Employers may set up different classes of employees with completely different benefits, and monitor usage by class of employees in real-time.
For example, an employer might offer to pay the first $100/year of pharmacy for all employees, but then pay 75% of the additional prescription cost for executives and 50% for managers.
ZaneHRA allows virtually unlimited plan designs with 16 different categories of expenses (dental, vision, doctor visits, pharmacy, etc.) so employers can custom-tailor plans to maximize Recruiting and Retention. ZaneHRA allows employers to monitor expenses by class of employees in real-time and make appropriate adjustments to employee benefits at any time.
Providing different levels of benefits to classes of employees is at the core of benefits compensation and is routinely done by major corporations. Federal regulations state that “a plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups of participants is based on a bona fide employment-based classification consistent with the employer's usual business practices.”
To comply with IRS and ERISA regulations, employee classes within the HRA must:
Be based on bona-fide business differences. These may include job categories, geographic location, part-time or full-time status, date of hire, etc.
Treat all “similarly situated” employees equally. By creating classes based on genuine job categories, all employees within a class will be “similarly situated”.
Not discriminate against unhealthy people. An employer cannot provide inferior benefits to specific individuals with adverse health conditions. (However, the law does permit employers to provide superior benefits to individuals with adverse health conditions.)
Spell out the requirements for classes and benefits in the ERISA plan document.
If, upon audit, an HRA plan is found to not comply with these rules, then the employer may be forced to provide the same level of benefits to all employees, regardless of their class, from the time the HRA was created to the date of the violation.