| How would you like a way to save fifty-percent, | | | | deductible for you and tax-free for your |
| or more, by giving your employees Tax-Free | | | | employees! Congress created the HRA as the |
| dollars to buy their own "private" health insurance | | | | newest consumer-directed plan designed to cover |
| policies? The most serious economic challenge | | | | medical expenses and it is subject to IRS |
| facing businesses today is reducing the cost of | | | | regulations and guidelines. |
| healthcare. Far too often employers are drastically | | | | Employer funds are used to reimburse employees |
| reducing healthcare benefits and deferring more | | | | for qualified medical expenses in accordance with |
| of the monthly and yearly costs back to the | | | | the pre-established employer arrangement. The |
| employees and their families. If your company is | | | | arrangement specifies a dollar-limit for the amount |
| providing group health insurance, you need to | | | | of qualified expenses that will be reimbursed to an |
| know about the changes in the law that have | | | | employee each year. The arrangement also |
| created the most dramatic and money saving | | | | usually specifies that any unused allocation of |
| opportunities since World War II, when employers | | | | funds can be accumulated and carried over for |
| were first allowed to provide tax-free health | | | | use next year. IRS requirements for qualified |
| insurance benefits during the rate freeze. | | | | medical expenses also apply. Employer payments |
| In today's business world, employees are quick to | | | | are a tax-deductible business expense and |
| go elsewhere if they see a better career | | | | reimbursements to employees are tax-free. |
| opportunity. Providing good benefits is essential to | | | | Availability of plans is limited to the qualified plans |
| retaining the best employees, but group health | | | | offered by insurance companies conducting |
| insurance can be too expensive for some small | | | | business in your State. |
| business owners to sustain. | | | | Since the employer owns the funds until |
| A Health Reimbursement Arrangement (HRA), | | | | presented with valid receipts, there are no actual |
| sometimes called "Section 105 Plans", allows you, | | | | funds accumulated that employees own to |
| the employer, to reimburse your employees for | | | | rollover to a new employer or take with them if |
| their individual health insurance premiums and/or | | | | they leave the company. An employer could |
| expenses, taking you out of the middle. | | | | continue to reimburse a former employee if he |
| Employees will carry their own private coverage | | | | chooses to do so, such as retirement. |
| which is totally portable and not tied down to their | | | | As for the forty-something percent of |
| employment. Your employees will also love the | | | | employers, and growing, who do not offer group |
| fact that they now have the benefit of | | | | health insurance because it is too expensive, now |
| guaranteed health insurance for life, even if they | | | | there is an affordable solution; give your |
| become too sick or hurt to work, or decide to | | | | employees tax-free money to buy their own, |
| retire early. | | | | better coverage at a fraction of the cost of |
| Premiums cannot be raised, nor can policies be | | | | group insurance. |
| canceled because of a catastrophic illness, injury | | | | Why are so few employers taking advantage of |
| or job loss. The employees will each get to | | | | them? That is a great question! It is surprising that |
| choose the insurance plan and plan options, such | | | | very few attorneys, accountants, insurance |
| as deductibles, that best suits their family's needs. | | | | agents, benefits administrators or benefits |
| It also allows your employees and their families to | | | | consultants are even aware of these new |
| work with a health insurance expert to get the | | | | "defined-contribution" plans, but that does not |
| best value for their situation. Many are choosing | | | | mean that you need to continue wasting |
| Health Savings Accounts as a way to further | | | | thousands of unnecessary dollars every year on |
| reduce their health insurance costs. Once | | | | health insurance and double-digit rate increases! |
| everyone is approved they will have permanent | | | | (Have your tax advisor refer to section 213(d) of |
| coverage that is not tied down to their | | | | the Internal Revenue Code. Health insurance |
| employment. And you, the employer can get out | | | | premiums were added to 213(d) in 2004 as |
| of the health insurance business, for good. | | | | allowable tax-free reimbursements from |
| Employers will no longer be required to administer | | | | employers) |
| the plan, and you no longer have to shop it every | | | | In conclusion: This is great news for Employers. |
| year with an HRA established. This gives the | | | | They can finally get out of the health insurance |
| employers the ability to get rid of their overpriced | | | | "business". If you want to finally escape your |
| and profit-draining group plans and give tax-free | | | | "health insurance nightmare," yet still attract, retain |
| dollars directly to their employees through an | | | | and have outstanding and grateful employees. You |
| HRA. The employees can purchase their own | | | | create these savings through a Health |
| better, safer and permanent private health | | | | Reimbursement Arrangement (HRA). Employers |
| insurance polices. The savings can be huge with | | | | can save as much as fifty-percent or more on |
| premiums averaging fifty-percent less than typical | | | | their healthcare costs. This gives the employer |
| employer-sponsored plans. HRAs, along with | | | | flexibility and cost savings for the health insurance |
| HSAs, represent the newest and most | | | | and the employees can purchase their own |
| cutting-edge development in the | | | | better, safer and permanent private health |
| employer-sponsored health benefits. While usually | | | | insurance polices. Health insurance premiums |
| a high-deductible plan is chosen for the insurance | | | | cannot be raised, nor can policies be canceled |
| portion, there is no requirement to do so, and any | | | | because of a catastrophic illness, injury or job loss. |
| approved plan can be used. When employees | | | | The employees will each get to choose the |
| carry their own private health insurance coverage, | | | | insurance plan and plan options, such as |
| there are also no COBRA issues to deal with | | | | deductibles, that best suits their family's needs. On |
| when employment terminates. | | | | top of all of this, the employer gets a tax break |
| HRAs represent the future of health insurance in | | | | for contributing and employees receive the |
| America. They are the only employee benefit | | | | benefit tax-free. This will increase profits and your |
| vehicle allowed to pay for premiums on individual | | | | employees will be much happier. What more can |
| health insurance! Best of all you, the employer, | | | | an employer ask for? Contact your local Health |
| decide how much of an allowance you want to | | | | Insurance Specialist. |
| provide and your contributions are completely tax | | | | |