How HRAs Work for Employers
HRAs (Health Reimbursement Arrangements) are no longer an untested opportunity. Some businesses were hesitant to implement the HRA because an IRS approved plan for lower health care premiums seemed too good to be true. Well, believe it! The HRA is helping many MMMA members lower health insurance premiums now and for years to come
The fact is that an HRA is a tested opportunity to lower health care premiums with a high deductible insurance plan. An HRA is an expansion of IRC (Internal Revenue Code) Section 105 that has been around for many years. What’s new is the HRA allows employees to roll over unused funds to use in later years, - even into retirement. In addition, an HRA can be used to reimburse health insurance cost for employees.
Here are two different HRA plan designs that MMMA members have already put in place and are working!!!!. You could follow one of these plans or with the flexibility provided by the HRA, design the plan that best fits your company and employees’ needs.
1. BRIDGE PLAN
. The HRA bridge plan allows employees to use their HRA to cover expenses which apply to all or part of their insurance plan’s deductible. The HRA provides the ‘bridge’ until the health plan deductible is met.
An employer can dramatically cut his insurance cost with his traditional carrier (Blue Cross, United HealthCare, or GHP, etc.), while still providing the employees with a plan which was similar to their plan before the HRA. This accomplishes several things:
· Cuts premiums (Savings can be used to fund the HRAs)
· Makes employees aware of costs of care
· Rewards employees who are responsible consumers
· Limits portion of your health care budget susceptible to rate increases
In addition, by putting in a Flexible Spending Account (FSA) with a Benny Card, employees can pay for their share of the health care pie with pre-tax dollars. A Benny card is a debit card employees can use to pay their co-pays and out-of-pocket medical expenses.
2. COMPREHENSIVE PLAN
. The HRA comprehensive plan (or as we like to call it ‘the turning over of the keys to the car’ approach) allows the employee to pay all medical expenses not covered by insurance as he chooses. These expenses include, but are not limited to, vision and dental cost, chiropractic services, co-pays, deductibles, and insurance premiums. This accomplishes many of the same things which a Bridge Plan does, but puts more of the responsibility of how health care dollars are spent on the employee.
The HRA is a wonderful tool to deliver healthcare more efficiently to your employees
Please contact Sheelah at the MMMA office , 636-537-1360 or (800) 467-MMMA (6662), or by email to Sheelah@mmma.org to learn how this new benefit plan can lower and control your health care costs.
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