Offering same employee both Cash In Lieu and Spousal Incentive HRA?

[Ashton S.]

Curious on thoughts about offering both an cash in lieu incentive and a spousal incentive HRA. 

[Brian Gilmore]

I'm not a fan as a plan design/strategy matter.  It's a bit like enrolling employees into dual PPO/HMO coverage.  I'd pick one and use that vehicle to accomplish the carrot incentive you're aiming for through the degree to which supports your goals/budget.   In other words, instead of doing both, I would recommend increasing the amount available under either (preferably the SIHRA) as being more effective and understandable for employees.

From a compliance standpoint, I think it works fine.  The opt-out credit is a creature of the cafeteria plan, and the SIHRA is by definition not tied to the cafeteria plan.  Each would operate independently from the other and not interfere with the other.

But again, why?  If they're at the point where a SIHRA is on the table, I view the SIHRA as the evolved (and superior) version of an opt-out credit.  I don't see a good argument for keeping the opt-out credit at that point.  Take the opt-out credit budget and put it into the SIHRA allocation for maximum effect/benefit.

As Yogi Berra famously said: "When you come to a fork in the road, take it."

Here's some more discussion if helpful:

• https://www.newfront.com/blog/ten-spousal-incentive-hra-compliance-considerations