With rising premiums and continued economic pressure, many employers are rethinking their approach to employee health benefits. For those wanting to cut costs without cutting value, there is a proven strategy worth considering: Offer a high-deductible health plan (HDHP) alongside a Health Reimbursement Arrangement (HRA).

When combined, these two powerhouses offer lower premiums and improved budgeting while still giving employees access to meaningful financial support for their health care expenses.

The Latest HDHP Pairing Research

According to the 2024 KFF Employer Health Benefits Survey, this approach offers a financially beneficial, although underutilized, approach to benefits. The survey states that:

  • 27% of covered workers are enrolled in an HDHP combined with either an HRA or a Health Savings Account (HSA), a figure that has remained stable in recent years.
  • Despite the potential, only 4% of employers currently offer an HDHP paired specifically with an HRA. This makes it a relatively untapped strategy, especially among small and mid-sized firms.
  • Among employers who do offer an HDHP with an HRA:
    • The average HRA contribution is $1,724 for single coverage and $3,274 for family coverage.
    • 24% of employees in these plans receive a contribution amount that effectively brings their annual deductible down to less than $1,000.
  • Many employers also benefit from unspent HRA dollars, since HRAs only reimburse for substantiated claims. Funds that are not used stay with the employer, roll over to the next year, or can be recaptured if the employee leaves the company.

These findings point to a cost-effective and employee-friendly solution that more employers could benefit from, especially when supported by smart plan design, clear communication, and the right administrative tools. By taking a thoughtful approach, organizations can reduce their benefit costs, improve employee satisfaction, and create a more sustainable path forward in today’s complex healthcare landscape.

Why HDHP + HRA Works for Employers and Employees

Moving away from a traditional PPO or low-deductible health plan might seem risky at first glance, but employers who adopt a high-deductible health plan paired with HRAs often find they can maintain strong benefits while gaining financial predictability.

Here are some of the top advantages:

  • Premium savings without benefit cuts: HDHPs offer significantly lower premiums than traditional group health plans, which translates to immediate savings.
  • Budget control and transparency: Employers set the HRA allowance, which means they know exactly how much they are offering, and they only reimburse when employees submit eligible claims.
  • Tax advantages for everyone: HRA reimbursements are tax-free for both the employer and the employee.
  • Flexible benefit design: Employers can choose what types of expenses are eligible for reimbursement, how much to offer, and whether any funds roll over at year-end.
  • Increased perceived value: Employees appreciate having support for high deductibles and out-of-pocket costs, especially when it is easy to access.

With the right tools and support, an HDHP paired with an HRA can help employers stretch their benefit dollars while still offering real value to their workforce.

Can You Offer Both an HRA and an HSA with an HDHP?

It is a common misconception that employers must choose between offering an HRA or allowing employees to contribute to a Health Savings Account. The truth is, you can do both if the HRA is designed properly.

To maintain HSA eligibility, the HRA must be structured so it does not interfere with the IRS’s requirements for high-deductible health plans. There are two compliant strategies that allow employers to support their teams while still preserving HSA access:

  • Limited-purpose HRA: This type of HRA reimburses only for dental and vision expenses. It is a great option when you want to offer additional support without disrupting HSA eligibility.
  • Post-deductible HRA (also known as a non–first dollar HRA): This structure allows the HRA to reimburse medical expenses, including deductibles, but only after the employee meets the IRS-defined minimum deductible. It gives employees meaningful support without disqualifying them from contributing to an HSA.

With Flyte, you can offer flexible plan options that give your employees more choice and more value—without sacrificing compliance. We help you build the right plan from the ground up, whether that includes an HRA, an HSA, or both working together.

Flyte HCM: Simplifying Reimbursement, Maximizing Value

At Flyte HCM, we specialize in helping employers design, implement, and manage HRA plans that are both compliant and employee friendly. Our approach takes the complexity out of reimbursement and brings clarity to your benefits strategy.

What makes Flyte different?

  • Customizable plan designs tailored to your business goals and budget
  • Full legal compliance support, including plan documentation and IRS and DOL regulatory requirements
  • Claims processing and substantiation handled for you, so you do not have to worry about paperwork or privacy violations
  • Reimbursement options that include direct deposit, physical checks, and a Flyte debit card
  • A user-friendly Mobile App that allows employees to submit claims, track balances, and get reimbursed with ease
  • Technology integrations that allow Flyte to receive EDI data feeds from insurance carriers, enrollment platforms and payroll systems, making setup and ongoing updates simple
  • Built-in Section 111 reporting, ensuring compliance with CMS requirements for Medicare coordination

Flyte does more than just administer benefits. We partner with employers to design plans that work and then make sure those plans run smoothly.

Are You Ready to Rethink Your Health Plan?

With the right strategy, offering health benefits does not have to mean stretching your budget thin. Paring a high-deductible health plan with an HRA creates a smart path forward, and Flyte HCM is here to help you take it.

Schedule a consultation with our team today. We will walk through your goals, explore your options, and help you build a benefits plan that fits.