Questions a CFO, benefits lead, or broker asks
The basics
Is this insurance?
No. It's an employer-funded Health Reimbursement Arrangement under Section 105 of the Internal Revenue Code. It reimburses eligible out-of-pocket costs under another group health plan; it doesn't insure anyone.
How is this different from a spousal carve-out or surcharge?
A carve-out pushes spouses off your plan, and a surcharge charges them more. Both leave families paying out-of-pocket costs. This program is voluntary, adds an option, and reimburses 100% of eligible out-of-pocket costs for employees who choose it.
Who qualifies?
Employees enrolled in your medical plan who also have access to a qualifying group plan: a spouse's employer plan, a parent's plan for those under 26, a second employer's plan, or a qualifying retiree plan. Medicare as primary, Medicaid, TRICARE retiree-only, VA care, and individual marketplace plans don't qualify.
Does this work in our industry?
Yes. It works the same way in any industry. What matters is how many full-time employees are on your health plan, whether the plan is self-funded, and how many employees have a working spouse with a plan of their own.
Are we big enough?
Usually, if you have 300 or more full-time employees on your health plan. The program has served employers from 300 to more than 150,000 employees.
Do we have to change our plan, carrier, or broker?
No. The program runs alongside your existing plan, and employees who don't participate see no change.
How is this different from “tax-saving” benefit plans promoted to employers?
The savings don't come from tax treatment. They come from moving risk. Participating families' claims are paid first by another group plan instead of yours, so for a self-funded plan their health claims risk moves off your bottom line. What you reimburse for each participant is capped at the ACA out-of-pocket limit.
Why haven't I heard of this?
Most brokers focus on renewals, plan design, stop-loss, and contributions. Evaluating a Spousal HRA is a specialty, and it only fits employers with enough qualifying households.
For your employees
Will employees keep their doctors?
That depends on the spouse's plan network. Employees confirm their providers and prescriptions before enrolling, and the HRA follows the spouse's plan's decisions about what it pays for.
What does the HRA reimburse?
Eligible copays, deductibles, coinsurance, and prescription cost-sharing under the spouse's plan, subject to plan rules. It doesn't make a service the spouse's plan excludes eligible.
What happens at the doctor's office?
The employee shows the spouse's plan card first and the HRA card second. If the provider doesn't process the HRA card, the employee submits the Explanation of Benefits or pharmacy record for reimbursement.
What if the spouse loses their job or their plan?
The employee notifies you within the qualifying event window and can return to your plan under your plan rules.
What about employees with a Health Savings Account?
If an HSA owner joins, their HSA contributions may need to stop, depending on who enrolls and how the HRA is designed. HSA funds can't pay for expenses the HRA reimburses. Plan design settles this with your advisors.
Do employees have to participate?
Never. It's an option, and declining it changes nothing.
The money
How much could we save?
Based on historical client data, approximately $6,000 to $8,000 a year per participating employee. Results vary with plan cost, participation, and plan design. Your analysis shows a range built from your census.
What's the most we could reimburse for one participant?
Reimbursement is capped by plan design at the ACA annual out-of-pocket maximum: $12,000 self-only and $24,000 family for 2027 plan years.
What does the program cost?
There's a one-time implementation fee and a small monthly fee per enrolled employee, estimated at about $30. Beyond that, the program is paid for as a share of the savings it produces, so you keep most of what you save. If it doesn't produce savings, there's no savings share to pay. The full cost structure is explained in writing before any decision.
Does it work for fully insured or level-funded plans?
Yes. It works for both self-funded and fully insured plans. Self-funded plans benefit most, because the savings show up directly in what the plan pays in claims. Level-funded plans can be evaluated in your analysis.
Compliance and process
Is it compliant?
The program is structured for compliance and documented in a formal plan document. We recommend review by your legal, tax, and benefits advisors before implementation.
Who administers it?
A specialist administrator that has run this arrangement for more than 25 years. You receive the administrator's name, credentials, and sample plan documents with your analysis, so your counsel and broker can review them directly.
What do you need from us for the analysis?
A basic census: how many employees are on your health plan, each one's coverage level (just them, with a spouse, or with family), and what the plan costs. It's non-identifiable, with no names, Social Security numbers, or health information. I send a short data request sheet, and you return it through the secure upload page.
How long does implementation take?
Typically 90 to 120 days from decision to launch.
Working with me
What does the analysis cost?
Nothing, and it carries no obligation.
Will you go around our broker?
No. Your broker is invited into the process from the start.
What does our broker get from this?
A technical summary written for benefits professionals, a seat in every meeting, and review of every document before you see a recommendation. Your plan, carrier, and their role on it stay as they are.
How do brokers participate?
Brokers stay on the account and take part in every step. Many welcome the program because it helps their clients: when participants' claims move to another group plan, the risk on your plan goes down, which can help moderate future renewals.
Is it a fit? Three questions.
- Do you have 300+ full-time employees?
- Is your plan self-funded?
- Do many of your employees have a working spouse?
Find out what it’s worth to you.
A no-cost savings analysis built from your census. You’ll see projected participation, estimated savings, and how the program would run, in writing, before any decision.
In one line
Employees with access to a working spouse’s group plan can choose to enroll in it, and you reimburse 100% of their eligible out-of-pocket costs. It’s voluntary. It is not a spousal carve-out or surcharge.
Not insurance. An employer-funded Health Reimbursement Arrangement. Savings figures are historical averages; results vary.