The following commonly asked HRA questions are answered below:
- Why does the HRA plan year need to align with the medical plan year?
- What is important to note with the funding calendar and new hire pro-rate?
- Are there any setup considerations when using the Cafeteria EN-Exchange?
- What happens if we make change to the plan or payroll calendar after EEs have enrolled?
- Can an employee enroll in both an HSA and HRA?
1. Why does the HRA plan year need to align with the medical plan year?
The system has built in logic to control eligibility:
- An EE cannot enroll in an HRA if they are not enrolled in the contingent medical plan
This means the HRA plan year needs to align with the tied medical plan for the system to work as expected. As an example, you cannot have the HRA start 1/1 and medical on 4/1.
Currently the system only supports the control of eligibility by looking at the enrollments in the same enrollment window.
This also means that when eligibility rules differ for these plans, they may split between windows and indicate that an EE is ineligible for enrollment.
2. What is important to note with the funding calendar and new hire pro-rate?
The funding calendar is only needed if the client wants to pro-rate the employer contribution for new hires.
Although it is called "funding calendar," it does not set when the employer actually funds employees' accounts. It purely drives the system to pro-rate new hires' ER contribution and not "when" funds are deposited just "how much" in total of the annual contribution a new hire will receive.
Best practice is just enter the 1st day of the month for each month of the plan year. The system works best when all 12 months are completed.
Note! If you change the plan year it is best practice to delete the funding calendar dates first, then change the plan year, then re-enter the funding calendar dates. The system will store funding calendar dates on the back end when you change the plan year and that can cause the system to calculate new hires' ER funding inaccurately.
New Hire Pro-Rate:
Here is a breakdown of how the system calculates what a new hire will receive in total ER contributions if you have it set to pro-rate.
To start, you must complete the funding calendar. Please refer to note above that indicates best practice is just enter the 1st day of the month for each month of the plan year.
The system figures out what the new hires "annual" will be. Just as a regular EE has an annual, a new hire needs to start with an annual. Here are the steps it goes through:
- The system will look at the annual ER contribution for the tier level the EE is enrolled
- It will then divide that annual by the number of funding months completed in the funding calendar to come up with a monthly $ amount
- After it has the monthly $ amount, it will look at how many months of coverage the new hire will have for the plan year
- And then it multiplies that by the monthly $ amount to get the new hire's annual
Example: The employers plan year is 1/1 - 12/31. Client gives employees with family coverage $1,500 in ER contributions. They pro-rate this amount for a new hire since they will not be working the full year. In the setup of the plan, the funding calendar is completed using the first day of the month for each month of the plan year to give 12 total months. The new hire starts employment in May with benefits being effective June 1st and enrolls in EE + Family coverage.
- System looks at ER contribution for EE + Family coverage = $1,500
- System divides $1,500 by total months in funding calendar which is 12 = $125 per month
- System looks at how many months EE will have coverage for the plan year. June through December = 7
- System multiplies $125 by 7 to get EEs annual = $875
3. Are there any setup considerations when using the Cafeteria EN-Exchange?
Yes. Confirm how the TPA has setup the HRA(s) in their system and match that in EN.
It is common for a TPA to build separate HRAs in their system if they vary in annual contribution or have separate accumulators for say deductibles or prescriptions. Think of it like a medical plan. If medical plans vary in benefits, typically they are different medical plans with each their own policy number.
With that said, if a TPA has built 2 HRA plans in their system and an employee should be enrolled in both, EN cannot currently accommodate that. The system will not allow an employee to be enrolled in two HRAs. EN knows this may impact using the EN-Exchange and we have it on our road map to allow enrollment in multiple HRAs.
BUT if the TPA has setup more than one HRA because the HRAs are each different in benefits and an employee can only be enrolled in one or the other, EN can accommodate this. You would need to build two HRA's and NOT one HRA that has multiple contingent medical plans. Yes, EN allows you to build one HRA and link multiple contingent medical plans but doing this would not allow the TPA to distinguish which HRA to put the EE into in their system.
Example: Client offers a benefit package where one class of EEs has an HRA with an ER contribution of $1000 (it integrates with Med Low plan). Another class of EEs has an HRA with an ER contribution of $3000 (it integrates with Med High plan). The TPA builds two HRA plans in their system, HRA 1000 & HRA 3000. If you build one HRA in EN and name it HRA and enter both the Med Low and Med High plan as contingent medical plans, the system will work. BUT, and this is the key part, the TPA only sees a plan come over on their file named "HRA" and they have no idea if Sally should be put in the HRA 1000 or HRA 3000 plan.
Best rule of thumb - 1:1 match.
4. What happens if we make changes to the plan or payroll calendar after EEs have enrolled?
Before you open up the plan for enrollment, double check that the plan design (ER contributions, pro-rated, etc.) and the company's payroll groups/calendars are setup correctly.
If you make changes to the plan or payroll calendar/frequency AFTER EEs enroll, those changes won't apply to the already processed enrollments. The only way to update those enrollments is to decline, save and re-enroll EEs in the enrollment flow (NH/OE/Modify).
Changing tier levels both limits and effective dates
5. Can an employee enroll in both an HSA and HRA?
Yes. If the client offers an HSA compatible HRA, i.e. post deductible HRA or limited HRA, the system can accommodate this. It is your responsibility to confirm that the client's HRA is HSA compatible.
On the medical plan under enrollment options, select both the HRA and HSA checkbox.