Flexible Benefit Service Corporation (Flex) offers debit cards as a reimbursement option with several different Health Reimbursement Arrangement (HRA) plan designs.
Why offer an HRA?
HRAs are employer-funded plans that reimburse employees for out-of-pocket medical expenses. HRA reimbursements are tax-free to the employer and employee. Employers can write-off reimbursements and expenses associated with administering an HRA. Employees don’t have to pay income taxes on reimbursements either. Both parties also avoid Medicare and Social Security taxes on reimbursements.
HRAs are often linked to a major medical plan allowing for reimbursement of deductibles, coinsurance and/or copay expenses. Many employers are transitioning to higher deductible health plans, and they are using HRAs as part of their transition strategy. The HRA helps offset or reduce expenses of employees who typically have high medical costs, and it provides a peace of mind to other employees who may be worried about an unexpected medical event.
On average, utilization of an HRA is between 25 – 35% of the maximum reimbursement available to the employee.* This, in combination with premium savings associated with a high deductible health plan, can lead to total savings of up to 20% for the employer.**
Why offer a debit card with an HRA?
HRAs, by name, are a type of reimbursement program. The old-fashioned way of administering an HRA required an employee to pay for an out-of-pocket expense with their own money. The employee would then request reimbursement by submitting proof that the expense was incurred.
Debit cards change the dynamic of the reimbursement process by providing on-the-spot access to available HRA reimbursement funds. For example, if an employee had to pay a $50 copay for an office visit, they could use the debit card associated with their HRA to make payment for the office visit right then and there.
The employee may still need to provide documentation showing the debit card was used for a qualified expense, but they don’t need to pay for the expense out of their own pocket and request reimbursement later. This creates a far better experience for the employee. We can even setup auto-substantiation rules to minimize the need to submit documentation in many cases.
Why use Flex as your HRA administrator?
Flex has been administering medical reimbursement programs since 1988. It’s part of our DNA. We eat, sleep and breathe these programs, and we have some of the best and brightest employees who support our HRA clients. Our HRA administrative fees are nominal compared to the savings that are received, and there’s no extra charge for debit cards. We’ll even provide free debit cards to spouses and adult children who are covered by the HRA.
Flex will work with the insurance producer, employer, or both, to make sure the implementation process is smooth. We’ll provide a number of resources and tools as part of our commitment to provide ongoing support and a great experience. Employees will be able to access account information online or through a mobile app. Employers will have an online portal to view account activity and run an array of reports, and a friendly voice will be on the other line whenever there are questions.
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* Actual utilization will vary by employer and the chosen HRA plan design.
** Total savings will vary by employer based on their unique benefits package.