As out-of-pocket expenses for employees continue to rise, HRAs provide a great opportunity for employers to help soften the blow. A Health Reimbursement Arrangement, also known as an HRA, is a reimbursement account that is funded by an employer and IRS-approved. They are a great way for employers to receive tax advantages while helping lessen the burden on their employees’ health costs. Here are a few interesting facts every employer should know about HRA insurance and the benefits it can provide:
HRA Insurance is Funded Solely By the Employer
While other types of insurances like FSA and HSA allow employees to contribute their money through payroll, an HRA is funded only by the employer. Since employers are in control, they get to determine how they want to handle certain rules of the HRA; for example, what types of expenses are eligible for reimbursement, what happens to funds at the end of the year, how much is allocated to employees, and more.
It’s Easy to Set Up and Manage
HRA insurance, unlike health insurance plans that use difficult language, is relatively easy to understand. This helps make set up quick since it’s essentially a business account for health care. This saves time for both employers and their staff.
HRAs are Extremely Flexible
HRA plans give employers a wide range of control. They can determine when employees become eligible, who is covered under their plan, and if they can retain benefits after termination or during a leave of absence. HRA plans also allow for part-time employees and seasonal workers to be covered.
HRAs are Exempt from State Insurance Rules
With traditional group health insurance plans, there is a state-mandated amount of coverage that must be included. This is one of the top factors driving up the cost of health insurance. HRAs are exempt from these requirements.
HRAs are Notional and Tax-Deductible
This means that none of the funds employers put into the account are paid out until employees follow the rules set up by the employer to receive reimbursement. Because of this, there are no minimum contribution requirements, and pre-funding is not necessary, which is a great benefit for many small businesses.
The trend for employer-sponsored health plans to include an HRA is on the rise, and for good reason. Although setting up an account is pretty straightforward, there are important steps like determining plan rules and going over documents. At Advanced Reimbursement Solutions, we can help get you started and streamline the process. Contact us today to speak with one of our team members in Wilmington or Phoenix.