HRA, or Health Reimbursement Arrangement, is a health reimbursement account which is IRS-approved and employer-funded. Tax advantages are provided to employers while offering personalized health benefits which reimburse employees for out-of-pocket medical expenses and health insurance premiums. As it includes so many benefits, it’s a great option for both employees and employers for out-of-pocket medical expenses and lowering tax liability.
Not the Same Thing as Health Insurance
The difference between a Health Reimbursement Arrangement and standard health insurance is that HRAs allow employers to make contributions to an employee’s account that provide reimbursement for eligible medical expenses. What this means is that it covers expenses not covered by their standard healthcare plan, like deductibles. Granting employees this option provides employers with certain tax benefits while also covering medical expenses that aren’t covered by their employee’s standard health insurance plan. These tax benefits are definitely worth exploring.
Benefits of HRA Insurance
One of the top benefits of employer-funded HRAs is that contributions are 100% tax deductible. If these accounts are structured properly, employers can not only cut healthcare costs without reducing health care benefits to employees, but also lower their own income tax liability at the end of the year; it’s a win-win for both employee and employer. Furthermore, employers have full control over the costs eligible for coverage under the plan.
Whether you’re a small business or a large multinational corporation, offering HRAs to employees is a win-win. Businesses interested in lowering their taxable income and helping their employees with their health care coverage should reach out to our team at Advanced Reimbursement Solutions so we can help get you started. Contact us today in Phoenix or Wilmington to learn more!