There are a number of steps you’ll need to take to establish a health reimbursement arrangement for your small business. Implementing an HRA for the first time can be overwhelming for some, but by following the steps below and using the right software, the process will be much smoother.
Select An Initiation Date
Establishing an initiation date is the first thing you will want to do. If your company currently has no medical plan you can start the health reimbursement arrangement whenever you wish, but if you do have an existing plan it should be canceled prior to HRA initiation.
Select A Termination Date For Group Policies
This only applies to organizations that currently have group medical plans. If you do it should be canceled prior to initiating your HRA. To prevent coverage gaps it is best to plan the cancellation a day before the HRA starts.
Determine Who Has Eligibility
Now you will need to figure out which of your employees is eligible for the HRA. It is mandatory to offer it to employees who work full time, but offering it to those who work part time is optional. If part time workers are eligible the allowance they’re given must be equal to their full time counterparts.
Setup The Legal Plan Documents
This step is absolutely essential to remain in compliance with the Department of Labor and the IRS. The legal plan documents must encompass multiple topics, such as the eligibility for expenses reimbursements and monthly allowance amounts.
Explain The Benefits To Employees
The best benefit plan in the world is absolutely meaningless if your workers don’t know it exists. Make certain that all of your employees are aware of the HRA and provide them with any info they need to make the best of it. ERISA also requires employers to provide employees with a Summary Plan Description. Employees should be made aware of their yearly HRA allowance, as well as the necessary steps for getting premium tax credits and getting benefits during periods where minimum essential coverage is not available.
Give Employees The Resources They Need to Purchase Health Insurance Individually
In general, health insurance policies aren’t fun to read. Some workers may be confused about the various complexities which involve their medical plans. Employers are therefore a crucial source that can provide the support and information employees need to make the best use of their plans. However, federal law makes it unlawful for business owners to meddle in the decisions their employees make in regards to choosing a specific health plan. As an employer your job is to give them the tools to make decisions which are informative, but nothing more. Establishing an HRA for a small business is a process that requires multiple steps, and while there are some complexities, it becomes much easier once you have an understanding of what is required. Having the right software can also greatly streamline the process.