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Small Business Employee Benefits and HR Blog

How to Choose a Small Business HRA Administration Tool

The following is a summary of a section from our free resource, The How to Choose a Small Business HRA Administration ToolComprehensive Guide to the Small Business HRA. If you would like to download the full resource, click here.

If your business has decided to start offering the Small Business Health Reimbursement Arrangement (HRA), it’s important to use an administration tool that helps you stay on top of compliance obligations, makes it easy for employees to enroll, and gives your business the training and resources it needs to keep your HRA running smoothly. Let’s take a look at the top three features your company needs from an administration tool.

Automated Compliance and Software Updates

Federal law and the IRS code impose strict requirements on companies that offer the Small Business HRA. Because certain requirements can change from year to year, any software you choose should include automatic updates.

At a minimum, the software should include features that cover:

  • Creation of a written legal plan and summary plan description (SPD).
  • A way to collect and store employees’ electronic signatures.
  • Privacy features that ensure the company does not view employees’ protected health information (PHI).
  • ERISA compliance.
  • Documentation regarding appeal requirements, notifications, and procedures.
  • Continued coverage of dependent children up to age 26.
  • Automated notice requirements for employees’ eligibility and annual allowance.

Without these features, your business could easily run afoul of tax rules and federal law. Fortunately, automated compliance software takes the guesswork out of administering your HRA.

Employee Tools and Resources

Your HRA administration tool should also include resources that help employees buy their own individual health policies and request reimbursement for eligible medical expenses.

Employee features to look for include:

  • An employee welcome letter and other employee communications.
  • Identification of resources that can help employees decide which policy to purchase.
  • Online access to their account and a way to check their account balance
    HSA compatibility.
  • A simple way for employees to make reimbursement requests.
  • An option to request an expedited reimbursement review.
  • A way for employees to track reimbursements over time.

Because the whole purpose of offering an HRA is to provide employees with flexible, valuable health benefits, you want to make it easy for them to take advantage of their benefits. With the right HRA administration software, you’ll be compliant with federal rules, and your employees will know where to go for info on choosing a policy and requesting reimbursements.

Business Tools and Resources

Additionally, the HRA administration software you choose should include tools that make it easy for your business’s plan administrator to manage the HRA, track reimbursements, and comply with all reporting requirements. Key features include:

  • Cloud-based account access.
  • Real-time access to accounting information.
  • An easy way to manage employee enrollment in the HRA.
  • A way to track and record reimbursements (and send automatic notice of reimbursement decisions to employees).
  • Online, automatic annual renewal.

While the Small Business HRA is less wieldy to administer compared to traditional group health insurance, it’s not without its own learning curve—as well as tough penalties if you inadvertently fall out of compliance. A good administrative tool will give your plan administrator the training and ongoing support needed to keep your HRA compliant and functioning smoothly.

Conclusion

With the right tool, administering the Small Business HRA can be a snap. For a simple and compliant way to administer your company’s HRA, consider our PeopleKeep software. To learn more about HRA administration tools, or tips for how to set up the Small Business HRA for your business, download our free resource, The Comprehensive Guide to the Small Business HRA.The Comprehensive Guide to the Small Business HRA

Are you making the switch to Small Business HRA administration software? Let us know in the comments below.