Standard HRAs (also known as Integrated HRAs) are employer-owned and employer-funded accounts that employees can use to reimburse for qualified out-of-pocket medical expenses. Since these accounts are employer-funded and owned, employers have a lot of control over how much they’ll offer each employee, the cadence at which they’ll offer it, and for which expenses employees can reimburse. The IRS has general guidelines about eligible expenses but employers may choose to further restrict that list. As an employer-owned account, unused funds will revert to the employer at the end of the plan. Employers also choose what happens to the account once the employee leaves the company either for retirement or otherwise. Employees cannot contribute to Standard HRAs.
HRA eligibility requirements
In order to offer a Standard HRA an employer must also offer a group health insurance plan that meets the Affordable Care Act’s (ACA) definition of minimum essential coverage.
For employees to be eligible to participate in an Integrated HRA, they must be enrolled in a group health plan. That can be through their employer or their spouse’s employer. If they plan to reimburse for expenses for their spouse and dependents through the HRA, their spouse and dependents must also be covered by a group health insurance plan. Dependents must also be under age 27 in order to have their out-of-pocket medical expenses reimbursed through the arrangement.
Why offer it
- Lower health insurance costs for employers. More claims against the Standard HRA means fewer claims filed with the insurance carrier, helping maintain or lower insurance premium rates.
- Greater flexibility in the types of health insurance plans that are offered. For example, in order to participate in an HSA, employees must be enrolled in a High Deductible Health Plan (HDHP), which might not work for them or their family. But a Standard HRA can be paired with any kind of group health insurance plan. That means employers can choose to offer the plans that work for their budgets and employees can choose the plan that works for their family and participation in the HRA isn’t affected.
- Tax benefits. Employer reimbursements are considered a tax-deductible business expense.
- Healthier and more productive employees. People with a way to pay for medical expenses are more likely to see the doctor when a health issue arises instead of waiting until it becomes an emergency. People who seek medical treatment are more likely to be healthy and the healthier your employees are, the more productive they’ll be.
Lively's HRA Guide
In-depth information about different types of HRAs, including Standard HRAs, Qualified Small Employer HRAs (QSEHRA), Individual Coverage HRAs (ICHRA), and Expected Benefit HRAs and what may be a fit for your business.
What is a Standard HRA?
An Integrated or Standard HRA is a way for employers to cover healthcare expenses that aren't completely paid for by a group plan. We cover what they are, their benefits, and who is eligible.
HRAs made easy
Lively’s user-friendly technology, signature user experiences, and unrivaled customer service make HRAs simple to administer and easy to adopt. Learn more.