How HRAs, FSAs and HSAs are Administered in Self-Funded Plans

We all love choices. Vanilla or chocolate, go out or stay in, HGTV or ESPN?

At a time when many people feel powerless over their own health care, giving your employees choices about how they manage their own medical costs is a good thing — both for them and for you.

Maybe your employees have Health Savings Accounts (HSAs), which you contribute to but they control. Employees can decide which medical expenses to pay out of the HSA and roll over their money from year to year, requiring minimal oversight from you. Perhaps your organization set up a Health Reimbursement Arrangement (HRA), which you fund and employees can use to pay medical expenses that their insurance policies don’t cover. Or maybe your employees use Flexible Spending Accounts (FSAs). Both you and your employees contribute to their FSAs, and they can use those funds to pay for both their own healthcare and care for their dependents, like children and elderly parents. (All three account types offer tax savings for employees.)

Maybe your employees even have access to more than one of these accounts, depending on how you’ve structured your coverage. But while all that choice is great for employees who want to manage their own costs, it can get complicated for employers with self-funded plans to track how accounts are managed and claims are paid. That’s especially true with HRAs and FSAs.

That’s where a third-party administrator (TPA) comes in. Your TPA will handle all the back-end accounting tasks involved in offering and administering these flexible plans. As employees use their accounts, your TPA will track claims, answer their questions and help you make adjustments so these accounts continue to meet everyone’s needs. And while employees own their own HSAs and don’t need much day-to-day management from their employers, your TPA can facilitate the setup of these accounts.

Once your employees have set up their FSAs, HRAs or HSAs and understand how to use them, they’ll be given debit cards that they can swipe to pay for covered services. When issues or questions arise, the TPA can answer them. This system takes the guesswork out of health care administration for employers and allows employees to manage their own untaxed funds.

Could your organization benefit from offering medical spending accounts? To learn more about the options available to you, contact us today.


Contact Block (Blog)

Recent Comments

    Newsletter Signup

    Signup to start receiving the latest newsletters from StopLoss right to your email.
    Stay up to date on insurance trends and insights.

    Back to Top

    In 2011, the top 5 most expensive medical conditions treated in US hospitals were: Septicemia, Osteoarthritis, Complication of device, implant or graft, Liveborn, and Acute myocardial infarction

    From 2010 to 2013, the number of claims that were individually $1 million or above rose by 1,000%

    In 2017 approximately 18% of the American public will purchase insurance through exchanges, radically transforming the health insurance landscape.

    In 2014, 98% of large firms (= 200 Workers) offer 1+ wellness programs to their employees.

    The most costly 1% of patients account for 20% of national health expenditures – accruing average annual expenses of nearly $90,000 per person.

    6% of firms offering fully-insured plans report they intend to self-insure because of Obamacare.

    In 2014, PPO plans remained the most common plan type, enrolling 58% of covered workers.

    In 2012, 93% of businesses with 5,000+ employees and 80% of companies with 1,000-4,999 employees were self-funded

    Massachusetts has the third-highest prevalence of self-funded insurance in the small-group market (Fewer than 50 employees).

    In 2013, the average deductible was $2,906 for individuals selecting plans from marketplaces. This compares with average deductibles of $1,135 for an individual with employer coverage.

    In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage, up 5% and 4% respectively from 2012.

    From 2010 – 2013, cancer followed by chronic/end stage renal disease and leukemia accounted for the top 3 costliest illnesses.