The drastic increase we’ve seen in health care costs over the past several years translates into a big worry for employers offering group coverage to their employees. Health care benefits can eat up profits, but not offering such benefits, can make your business less attractive to staff. But, until December 31, there’s another option. That’s the last day to set up an HRA in order to reap current year tax benefits. So, would an HRA work for your company?
With group premiums escalating, coverage through the individual market may only cost about half that of group plans. An HRA can be set up as a monthly benefit to reimburse employees for less expensive policies from the individual market. It’s a better way of providing cost-effective health insurance to employees.
We are seeing more and more employers are setting up a Health Reimbursement Arrangement (HRA), or a Section 105 plan, to reimburse the medical expenses and individual health insurance premiums of their employees.
With an HRA, employers are able to save up to 50 percent over group health insurance rates. This is a key element of HSA for America’s Complete Protection Strategy described on our website: www.HSAforAmerica.com/The-HSA-for-America-Complete-Protection-Strategy.htm.
An HRA allows you to reimburse whatever employee medical expenses you choose to cover. The reimbursements you make are considered to be a tax-free benefit for the employee, too. Additionally, starting in 2014, individuals can buy health insurance through state health insurance exchanges. And, the individual health insurance plans are not tied to employment, so employees may want to keep their plan even after they change employment.
Setting up an HRA can also be very advantageous for a married sole proprietor who can set up their spouse as an employee. This can allow all of the family’s medical and health insurance expenses to be reimbursed tax-free from the business.
An HRA requires very little administration to establish and is simple to maintain. More HRA information and an online process to establish an HRA are available at HSA for America’s Health Reimbursement Arrangements web page: www.HSAforAmerica.com/HRA.htm.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.