BASE^® Blog

Health care costs increase yearly at an average rate of 5.5% (cms.gov).  Every business feels it, but certainly more than anyone is the small business with 50 or fewer employees.  So, what can a small business owner do if they want to provide their employees with health care coverage, but cannot afford to?  Set up a Qualified Small Employer HRA (QSEHRA).

The BASE® Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows small employers with less than 50 full-time employees to set aside a fixed amount of money each month, tax-free, that employees, who maintain Minimum Essential Coverage (MEC), can use to purchase their individual health insurance or use on out-of-pocket health care.

With the help of BASE®, employers can be assured they have a compliant benefit option when offering a group health plan is not an option.  Plus, employees will know how much they will have available to them for reimbursement of qualified medical expenses.  BASE® makes enrolling in the QSEHRA simple and helps save thousands in valuable tax dollars.  How it works is simple:

1. Design the Plan – the employer chooses the limit on how much to reimburse their employees and what kind of health care expenses, such as insurance premiums and qualified health care expenses to reimburse.  For 2020, the maximum contribution limits for self-only are $5,250 and for family are $10,600. 
2. Employee Pays for Health Care – employees pay for health insurance and out-of-pocket health care costs, then submit for reimbursement.
3. Employer Reimbursement – once submitted and substantiated, the employer reimburses up to the maximum contribution based on what they established.

The BASE® QSEHRA not only benefits the employer, but the employee and their dependents as well.  The employer is able to retain and attract employees with an increased benefits package, deduct all reimbursements as a business deduction, establish better control of funding limits, and have peace of mind knowing that all legal and administrative concerns are taken care of by BASE®.  The employee now has additional money each month to help with the rising costs of their health care, realize more take-home pay with reimbursements as non-taxable income, and have an easy, and convenient, way to pay for their health care expenses.

Stacey Davis, a BASE® Sales Representative gets to talk to a lot of businesses interested in the QSEHRA and finds that it is a great fit for smaller business owners, such as mom & pop stores, and business owners with up to 49 employees.  Stacey reminds employers that employees must have Minimum Essential Coverage (MEC) to qualify but can be covered by their spouse’s employer and still get reimbursed for their health care expenses.  A great point is that all expenses reimbursed to the employee are 100% tax deductible through the business and helps to save the employer on payroll taxes.  

At the end of the day, there are so many reasons as to why a small business owner would want to enroll in the BASE® QSEHRA.  The top 2 reasons?  1)  the employer is no longer able to provide a group health plan due to cost, and 2) the employer wants to offer their employer a means of paying for out-of-pocket health care spending.

For more information on the QSEHRA and how it can save a business owner thousands in valuable tax dollars while still providing an attractive, and competitive, benefits package, call BASE® at 888-386-9680 or visit www.BASEonline.com.

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Health Reimbursement Arrangements (HRAs) have become an essential employee benefit in recent years, continually evolving and helping employers and employees save valuable tax dollars each year.  In just the past three years, three of the most popular HRAs have been rolled out – Qualified Small Employer HRA (QSEHRA), Individual Coverage HRA (ICHRA), and the Excepted Benefit HRA (EBHRA).

One of the newest, the BASE® Excepted Benefit Health Reimbursement Arrangement (EBHRA) was signed into law for January 1, 2020.  It is for employers of all sizes to reimburse their employees for certain medical expenses not covered by their group health plan.  While an employer must offer group health insurance, employees are not required to enroll in the group health plan, to benefit from this HRA.   

The EBHRA can help boost an employer’s current benefits plan by providing their employees with an additional tax-free $1,800 per plan year for out-of-pocket medical expenses and non-insured medical expenses.  The EBHRA can reimburse copays, deductibles, prescriptions, dental and vision insurance premiums, COBRA continuation coverage, and short-term limited duration insurance premiums.

Just like other HRAs, both the employer and employee will benefit.  The EBHRA provides employers with the opportunity to further expand their benefit options, more options in designing the health care coverage that works best for the business, and saving valuable tax dollars.  The employee has more choices to choose from to fit their health care needs and have an additional $1,800 to put towards their health care expenses.

For more information on how to boost a business’ current benefits plan with the Excepted Benefit Health Reimbursement Arrangement, call BASE® at 888-386-9680 or visit www.BASEonline.com.

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With so many rules and regulations a business must follow it is often difficult to know which ones apply and how serious the penalties could be if not applied.  One of those regulations:  The Employee Retirement Income Security Act (ERISA). 

The Employee Retirement Income Security Act (ERISA) protects the interests of employees (and their beneficiaries) and safeguards any employer-sponsored plan.  ERISA is a federal law that governs how employers provide benefit plans and the Summary Plan Description (SPD) to the participants.  The law establishes standards to ensure that plan funds are protected, how the qualified participants receive their appropriate benefits, and their access to the health benefit plan information.

During the fiscal year of 2019, the DOL reported recoveries of $2.5 billion with a 56.25% increase over 2018.  Recoveries are the result of imposed penalties up to $110/per day per employee for employers failing to adhere to ERISA rules and regulations.  This increase affirms that the DOL ERISA enforcement program remains very active, is taking their job seriously, and continues to find breaches of ERISA.  In recent years, much focus has been on retirement plans, but health plans have become an increasingly high DOL priority.

Many businesses do not understand how serious it could be if their business fails to comply with ERISA.  Failure to comply can expose their company to ERISA litigation and DOL or IRS monetary penalties.  In a court case, Harris-Fry v. United of Omaha Life Insurance Company, a federal district court case awarded $74,140 in penalties on a plan administrator for failing to simply provide the plaintiff with the plan documents requested in a timely manner.  The court imposed the maximum penalty of $110 per day (for 674 days) to punish the plan administrator for failing to respond to the plaintiff’s request.

To be in compliance and avoid the steep DOL penalties, BASE® has just the product.  The BASE® ERISA Wrap was designed to help employers fulfill the ERISA requirements for an SPD and Plan Document.  These documents 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.  Within the requirements, plan administrators must provide their participants with information about the health plan features including plan rules, financial information, documents on the operation/management of the plan, and funding.

Virtually all employers, regardless of size or number of participants, who provide health benefits to their employees are required to have an ERISA Wrap.  To avoid not being in compliance with ERISA, BASE® suggests a full review of the business’ compliance measures in place.  For more information on the ERISA Wrap, call BASE® at 888.386.9690 or visit www.BASEonline.com.

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