adding an HRA embedded limit could potentially decrease employer liability because it could take longer before a family could access their HRA money.
Example: Start with an HRA with a $500/single and $1,000/family allocation, and an "HRA pays first" payment design. Add the HRA embedded limit, and each person in the family can only receive a maximum of $500 from the HRA. The result is the family receives $1,000 total from the HRA with no one person using up the money.

The employer simply chooses a flat dollar amount of carryover allowed.
Example: The current year allocation is $500. The employer sets carryover limit of up to $250.

Last modified: 4/14/2011