The HRA as a Deductible Bridge
Many employers use their HRA program as a sole means to reimburse part of their medical plan deductible. By doing so, they are “self-funding” part of their medical plan, saving insurance premiums in the process. As an example, ABC Company pays $450 per employee monthly for a $200 deductible plan. By increasing the deductible to $1000, the premiums would decrease to $350 per employee per month. The employer uses this $100 in monthly premium savings per employee to help fund any claims that are sent into the HRA program for reimbursement.
Reimbursement Grace Period
It is standard practice to provide employees with 2 months to submit claims after the plan year ends. For example, if your plan year ends on December 31st, you would allow employees to submit their claims for that plan year through February 28th.
Portability of Coverage
An HRA is an ERISA plan, therefore, it needs to follow the rules of COBRA. If your company must provide COBRA coverage for other coverage, the HRA must be offered under COBRA, too. You may elect to require enrollment in your COBRA medical plan for the participant to be eligible to enroll for the HRA under COBRA.
Rollover of Funds At the beginning of the plan year, the employer determines if fund roll-overs will be allowed at the end of the plan year. With a deductible bridge HRA, the usual practice is to not allow rollovers of unused funds.