As of May 2, 2020, more than 27 million hard-working Americans lost their employer-sponsored health insurance. Prior to COVID, small to mid-sized businesses struggled to provide a competitive benefits package for their employees due to limited options that are too expensive to administer and sustain. COVID has only made this worse, leaving employers hoping their superhero would fly in to save the day and help provide a custom benefits plan.
Here ICHRA comes to save the day! The HRA employers need to save their employee benefits - the Individual Coverage HRA!
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, regardless of size. 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.
The NEW ICHRA is small, but mighty, and has both the employer and employee realizing benefits.
- No Size Restrictions. The ICHRA is available to any size employer.
- Employer Satisfaction. Will attract and maintain employees with an increased benefits package.
- Tax Benefit. All reimbursements to employees are 100% deductible as a business deduction.
- Controlled Funding Limits. Employer has the freedom to choose the level of reimbursement for their employees.
- Savings. Saving valuable money by not providing a traditional group health plan.
- Cost Savings. Employees have additional money to help pay for their health care premiums and/or other qualified medical expenses.
- No Taxes. All reimbursements are tax-free to the employee.
- Easy to get reimbursed for medical expenses.
The ICHRA will allow employers to set a budget and help create some health care predictability. With all the flexibility the ICHRA provides, this employee benefit is the “Mighty Mouse” an employer has been looking for. For more information, call BASE® at 888-386-9680 to discuss the ICHRA or visit www.BASEonline.com.
When implementing a Health Reimbursement Arrangement (HRA) into a business, it can come with its own set of challenges and be confusing for an employee. BASE® has a few tips to help every business experience success with an HRA, save valuable tax dollars, and provide the employees with a competitive benefits package!
A Health Reimbursement Arrangement (HRA) is a tax-advantaged, employer-funded, benefit plan in which employees are reimbursed tax-free for qualified medical expenses not covered by the employer’s group health plan, helping both the employer and employee save on health care expenses.
4 tips for implementing a successful, and compliant, HRA:
- Determine an HRA allowance. Helpful tip: the allowance amount will depend on the type of HRA. Some HRAs have maximum contribution limits, while others do not. If the employer decides to implement a BASE® Qualified Small Employer HRA (QSEHRA) or the BASE® Excepted Benefit HRA (EBHRA), there are maximum contribution limits. With the QSEHRA, the 2020 contribution limit is $5,250 for self-only and $10,600 for family, and with the EBHRA, the 2020 contribution limit is $1,800. HRAs that do not have contribution limits, the allowance amount is set at the discretion of the employer.
- Employee eligibility. Helpful tip: employee eligibility will depend on the type of HRA. Each HRA will reimburse a different group of employees. With the QSEHRA, all full-time employees are eligible that have minimum essential coverage (MEC). With the BASE® Individual Coverage HRA, the employer determines eligibility based on employee class. With the BASE® Integrated HRA, all employees that participate in the company’s group health insurance qualify.
- Helpful tip: the reimbursement will depend on the type of HRA. Employees will incur a qualified health care expense, provide documentation, and submit for reimbursement. The employer will evaluate if the medical expense is qualified to be reimbursed, or have a third-party administrator such as BASE®, to substantiate the qualified expense. Depending on the HRA, health insurance premiums, copays, prescriptions, over the counter (OTC) medicine, and other qualified medical expenses not covered by insurance can be reimbursed.
- Legal documents. Helpful tip: not having legal documents in place could cost an employer regardless of the type of HRA. A business needs to be in compliance, otherwise the HRA will be at risk for IRS monetary penalties due to improper documentation. With the BASE® ERISA Wrap, BASE® helps employers fulfill the ERISA requirements and the proper documentation that is required to protect the plan. The Wrap SPD and Plan Document 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.
Success means seeing a favorable or desired outcome, so let BASE® provide you with more information on how to see success with the right HRA. Whether a business is self-employed or has multiple employees, there is an HRA for every business type. Call BASE® at 888-386-9680 or visit www.BASEonline.com.