Health Reimbursement Arrangements

2023 Year-End Report on HRAs

Dive into the highlights of Liferaft’s 2023 Year-End Report on HRAs. From the growing popularity of HRAs across organizations of all sizes to key considerations influencing employer decisions, this comprehensive report provides insights into the evolving landscape of HRAs.

February 6, 2024

The Highlights

Examining the changing landscape of Health Reimbursement Arrangements (HRAs) reveals a growing adoption trend fueled by the pursuit of cost-effective solutions amid challenges in the group market. 

  • We still haven't seen the full potential of the HRA in the market: The significant growth of HRA adoption in the last year is just the beginning. From 2022 to 2023, we are seeing major growth in market penetration from both small employers and Applicable Large Employers (ALEs)
  • Increased cost pressure in the group market is driving employers to alternative solutions: The continued rate increases within the group market have caused organizations to actively seek cost-effective solutions, making HRAs more appealing as a strategic tool to manage benefits efficiently.
  • While health insurance is the main focus, specialty coverages are also growing in popularity: While the majority of interest has been in using an HRA as a vehicle to offer health insurance, there is also a noticeable uptick in interest for specialty coverages not adequately provided by traditional carriers. This shift reflects a changing landscape where organizations seek more comprehensive and tailored benefits beyond standard health coverage.
  • HRA management has not yet gotten to the point that group brokers are comfortable using the HRA with a majority of their groups: The tools and processes available for HRA management are still evolving, and as a result, group brokers may not feel entirely comfortable using HRAs with the majority of their groups. This highlights an ongoing need for refining and simplifying HRA management tools to enhance broker confidence and adoption.
  • State-based plan availability and exchange market depth is highly determinative of whether HRAs make sense: There is considerable variability across states in the availability of individual market plans and the quality of the plans on the exchange. Local market conditions are crucial in determining whether a group will use HRAs.
  • Year-to-year groups with HRAs have increased reimbursement limits less than the national average in the group market: On average, the average rate for an individual market plan increased by 6%, whereas in the group market, rates grew by 11%. If you have an ICHRA and need to increase reimbursement levels to meet your group's minimum affordability requirement, the increase would still be less than the rate increase you would have seen with a similar plan on the group market. 
  • Ease of use and health plan selection remain the biggest friction points with brokers and users to date: The primary challenges faced by brokers and users revolve around the ease of use and health plan selection within HRAs. Compared to a group plan, onboarding employees successfully onto an HRA can require individual meetings with each team member to review plan options and help them choose the best plan for their individual needs.

HRA Gains Popularity

As the popularity of HRAs continues to surge across groups of all sizes, Liferaft emerges as a preferred administrator, experiencing substantial growth in managing HRAs for organizations.

The HRA is increasingly popular with groups of all sizes

There’s been a big increase in the number of groups adopting the HRA and working with Liferaft as their group administrator. This growth reflects the rising popularity of HRA solutions across the industry. More organizations are recognizing the benefits of managing their benefits through HRAs, and Liferaft is becoming a preferred choice for groups seeking streamlined and comprehensive HRA management. The user-friendly design, competitive features, and cost-effective solutions have contributed to the increasing popularity of our HRA platform.

New groups use QSEHRA as a way to offer benefits for the first time

For new groups just beginning to offer health insurance, the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a simple and strategic option. 

Larger groups switching to HRAs with greater frequency

Notably, larger groups are increasingly opting for HRAs, attracted to significant cost-savings and the ability to insulate P&L from rising healthcare costs. Larger organizations are recognizing the financial advantages and flexibility offered by HRAs in managing employee benefits.

HRAs under-penetrated in the group broker market

Despite the increased popularity of HRAs, there is still significant untapped potential within the group broker market. As awareness and understanding of HRAs rise among group brokers, we anticipate HRA adoption to grow exponentially.

Your guide to flexible & affordable benefits — download now.

Group health can be complex, restrictive, and costly. Liferaft offers something different.

Liferaft's 2023 Whitepaper on HRAs is the most comprehensive guide available, giving you what you need to determine if an HRA makes sense for your business.
You will automatically be redirected to your whitepaper download after submission.
What you get in your guide:
• What is an HRA?
• HRA Requirements & Features
• Eligible HRA Expenses
• When an HRA Makes Sense
• Different HRA Types
• States Where HRA Works Best

Top Employer Concerns

Employers are interested in the HRA but cited the following as impediments to HRA adoption.

Lack of employee interest / engagement

Potential clients expressed concern about employees not understanding or showing interest in an HRA benefit offering, which led employers to prioritize other employee benefit programs.  

