Businesses Are Not Required to Offer HRA to All Employees

A health reimbursement arrangement (HRA) allows an employer to design a health benefits offering that varies by employee and is not required to be provided to all employees at a company.

Federal regulations (45CFR146.121) state the following:

"A plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups is based on a bona fide employment-based classification consistent with the employer's usual business practices."

HRA Employment-Based Classifications

The type of HRA employment-based classes differ by the type of HRA you offer.

• Qualified small employer HRA (QSEHRA)
  • You must offer the HRA to all W-2 full-time employees. You can choose to offer the benefit to part-time employees or not.
• Individual coverage HRA (ICHRA)
  • The ICHRA allows you to differ allowances and eligibility with 11 employee classes. See our article to learn more.
• Group coverage HRA (GCHRA)
  • An integrated HRA allows you to differ allowances and eligibility with seven employee classes. See our article to learn more.

HRA Employee Classes and Federal Law

To comply with federal regulations, employee classes within an HRA must:

• Treat all "similarly situated" employees equally

• Not discriminate against unhealthy individuals

• Spell out the requirements for classes and benefits in the ERISA plan document

With salary and other types of compensation, employers routinely compensate groups of employees differently.  Since health benefits are such an important part of compensation, why not provide benefits that vary by class of employee?