Welcome to Liferaft's comprehensive guide on Excepted Benefit Health Reimbursement Arrangements (EBHRAs). As a business owner, you may have heard of health reimbursement arrangements—but there are many different types, each with its own complexities and benefits. In this article, we will shed light on how businesses leverage EBHRAs to enhance their health insurance coverage affordably and with attractive employee tax incentives. Liferaft, a trusted HRA administrator, specializes in simplifying the setup and management of EBHRAs for companies like yours.
EBHRA stands for Excepted Benefit Health Reimbursement Arrangement. It is a tax-advantaged healthcare reimbursement arrangement that helps employers provide additional health benefits to their employees beyond the coverage offered by traditional group health plans. The primary purpose of an EBHRA is to assist employees with health-related expenses that fall outside the scope of their existing insurance plans.
Purpose of EBHRAs
EBHRAs are designed to offer higher levels of employer contributions compared to other reimbursement arrangements, such as flexible spending arrangements (FSAs). Unlike individual coverage HRAs (ICHRAs) or qualified small employer HRAs (QSEHRAs), EBHRAs are used alongside a group health plan to provide additional support for healthcare expenses. These expenses may include copays, deductibles, or other costs not covered by the primary insurance plan.
One key aspect of EBHRAs is their focus on "excepted benefits" as defined by the Affordable Care Act (ACA). Excepted benefits encompass various coverage types, including dental, vision, accident-only coverage, disability insurance, workers' compensation insurance, limited health benefits, and more. Through an EBHRA, employers can reimburse their employees for premiums paid towards these excepted benefits, as well as other eligible out-of-pocket medical care expenses determined by the employer. However, it's important to note that EBHRAs do not cover premiums for individual coverage, traditional group health plans, or Medicare. COBRA or continuation coverage premiums, on the other hand, can be reimbursed.
How EBHRAs Differ from Other HRAs
While EBHRAs share similarities with other HRAs, such as ICHRAs and QSEHRAs, they have distinct characteristics that set them apart. Unlike ICHRAs that reimburse individual health insurance policies or QSEHRAs designed for small employers, EBHRAs work in tandem with a group health plan. This flexibility allows employers to provide additional benefits while employees remain enrolled in the group plan. The higher contribution limits of EBHRAs make them an attractive option for businesses looking to offer comprehensive coverage beyond what traditional insurance plans provide.
Employers are able to customize their EBHRA by limiting which IRS-eligible expenses are covered by their company's plan. Businesses who are interested in offering a customized EBHRA will often survey their employees and determine which expenses are most highly valued by their team. With Liferaft, many companies are choosing to create customized plans to cover things like fertility costs and mental health treatments.
Here is a breakdown of the four most common HRA types:
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
Regulations & Guidelines
As with any healthcare-related arrangement, there are regulations and guidelines to adhere to when implementing an EBHRA. Under an EBHRA, there is a limit to the reimbursement amount, which is $2,100 for 2024 (adjusted annually for inflation). This amount covers premiums for excepted benefits and other eligible medical expenses determined by the employer. Employers must also ensure that other nonexcepted, non-account-based group health plan coverage is made available to EBHRA participants, although individual enrollment in the other group health plan is not mandatory.
Businesses who would like to contribute more than the above limit should look into setting up a Standard HRA, which also couples with a group health care plan but does not have the same funding limits that an EBHRA does.
To remain compliant, EBHRAs must follow Code § 105(h) nondiscrimination rules, which prevent discrimination in favor of highly compensated individuals regarding eligibility or benefits. Additionally, ERISA requirements apply to EBHRAs unless an exception is applicable. This means proper handling of reimbursement requests, provision of a summary plan description (SPD), and adherence to ERISA's claim and appeal procedures. HIPAA's administrative simplification requirements, including privacy and security rules, also apply unless specific exceptions are met.
Employee Wellness & Satisfaction
In today's competitive job market, employee wellness and satisfaction are paramount to the success of any business. Excepted Benefit Health Reimbursement Arrangements (EBHRAs) offer a unique opportunity for employers to support their employees' well-being while fostering a positive and productive work environment.
EBHRAs go beyond traditional health insurance plans by providing coverage for a wide range of healthcare expenses that promote holistic health. From dental and vision care to mental health services, preventive screenings, and alternative therapies, EBHRAs allow employees to access a comprehensive array of healthcare services that address their unique needs. This comprehensive coverage not only enhances their physical well-being but also supports their mental and emotional health, ensuring employees feel cared for and valued.
Financial Security and Flexibility
One of the key advantages of EBHRAs is the financial security they offer employees. By covering additional healthcare expenses not typically included in standard health plans, EBHRAs alleviate the financial burden on employees, providing peace of mind regarding their healthcare needs. This financial security, coupled with the flexibility to choose the most suitable healthcare providers and services, empowers employees to make informed decisions about their health and wellness. They can seek care without worrying about excessive out-of-pocket expenses, creating a sense of empowerment and control over their healthcare journey.
Access to Preventive Care and Wellness Programs
EBHRAs encourage a proactive approach to healthcare by emphasizing preventive care and wellness initiatives. Employees can utilize their EBHRA funds to cover preventive screenings, vaccinations, and annual check-ups, promoting early detection of potential health issues and contributing to long-term well-being.
By providing comprehensive coverage, financial security, access to preventive care, and tailored healthcare options, EBHRAs empower employees to prioritize their well-being. As a result, businesses can create a positive work environment, boost employee satisfaction and retention, and ultimately thrive in today's competitive landscape.
Liferaft: Your HRA Administrator
Liferaft is an affordable HRA administrator dedicated to streamlining the setup and administration of EBHRAs for businesses. With Liferaft, you can customize HRA plans to meet your organization's specific needs, whether it's offering benefits for the first time, providing flexible individual plans, or expanding coverage to specialized healthcare areas. Liferaft simplifies the documentation and setup process, ensuring your EBHRA is properly established to take advantage of tax advantages. Compliance management and reporting are handled by Liferaft, keeping you informed and in line with legal requirements. Additionally, Liferaft makes employee onboarding and plan management effortless through a user-friendly digital platform, allowing employees to submit claims and request reimbursements for eligible expenses easily.
Which industries can benefit the most from implementing an EBHRA?
While EBHRAs can benefit a wide range of industries, any organization looking to expand its benefits and provide more comprehensive coverage can benefit from implementing an EBHRA. Whether you are in healthcare, technology, or any other field, an EBHRA offers additional support and flexibility for your employees' healthcare needs.
Can Liferaft handle compliance and reporting for my EBHRA?
Yes, Liferaft takes care of compliance management and reporting, ensuring that your EBHRA remains compliant with regulations. We handle tasks such as tax reporting, COBRA administration (if applicable), ERISA compliance, and HIPAA and PHI compliance.
Is Liferaft's HRA administration cost-effective for businesses of all sizes?
Yes, Liferaft prides itself on offering the most affordable and feature-rich HRA product on the market. We provide comprehensive employee and employer tools and resources, automated compliance features, and a seamless user experience, making HRA administration painless for businesses of all sizes.
Can Liferaft assist with employee onboarding and plan management?
Yes, Liferaft simplifies employee onboarding and plan management. We provide informative materials for employees to help them understand how to maximize their EBHRA benefits. Our 100% digital platform allows employees to easily submit claims and request reimbursements for eligible expenses.
Can Liferaft customize HRA plans to suit my organization's unique needs?
Absolutely! Liferaft offers fully customizable HRA plans based on your organization's specific requirements. You have the flexibility to decide the tax-free amount to offer each month and determine which expenses are eligible for reimbursement.
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.