Too much effort to switch

Potential clients perceived switching to an HRA as overwhelming or time-consuming. Even with individual onboarding support, having employees on different plans and the paperwork and reporting required by an HRA was too intimidating to move forward. 

Overwhelmed with paperwork and reporting to stay compliant

A significant concern was the perceived burden of paperwork and reporting required to ensure compliance. Even though Liferaft completely handles the paperwork and reporting, the novelty of HRA reporting compared to group health plans caused concerns.

Too few employees to make the management of the HRA worth it

While the HRA can be an extremely cost-effective solution for smaller businesses hoping to subsidize the cost of health insurance, participants with smaller employee populations (under 10) expressed reservations about the value of managing HRA accounts for a limited number of employees. Many employees had already enrolled in their spouse’s coverage or qualified for subsidized plans that negated the value of the HRA. 


While the HRA usually offers cost savings for employers switching from a group plan, plan pricing is a key concern for potential clients. For business owners who don’t currently offer coverage, any budget allocated towards employee healthcare is up for debate.  

HRAs not established / well known

Lack of knowledge about how HRAs work or their value is a barrier for both business owners considering the product offering and for building employee enthusiasm. 

Wanted better claims / insurance payment automation

Potential clients wanted more automation in the claims and insurance payment processes, lessening the amount of review employers need to process claim payments and disbursements.

Wanted payroll integration

Business owners expressed a preference for a streamlined connection between HRA accounts and their payroll systems.

Wanted platform with more products

When considering the adoption of a new SaaS tool for their employees, business owners were interested in platforms that acted as a one-stop shop. If they were to set up a reimbursement program for health care costs, they wanted the same tool to offer expansion possibilities, like travel reimbursement or payroll processing.

Top 3 Conditions Where HRAs Don’t Work

Ultimately, those who didn’t move forward with an HRA often faced the following:

1. Short timeline to change management (didn't have time to transition)

Some companies faced time constraints and a tight timeline, making a smooth transition to HRA accounts challenging. The urgency of change management might have led them to opt for solutions with quicker implementation or less disruptive onboarding processes.

2. Located in states where the individual exchange was less attractive than the existing group offering

For some companies, their state’s individual health insurance marketplace was either not competitively priced or did not have the same quality plans seen on the group market. The perceived drawbacks of the individual exchange in their specific region influenced their decision to maintain the status quo with group plans.

3. Chose to stay with group broker for specific network considerations for certain employees

In some instances, companies opted to remain with their group broker due to specific network considerations essential for certain employees. The existing group plan likely provided a network that met employees' unique needs, making it a deciding factor in the choice to stay rather than transition to HRA accounts.

2023 Year-End Report: 
HRA Trends & Insights

Liferaft's 2023 Year-End Report gives brokers and business owners the full breakdown of HRA market challenges, employer concerns, growth opportunities, and more, to help you can stay ahead of the curve.
You will automatically be redirected to your whitepaper download after submission.
This whitepaper includes:
2023 HRA Trends  |  Top Employer Concerns  |  Trends in HRA Account Types  |  Potential Pitfalls & Challenges  |  ICHRA Enrollment Stats & Trends  |  2024 Areas of Opportunity & Growth

Frequently Asked Questions

Why are HRAs gaining popularity across organizations of all sizes?

HRAs are gaining traction due to their inherent cost-effectiveness, offering a strategic solution for organizations navigating challenges in the group market. The flexibility and efficiency in benefits management that HRAs provide have contributed to their growing popularity among organizations of varying sizes.

Why are specialty coverages gaining popularity alongside health insurance in HRAs?

The evolving landscape sees a shift towards more comprehensive and tailored benefits beyond standard health coverage. Organizations recognize the need to cater to diverse employee needs, leading to a noticeable uptick in interest for specialty coverages within HRAs, addressing gaps left by traditional carriers.

Why do group brokers face challenges using HRAs with most of their groups?

The ongoing evolution of HRA management tools and processes introduces complexity that makes group brokers cautious. This underscores the need for continued refinement and simplification in HRA management tools to enhance broker confidence and promote broader adoption.

What critical insight does the report provide regarding reimbursement limits for groups with HRAs in the group market?   

On average, groups with HRAs experience lower reimbursement limit increases than the national average in the group market. This suggests that HRAs offer a potentially cost-effective solution, providing organizations with better control over rising healthcare costs than traditional group plans.

What are some common concerns employers expressed about HRA adoption?

Employers voiced concerns about employee interest, the perceived effort required to transition to HRAs, paperwork and reporting burdens, and the perceived value for smaller employee populations. Pricing considerations, lack of awareness about HRAs, and desires for better automation, payroll integration, and expanded platform capabilities also emerged as common themes expressed by employers exploring HRA adoption.

Book your consult with Liferaft

Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.

During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.

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