HRA and COBRA

Employer contributes a specified dollar amount each year to an HRA on behalf of each participant, which money can be used for deductibles and co-pays under its high-deductible health plan.  As a group health plan, the HRA is subject to COBRA, but the premium is not entirely clear.  I understand that there are a couple methodologies for determining the premium for COBRA purposes (e.g., actuarial method and past-cost method), but is there an argument that the premium is the employer contribution itself on top of which an administration charge up to 2% could be added?  It does not seem that former employees should be eligible for continued employer contributions to the HRA; that should be limited to current eligible employees.  

See two examples below:  Employer contribution, on top of which an administration charge of up to 2% is not one of the two allowed methods unless it is a fully insured HRA. Former employees are not eligible for continued employer contributions to the HRA. If the self-funded HRA is a new plan, a reasonable estimate for the first year is 75%-60%; check with the HRA vendor to confirm.

HRA COBRA Premium Calculation Summary and Instructions

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Click on the icon below to open the HRA Premium Calculation. Worksheet. If your HRA has tiered contributions (e.g., a different contribution for single and.

 

Determining the COBRA Premium for an HRA

Parker, Smith & Feek

https://www.psfinc.com › articles › determining-the-co...

 

 

 

Oct 16, 2018 — To set HRA premiums using the past-cost method, the employer looks at the total claims reimbursed by the HRA during a 12-month “determination 

Very much appreciated!  Glad to hear that the employer is not required to make employer contributions to the HRA on behalf of former employees.  The HRA is self-insured, so I'm not sure what benefit any former employee would have in electing COBRA other than to use whatever balance is remaining in their accounts before they expire.