Health Reimbursement Accounts (HRA)
Health Reimbursement Arrangements offer clients and their employees choices that help them manage the rising costs of health care. As insurance costs continue to climb, the HRA is becoming a successful benefits solution. Offering flexibility in plan design for businesses with consumer choices for employees, clients can rely on an HRA to help them regain control of their health costs. With an HRA, clients have a high degree of flexibility in plan design. The contribution amount, type and payment order of expenses, whether or not to roll over funds and whether to place a cap on rollover amounts are a few options. Based on Section 105 of the IRS code, the HRA allows companies to fund certain qualified expenses and high deductible payments. Employees use these funds to pay for eligible, out-of-pocket health care expenses and high deductible payments. Employees pay no taxes on their reimbursements. The Employer contributions to the plan used by participants are also 100% tax deductible.
Healthcare Savings Accounts (HSA)
Health Savings Accounts are portable, tax-advantaged savings accounts that can be likened to a medical IRA. Unused money is rolled over from year to year (there is no “use it or lose it”), money grows through interests and investments, and it can be used to pay for a wide variety of health and wellness related products and services. Any adult who is covered by a high deductible health plan (and has no other first dollar coverage except for preventive care) may establish a HSA. HSA-eligible health plans reduce health care costs for U.S. business dramatically, with some studies citing as 20-30% lower cost than average premiums. Part of these savings should be used to provide the employee with a recurring contribution to their HSA representing a portion of their deductible. This practice allows the employer to recognize significant cost savings while reducing the out-of-pocket health care cost risk and providing a portable pool of health care money managed directly by the employee.
Consult the Chicago Insurance Agents at The David Agency today to learn how we can help develop personal insurance, business insurance and employee benefit plans that are right for you and your business.