Here’s what you need to know about the HRA types.
Our small business tax strategy HRA guide can help direct you to the best one for your business.
There are many benefits of a health reimbursement arrangement.
- Funded entirely by Employer (no employee contributions)
- Account owned by Employer- funds stay with employer if employee leaves company
- Reimburses health insurance premiums and medical expenses
- Money is reimbursed for expenses/premiums after they are incurred and receipts are provided
- Employees must have health insurance (minimum essential coverage) to participate
- Tax benefits: Tax free for both employee and employer
HRA: what it means for the employee
If you’re an employee and your boss is offering you an HRA, it means that they are going to reimburse you for health insurance costs and possibly medical expenses depending on the type of HRA they have chosen. This is great news because it means you can shop for the best plan that fits your needs (you know you want to keep your doctor in network!), and you submit receipts and get reimbursed. This is an alternative to a group plan and means personalized plan choice and portability for you.
Pro tip: Before you sign on the dotted line for a new health plan, make sure you study up on HRA compliant plans.
HRA: what it means for the employer
An HRA allows you to set aside a fixed amount of money each month that employees can use to purchase individual health insurance or use on medical expenses, tax-free. This means employers get to offer benefits in a tax-efficient manner without the hassle or headache of administering a traditional group plan and employees can choose the plan they want.
The mechanics of an HRA are pretty simple. You choose a monthly budget that works for you, your employee signs up for a health plan that works for them, then you outsource the rest to an HRA administrator (like Take Command!) so you don’t have to worry about things like compliance or forms during tax time.
HRA and Take Command- a perfect match
We believe that HRAs empower employees to be their own advocate when it comes to their healthcare spend. That’s an important piece of the puzzle as we try to fix the high costs of healthcare.
If you think an HRA might work for your business, don’t hesitate to reach out to our HRA experts. We are around to chat on our website and would be happy to help you.