BASE^® Blog

While small business owners are looking to keep their employees safe and healthy, their health care costs could be unpredictable for 2021.  It is a brand new (pandemic) world out there since COVID-19 introduced a significant amount of uncertainty in projecting health care costs for 2021.  One thing for certain is Health Reimbursement Arrangements and the valuable tax dollars that businesses of varying sizes could save.

Health Reimbursement Arrangements (HRAs) are tools for business owners to increase their tax savings and to offer tax-free health benefits.  An HRA may reimburse for qualified medical expenses such as co-pays, deductibles, and health insurance premiums.  These IRS-approved tax savings plans benefit both the employer and employee, saving both valuable tax dollars each year.

BASE® Section 105 HRA – allows small business owners the opportunity to deduct up-to 100% of health care costs, including their family’s health insurance premiums and out-of-pocket medical expenses as a business deduction expense.  On average, BASE® clients save over $5,000 each year in valuable tax dollars.

The Section 105 HRA certainty for 2021 looks to still save employers valuable tax dollars and help them find more ways to deal with the annual rise in health care costs.  The Section 105 HRA can help reduce the financial impact of health care expenses when 2021 could possibly be a hard year for self-employed businesses to find the funds to pay for health care.  

BASE® Integrated HRA – allows employers to suppress the yearly increases most associated with traditional forms of health care, coupled with a high-deductible group health plan.  On average, BASE® clients save 10-50% each year on health insurance premiums.  

The Integrated HRA certainty for 2021 looks to still help employers save on the cost of the health insurance premiums.  In a recent study, health insurance premiums could increase between 4-40% to cover the losses they did not plan for in 2020, and to cover the anticipated costs for 2021.  With the predicted increase, the Integrated HRA can still help businesses keep premiums low while providing their employees with a way to pay for their health care expenses.

BASE® QSEHRA & BASE® ICHRA – The Qualified Small Employer HRA (QSEHRA) allows employers to help employees pay for qualified medical coverage and out-of-pocket medical expenses.

The Individual Coverage HRA (ICHRA) allows employers to provide employees with tax-preferred funds for qualified insurance premiums and/or medical expenses, offering a more personalized, account-based health benefit.

Both the QSEHRA and ICHRA certainty for 2021 looks to still help employers provide employees with tax-preferred funds to pay for qualified health care costs while saving thousands on not providing a traditional group health plan.  With the predicted rise in health care expenses, a small business may not be able to afford their employees with the health care benefits they deserve, but with these two HRAs, employers can keep their health care costs low, while still being able to provide their employees with benefits.  BASE® clients save thousands by not providing traditional group health plans while still providing an attractive benefits package.

BASE® EBHRA – The Excepted Benefit HRA allows employers of all sizes, that offer a traditional group health plan, to provide an additional $1,800 pre-tax to reimburse employees for out-of-pocket medical expenses and non-insured medical expenses.  BASE® clients save on employees’ pre-tax reimbursements and further expand its benefit options.

The EBHRA certainty for 2021 looks to still help employers provide their employees with additional funds to help pay for their health care expenses.  Health care costs are so unpredictable for 2021 and providing additional funds through an EBHRA will offset any surprise health care costs.

The pandemic-induced economic downturn may also mean many employers, big or small, are less likely to offer, or keep, health care coverage - BASE® can keep that from happening!  For more information on Health Reimbursement Arrangements and saving thousands with this cost containment solution, call BASE® at 888.386.9690 or visit www.BASEonline.com.

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On June 8, 2020, the Internal Revenue Service (IRS) proposed regulations addressing proposed regulations on the treatment of amounts paid for two medical arrangements:  Direct Primary Care (DPCs) Arrangements and Health Care Sharing Ministries (HCSMs).  Currently, HCSM membership fees and DPC payments are not for medical care under Section 213(d), but through the new proposed regulation, in response to Executive Order 13877, would allow the membership fees and payments for direct primary care to be treated as an eligible medical expense.

This proposed regulation would treat the HCSM membership fees and DPC payments as expenses related to certain types of arrangements as eligible medical expenses under Section 213(d) of the code through an employer’s Health Reimbursement Arrangement (HRA).  The employee would be reimbursed for HCSM membership fees and DPC payments through the employer sponsored HRA.

Code Section 213 allows individuals to deduct medical care which includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

Health Care Sharing Ministries are formed by members of religious groups that share health care costs without having to meet the requirements of the Affordable Care Act (ACA) for covering a comprehensive set of benefits.  These individuals share their medical bills through the ministry and receive payments from other members to help with medical bills.

Direct Primary Care Arrangements are contracts between an individual and one (or more) primary care physicians under which the physicians agree to provide medical care for a fixed annual or periodic fee without billing a third party.

This regulation will enhance employers’ and employees’ ability to use the HRA to pay for medical services without purchasing traditional group health insurance.

The proposed regulations would apply for tax years beginning on or after the date they are published in final form.  Currently the IRS is accepting comments, so the final regulations are expected after August 10, 2020.  Stay tuned as BASE® will keep you updated when additional information becomes available! 

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