health reimbursement account is an employer-funded group health plan that small business owners can link to the health plans they offer their employees. Think of it as a health spending account that employees use to pay for their share of qualified health care costs.
Standard HRA Plan Designs
You can have multiple plans in place to allow for maximum flexibility. Because of this flexibility, you can design the plan to meet the unique needs of your company and the employees. Some eligible expenses include doctor visits, hospitalizations, and prescription drugs. Standard plan designs include the following:
Because you contribute funds to employees' HRAs on a pre-tax basis, the funds are not taxable to the employee. That also means that employees cannot claim a tax deduction for an expense reimbursed by their HRA. Also, HRA funds cannot offset health insurance premiums.
Accessing Funds in a HRA
The tax-free funds you allocate to a health reimbursement account may be rolled over for use in following years, and there is no limit to the amount of money an employer can contribute. Employers decide how employees access funds in HRAs, but the three most commonly preferred methods are:
As the employer, you fund and own your employees’ HSAs, and can decide whether they can access unused dollars for qualified medical expenses after they leave the company.
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Sackett Health Insurance covers your health insurance needs throughout Sonoma County. For more information on the benefits of a health reimbursement account, contact us today. Like us on Facebook, find us on Google+, and subscribe to our blog.
A health savings account, also known as an HSA, is a combination of a tax favored savings account and a high deductible health insurance policy. The money that builds up in the savings account can be used to help cover the cost of the deducible. Once the deductible of the policy is met, the insurance will start paying for health needs. The money that is left within the savings account is yours to keep after all payments are made, and can even earn interest.
There are many benefits of investing in a health savings account, including:
In order to take advantage of all the benefits that are provided by an HSA, the savings account is required by law to be combined with a qualified high deductible health insurance policy.
For all of your health insurance needs throughout Sonoma County and to ensure that you have the right amount of coverage, contact Sackett & Associates Insurance Services. As an independent insurance agent, we will work with you to ensure that you have the right amount of protection, all at the right price for your budget.
HRAs deliver numerous benefits to both employers and employees, along with a few downsides. In all cases, HRAs help offset healthcare costs by using pre-tax dollars.
Critical HRA Components
Some Benefits of HRAs
If you are considering establishing an HRA for your business in or around Sonoma County, California, contact Sackett & Associates Insurance Services. We have been serving Northern Bay Area individuals and businesses for their health insurance needs for over 30 years. Sackett & Associates Insurance Services offers valuable and free quotes for you and/or your business to find affordable, effective healthcare solutions.