If you’ve decided to implement the Small Business Health Reimbursement Arrangement (HRA), it’s important to manage and administer it appropriately. Here are three key points to keep in mind as you start to offer your new benefit to your employees, as well as tips for choosing an HRA administration tool like our PeopleKeep software to help you avoid making costly compliance mistakes.
Update Your Plan Concurrently with Staff Changes
One of the few certainties in life is that it’s constantly changing. Likewise, your company is certain to see staffing changes through the years as employees move on or retire and new workers come on board.
As your business evolves, it’s crucial to update your Small Business HRA to reflect changes in personnel, as the eligibility parameters set forth in your plan documents must line up with the roster of workers enrolled in the HRA.
Record Reimbursements and Store Documentation
You should also take steps to ensure your business properly documents reimbursements and stores the documentation in accordance with IRS and Department of Labor rules.
Under federal law, businesses are required to show documentation verifying at least seven years’ worth of HRA-related expenses and supporting documentation. For more in-depth guidance on documentation, see IRS Publication 583.
Evaluate Allowance Amounts Annually
At some point, your business may wish to change employees’ monthly allowance amounts under the HRA. You’re allowed to do this as long as you give employees proper notice. Many business owners include a monthly allowance adjustment as part of their annual benefits review.
Although there’s no prohibition against self-administering your Small Business HRA, many employers turn to an HRA administration tool to help them navigate the maze of HIPAA rules, IRS requirements and other compliance issues. Key features to look for in an HRA administration software program include online administration, the ability to easily document reimbursements, and tools that ensure you remain compliant with federal and state rules.
For more tips on what to look for in a Small Business HRA software administration tool, check out page 40 of our eBook.
For information on our administration tool, PeopleKeep, click here.
Have you implemented the Small Business HRA? Share your experience in the comments below.