Spousal Incentive HRA
EMPOWER’s Spousal Incentive HRA (SpHRA) is great for self-insured Employers who are looking to reduce costs. The SpHRA reimburses out-of-pocket expenses from the spouse’s group health plan and is a great way to incentivize employees and their families to enroll in the spouse’s plan.
Cost Savings for Self-Insured Employers
A Spousal Incentive Health Reimbursement Arrangement (HRA) is a tailored employer-funded benefit that helps self-insured businesses encourage employees to utilize their spouse’s health insurance plan instead of relying on the employer-sponsored plan. Offering this type of HRA can help self-insured employers reduce healthcare costs while promoting smarter, more cost-effective benefits choices for employees. Here’s everything you need to know about sponsoring a Spousal Incentive HRA.
Speak with EMPOWER today about how a SpHRA can save your clients on healthcare expenses.
What is a Spousal Incentive HRA?
A Spousal Incentive HRA is a type of Health Reimbursement Arrangement designed for employers to provide financial incentives to employees whose spouses have access to other health insurance options. This HRA reimburses employees for out-of-pocket medical expenses when they elect not to cover their spouse under the employer’s health insurance plan, thus reducing the overall costs for the employer and promoting more efficient healthcare choices.
Key Features of a Spousal Incentive HRA:
- Employer-funded: The employer contributes to the HRA, which employees can use to cover out-of-pocket healthcare costs.
- Spousal health insurance incentive: Employees receive reimbursements if they opt to have their spouse covered under their spouse’s insurance rather than the employer’s plan.
- Tax-advantageous: Employer contributions to the HRA are tax-deductible, and reimbursements are tax-free for employees when used for qualified medical expenses.
- Cost savings: Helps reduce employer healthcare costs by incentivizing employees to choose more cost-effective health coverage for their spouse.
How a Spousal Incentive HRA Works for Your Employees
When you offer a Spousal Incentive HRA, employees can choose to enroll their spouse in their spouse’s health insurance plan, instead of your company’s plan. In return, the employer reimburses them for certain out-of-pocket medical expenses, helping offset the costs of not using the employer’s health plan for their spouse. This arrangement incentivizes employees to consider more cost-efficient healthcare options while still receiving financial support for their medical needs.
- Employer Contributions: Employers fund the Spousal Incentive HRA, which employees can use for qualified medical expenses. The employer may set a fixed annual amount or a per-employee contribution, depending on the plan design.
- Eligible Expenses: The HRA can cover a wide range of medical expenses, including copayments, deductibles, prescription drugs, dental and vision care, and other qualified healthcare expenses that are not covered by their spouse’s insurance.
- Accessing Funds: Employees can access their HRA funds through a claims reimbursement process. Funds are typically tax-free when used for eligible expenses
Why Offer a Spousal Incentive
HRA to Your Employees?
Cost Savings for Self-Insured Employers
Tax Benefits for Employers
Incentivize Smarter Health Choices
Attract and Retain Talent
How it Works
For Employers
The Employer hosts Open Enrollment with employees and enrolls Group Health Plan enrollees in the MERP.
HRA funds may be available to employees on the first day of the Plan Year, depending on how the Plan is structured.
EMPOWER administers the Plan and issues reimbursements to employees after claims are filed. MERP reimbursements are made from an Employer-owned account.
For Participants
Employees are automatically enrolled in the MERP when they enroll in the Group Health Plan.
Participants use their insurance or pay out of pocket for eligible expenses.
Participants file claims to EMPOWER with the insurer’s benefits summary sheet or explanation of benefits. EMPOWER reimburses claims conveniently from the Employer’s bank account.
Tailored to Your Needs
Employers can customize their plans with many options, including:
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