HRA administration companies: what HRA administrators actually do, and what the service costs

Substantiation is the job

An HRA reimburses expenses the written arrangement permits, which means every claim has to be checked against those terms before it is paid. Doing that in house means managers and finance staff reading colleagues' medical receipts, which most employers correctly refuse to do. Buying administration is therefore mostly buying somebody to stand between the employer and that detail, and the quality of that separation is worth more attention than the portal.

The arrangement is a document, and the document has to be current

What the HRA covers, who is eligible, what happens to an unused balance at year end and whether it carries over are written terms, not settings. An administrator should hold the current document, apply it, and tell you when a design decision you have made requires it to change. Ask to see the document they are administering to, because a mismatch between the document and the practice is the failure that surfaces years later.

Price it per participant per month, and read the floor

The usual shape is a rate per participating employee per month, often with a monthly minimum. At small headcounts the minimum is the real price, so work out what it costs per participant at your actual number of participants rather than at the headcount in the example. Ask separately about card issuance, substantiation review and year end reporting, which are sometimes inside the rate and sometimes not.

Decide the design before you shop for the operator

Which flavour of arrangement, what it reimburses, who is eligible and how much per person per year are employer decisions with tax consequences attached, and they belong on the plan record beside the headcount they apply to. Shopping for an administrator before those are settled means being sold a design by the firm that will be paid to run it.