Prior to 2020, some small businesses had found it difficult to provide benefits to their employees under a traditional group health plan, but as of January 1, 2020, a new regulation expanded how Health Reimbursement Arrangements could be used and how employers pay for employee health care coverage. The rule was set to benefit small employers, making it easier for them to compete with larger businesses by creating another option to provide their employees with a competitive benefit package. The Individual Coverage Health Reimbursement Arrangement (ICHRA) was projected to benefit over 800,000 small businesses and help 11.4 million employees and their family members purchase individual insurance coverage using HRA funds.
The BASE® Individual Coverage HRA (ICHRA) is a tax-advantaged health benefit used to reimburse employees for personal health care expenses, such as individual health insurance premiums and out-of-pocket medical expenses. The ICHRA provides a health benefit to better fit the needs of many businesses, of all sizes. It allows for the opportunity to increase flexibility and employee choice by designing a reimbursement that works for the business for their employees’ individually purchased insurance.
Almost halfway through 2020, what has BASE® been seeing with the ICHRA?
BASE® is on their way to helping many small businesses across the country save thousands of dollars each year with the Individual Coverage HRA, and most are choosing to reimburse both insurance premiums and out-of-pocket expenses. New with this HRA and one of the biggest selling points is the ability to establish different reimbursement rules for different types of employees (i.e. classes). These classes allow for a flexible benefit solution, and many businesses are commonly separating their salary and hourly employees to determine the benefit they receive.
According to Casandra Mueller, BASE® Sales Representative, she knows that for employers keeping and retaining employees is hard. “Finding a way to offer benefits that are tax-free to the employee and a tax-deductible expense to the employer is what makes the ICHRA beneficial. The ICHRA is a great avenue for employers to take that first step into offering benefits to employees, even if it is a small dollar amount.”
With the ICHRA, both the employer and employees realize benefits. The employer can provide their employees with a better choice in health care, with the employee choosing their own health insurance plan meant to fit the employees’ lives, as well as economic and family status. The ICHRA offers better cost control. The employer does not need to worry about increases in insurance premiums since the employer establishes an affordable monthly allowance for employees to put towards individual health insurance premiums and out-of-pocket medical expenses. This creates an expected monthly amount for both the employer and employee with no surprises!
Talk to BASE® about getting started with the ICHRA today. Call 888.386.9680 or visit www.BASEonline.com.
When an employer decides to offer health benefits, they may not fully understand that by providing an employee benefits plan they are subject to a federal law called ERISA. Not complying with ERISA can put a business at risk for steep penalties with the Department of Labor (DOL).
The Federal Employee Retirement Income Security Act (ERISA) is a federal law that governs how employers provide benefit plans to their employees. It protects the interests of the employee benefit plan participants and their beneficiaries, and mandates that the plan sponsors provide a Summary Plan Description (SPD) to their participants. The ERISA laws established standards to ensure that plan funds are protected, and the qualified participants receive their appropriate benefits. It also ensures that the participants have access to the information about their health benefit plan.
The BASE® ERISA Wrap is designed to help employers fulfill ERISA requirements. It is designed to wrap around the existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA.
Many employers mistakenly assume that insurance contracts, certificates of insurance, and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document, but they do not include the required or recommended provisions that protect the plan and employer from the DOL penalties. Any business, regardless of the number of employees or how the business is structured, is required to have ERISA documentation in place if the employer provides their employees with health benefits.
If an employer can answer “yes” to one of the following questions, the benefit is an ERISA-qualified benefit.
- Is there a plan, a fund, or a program in place?
- Does the employer sponsor the plan, fund, or program?
- Does the employee pay pre-tax contributions?
- Is the employer providing ERISA listed benefits, such as medical care, benefits for sick, accident, disability, unemployment benefits, vacation benefits, etc.?
- Does the employer provide benefits to the plan participants and/or beneficiaries?
The recently enacted Federal Families Coronavirus Response Act (FFCRA), means that employers with ERISA qualified benefits have another reason for needing an ERISA Wrap in place to ensure compliance. BASE is re-issuing the proper documentation to our clients in order to protect the plan and the employer by making the most recent language updates available.
The BASE® ERISA Wrap documentation has been updated to reflect certain COVID-19 related changes for group health benefits. The updated documents now provide that coverage for group health benefits will continue during a COVID-19 related paid leave, as required by the FFCRA, and is federally required to be shared with plan participants. The ERISA Wrap will protect these business owners for all the benefits they offer by providing an SPD that will include the required ERISA language and the detailed instructions on the proper way to distribute these documents to their employees.
Many employers may be unsure if ERISA applies to their business and their benefit(s) or what to do with the updated ERISA information. It can be confusing, but BASE® is here to make sure the business is in compliance and is not at risk for DOL penalties. If a business is unsure if their benefits qualify for ERISA or if they have the most updated information, call BASE® at 888.386.9680 or visit www.BASEonline.com.
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