In our last post, we touted the benefits of a health savings account (HSA) and flexible spending account (FSA). But we don’t want to leave the health reimbursement arrangement (HRA) out of the equation! These less common—but similarly beneficial—accounts are a flexible way to help employees pay for health care costs. Read on to learn about HRA advantages and find out if an HRA is right for your company and your workforce.
The Perks of Offering an HRA
We’ll let the HRA advantages speak for themselves.
An HRA can help lower health care costs for employees. Funds can be used toward eligible out-of-pocket health care costs, copayments, deductibles, prescriptions, and more. Since this is an employer-provided account, it does not affect employees’ income.
These plans are super flexible; employers can choose the features of the plan that work best for their employees and budget.
An HRA can help employers control costs by allowing them to choose how much they want to contribute for each employee each year.
There are tax advantages too. All employer-made contributions are completely tax deductible, and reimbursements are tax-free when an employee files a claim.
Employers can use this benefit to round out their benefits package to attract and retain talent.
HRAs of All Shapes and Sizes
There are many different types of HRAs. Some are newer offerings, others have been around for years, and all are beneficial in their own way.
Here’s the current rundown of the different varieties:
Keep in mind that even within these different varieties, employers still have a lot of flexibility when it comes to designing the details of the account—one of the most appealing HRA advantages! Employers can decide if they want funds to roll over to the next year, decide what IRS-qualified medical expenses they want to cover, who will pay the deductible expenses first (employee or employer), and what the maximum annual reimbursement will be.
Want to learn more to see if an HRA is right for your organization? Let us know here.