Employers can define different classes that offer different features, such as allowance amounts, HRA deductibles, and cost sharing.
Can I offer different benefits to different classes of employees?
Yes. Our software provides the following common class types employers can use to tailor benefits to their employees.
- Full-time
- Part-time
- Salaried
- Hourly
- Managers
- Staff
- Executives
What are the regulations around classes?
The administration of Health Reimbursement Arrangements is largely governed under IRC § 105(h), which in part prohibits discrimination in favor of highly compensated individuals with regard to the eligibility and availability of benefits. An HRA must treat all employees the same for example; all are eligible; the waiting periods (if any) are the same; no one is treated differently on the basis of age, years of service, or compensation; there are no differences in maximum reimbursement amounts, types of expenses reimbursed, etc.
What are additional requirements of classes?
Employers can use these classes any way they like; however, they are required to:
- Define the class
- Offer the benefit to all employees that fall under that definition
- No discrimination within the class.
For example, if the employer wants an executive class that offers a specific benefit to all C-level staff, they have to offer that benefit to all employees with a “Chief” title. They can’t exclude their Chief Information Officer. If they create a Full-time class that will need to include all full-time W-2 employees, they can’t choose to offer the HRA to just a few select full-time W-2 employees.
Are there minimum class size requirements?
No.
Do we support different allowances for individuals and families?
Yes. Employers can offer:
- All employees in a class the same amount
- Different allowances based on their family status:
- Single
- Single with Dependents
- Married
- Married with Dependents