Quick Facts About the HRA vs. HSA

While BASE® does not administer HSA's, Business Partners are frequently asking us about the differences between the two employee benefit plans. Following are some of the main things to remember when advising employers with multiple employees:

 - If an employer is going to reimburse an employee’s medical expenses through an HRA, it will make the employee ineligible for contributions to their HSA.
 - If an employer is going to reimburse an employee’s medical expenses and wants to allow employees to be eligible for contributions to their HSA, employers have the option to expand their benefit options with an FSA.
 - If an employer really wants to have an HRA and HSA, BASE® would recommend a post deductible HRA.
 - If the individual is enrolled in Medicare they are no longer HSA eligible.
 - If a spouse has an FSA through an employer, their spouse is ineligible to contribute to the HSA account –even if they have a qualifying HDHP.

There are conditions that must be met in order for employees to be eligible. Remember that any employer contribution to an HSA is immediately owned by the employee. When employers contribute to an HSA they lose control over that income immediately. The cost effective way to help employees and keep control over their bottom line is the Integrated HRA. Call 1-888-386-9680 to discuss HRA’s vs. HSA's in more detail.

See Notice 2004-45 and Notice 2008-59 Q-3 and Q-4 for more technical information.

Anne Case
BASE® - Director of Marketing & Communications

BASE® Introduces New Compliance Service

BASE® announced a new compliance service available to assist any employer offering benefits (ie. medical plan, dental plan, Health Savings Account (HSA), Flexible Spending Account (FSA), prescription-drug plan, etc.) to their employees.  The BASE® ERISA Wrap is designed to help employers fulfill the ERISA requirements for an SPD and Plan Document.

What is ERISA?
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for health plans in private industry to provide protection for individuals in these plans. ERISA requires plans to provide participants with plan information, including important information about plan features and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty. Plan information as described by ERISA is Summary Plan Descriptions and Plan Documents. 

What employers are subject to ERISA?
Regardless of business size or number of participants, employers that offer any of the following benefits are subject to ERISA (The only entities exempt from ERISA are government employers and bona fide church groups.): Medical Plan, Adoption Assistance, Dental Plan, Dependent Care Reimbursement Account (DCRA) Plan, Health Care Flexible Spending Account, Health Reimbursement Account (HRA), Health Savings Account (HSA) Contributions, Life Insurance Plan, Long-Term Disability Plan, Prescription Drug Plan, Short-Term Disability Plan, Vision Plan. 

Why is it important to comply with ERISA?
According to the Department of Labor’s Strategic Plan for Fiscal Year 2014-2018, a random-sample of plans shows seven out of ten plans fail to comply with some aspect of ERISA’s provisions. If employers are found out of compliance they will face a fine of $110 per employee for everyday that they are out of compliance.     

Think you already have the necessary documents?
Many companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document--but they don't include the required or recommended provisions that protect the plan and the employer.

How can you become compliant?
BASE® will provide a Wrap SPD & Wrap Plan Document (also known as the BASE® ERISA Wrap), which are designed to wrap around existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA. The BASE® ERISA Wrap will cover all required benefits that the employer offers. 

ERISA requires employers to give plan participants in writing the most important facts they need to know about their health benefit plans, including plan rules and documents on the operation and management of the plan. BASE® is proud to offer a solution to help keep employers ERISA compliant.  More information can be found at www.BASEonline.com/ERISA_Wrap.html or by calling 1-888-386-9680.

Tom Stiles
BASE® - Digital Marketing Assistant

Tax Time: Going Beyond the Standard and Averages

When reading through BASE® information it is often stated that the average client saves over $4,500 in annual tax savings each year.  Clients are able to do this by establishing the BASE® HRA and going beyond the standard 1040 deduction.  What better way to provide more of an explanation of what “going beyond the standard” and “average” really means, then by sharing a real true story of someone who has utilized the HRA.

 

Enrolled since 2004, BASE® client Daniel S. out of Seattle, Washington continues to see the value of the BASE® HRA. “My wife and I are self-employed, selling real estate. After we were introduced to the BASE® HRA we saw that it was very practical and helpful for us to use.”

 

Daniel pointed out that, “The BASE® HRA has proved to be a great benefit to us. It allows us to deduct our medical costs from our income and save valuable tax dollars.”  And averaging over $5,000 in HRA tax savings over the years, Daniel and his wife are just one of thousands of business owners saving thousands in tax dollars each and every year with the BASE® HRA. 

 

The HRA allows business owners to go beyond the standard 1040 deduction, and allows them to claim health care expenses as a deduction on their business tax return.  This now makes health care expenses deductible from a federal, state and self-employment tax standpoint. Daniel relies on BASE® to walk him through any questions he has regarding his plan, and said “The BASE® staff is always very helpful when I call in and have questions. There was one instance where I needed to call in and receive help regarding a simple IRS form and I asked, “Am I doing this right?” The instructions that the BASE® Support Specialist gave me were very clear and very quick.” 

 

He continued to express the value of establishing this plan by saying, “If other eligible small business owners are not utilizing a BASE® HRA I would tell them that it is an extraordinary benefit and would ask them, “What would be the point of not looking into it? It has saved me and my wife a lot of money.”

 

While the savings we see average out to be over $4,500 in tax savings each year – that is a lot of money when it comes to small business and isn’t just your standard tax deduction!  Learn more today! 

Anne Case
BASE® - Director of Marketing & Communications