How Long Does the HRA Approval Process Take?

A Health Reimbursement Arrangement (HRA) is an employer-funded benefit allowing employees to receive tax-free reimbursements for eligible medical expenses. These arrangements provide a flexible way for employers to support their workforce’s healthcare needs, while also offering tax advantages. This article clarifies the factors that influence HRA approval timelines and what individuals can expect throughout the process.

Understanding HRA Approval Timelines

The time for HRA approval varies significantly, depending on several contributing factors. Different HRA types, such as Qualified Small Employer HRAs (QSEHRAs) and Individual Coverage HRAs (ICHRAs), possess distinct administrative structures that influence how quickly they can be implemented. For instance, establishing an ICHRA can take anywhere from a few days to six months, with employers typically providing 90 days’ notice before the plan year begins. QSEHRAs also have a federal recommendation for a 90-day notice period before each calendar year.

The roles and efficiency of the employer and any third-party administrators (TPAs) play a substantial part in the overall timeline. Employers are responsible for defining the HRA plan, including contribution amounts and eligible expenses. Many employers outsource administrative tasks, such as claims processing and compliance management, to TPAs. The TPA’s internal processes, technological capabilities, and communication effectiveness can accelerate or slow down HRA approval and ongoing administration.

Submitting complete and accurate information during the initial application or enrollment phase is crucial for approval speed. Any missing details, incorrect forms, or insufficient supporting documentation can lead to significant delays as the employer or TPA will need to request additional information. This back-and-forth communication can extend the timeline, preventing timely approval and access to benefits. Ensuring all required information is precise from the outset helps streamline the process.

While specific, definitive numbers for HRA approval are difficult to provide due to these variables, employers typically aim to process reimbursements for approved expenses within 90 days once the HRA is active. The initial setup and employee enrollment period will precede this, with the duration dependent on the factors previously mentioned. A well-prepared employer and responsive TPA can help minimize these waiting periods.

The HRA Approval Process: Step-by-Step

The HRA approval process begins with the employee’s submission of enrollment forms or required information to their employer or the designated third-party administrator (TPA). This submission initiates the formal review, ensuring all participant details are captured accurately for benefit eligibility. The information provided forms the foundation for the HRA account setup.

Following submission, the employer or TPA undertakes a thorough review of the provided documentation. This step involves verifying the employee’s eligibility for the HRA program and confirming that all submitted data aligns with the plan’s requirements. During this review, the administrator may request additional information or clarification if any discrepancies or missing details are identified. These requests are communicated to the employee, and the process pauses until the necessary information is received.

Once the review is complete and all requirements are satisfied, the final approval decision is made by the employer or TPA. This decision confirms the employee’s enrollment in the HRA. The employee is then officially notified of their HRA approval, often through an email, a letter, or an update within an online benefits portal.

Upon notification of approval, the HRA account becomes active and accessible to the employee. This activation means the employee can begin to incur eligible medical expenses with the expectation of reimbursement.

What to Expect After HRA Approval

Once HRA approval is granted, employees will receive confirmation and details on how to access their account information. This access is typically provided through an online portal or a dedicated mobile application, allowing individuals to view their HRA balance and track activity. This digital access streamlines the management of HRA benefits.

Employees can then begin submitting claims for reimbursement of eligible medical expenses. To facilitate this, proper documentation is required, which usually includes itemized receipts, invoices, or an Explanation of Benefits (EOB) from their health insurance provider. This documentation must clearly show the provider’s name, the date the service was rendered, the recipient of the service, a description of the service or item provided, and the amount paid. Adhering to these documentation requirements is essential for prompt processing.

After a claim is submitted and approved, the reimbursement process typically moves forward within a defined timeframe. Many employers aim to reimburse approved expenses within 90 days. For direct deposit, funds can often be received within 3-5 business days, while mailed checks may take an additional 5-7 business days to arrive. Employees are encouraged to monitor their HRA balance and claim status regularly through their online account or mobile app to stay informed about their available funds and pending reimbursements.