BASE^® Blog

Creative Benefit Strategies Help Contain Costs

With the cost of health care on the rise every year, it is not surprising that consumers are concerned about their health care needs, on top of the cost of maintaining a healthy lifestyle and their future.  All too often the healthy choice is almost always the more expensive option.  How many times have you thought about substituting a healthy side salad for fries, but don't necessarily want to pay the extra $2 to do so?

For many, health care just doesn't fit into the budget.  When the burden of health care costs become too much for an employee to handle, they either start to look elsewhere for work, or the necessities become stretched and other things such as retirement and college take to the back burner.  (Health and Financial Well-being:  How Strong is the Link?).

So what can a business owner do to combat the rise of health care AND save the business money WHILE retaining their great staff AND offering the best benefit package?

The BASE® Health Reimbursement Arrangement (HRA) plans are designed for all types of businesses to assist with health care expenses, and provide a business with tax savings.  Every plan allows the business owner the opportunity to deduct up-to 100% of health care costs as business deductions.  The HRA is an IRS-approved, employer-funded, tax-advantaged employer health benefit plan that will reimburse employees for their out-of-pocket medical expenses and help contain the cost of health insurance premiums.

According to the Centers for Medicare and Medicaid, overall health care spending increased 4.3% with consumers spending $10,348 per person in 2016.  (Health care spending passes $10,000 per person in 2016).

With a BASE® HRA in place, employees can continue to work, save for retirement, and save for their children's college education, while using their money, set-aside from their employer-sponsored HRA, to pay for their health care costs.  This money can be used for doctor fees, chiropractic visits, vision fees, prescriptions, dental fees, hospitalization, and much more!  Health care (and how to pay for it) is easier now more than ever.  Consumers can enjoy peace-of-mind knowing they can continue to afford their healthy lifestyle, the surprises of the future, AND their health care needs.

At the end of the day, 80% of consumers say they wish "doing healthier things didn't cost so much."  (Health and Financial Well-being:  How Strong is the Link?).  But with an HRA in place, this "wish," is granted.  Health Reimbursement Arrangements significantly benefit the employer and employee.  It helps to reduce the financial impact of health care expenses, create a tax benefit for the employer so all reimbursements are 100% deductible as a business expense, and helps the employee with cost savings with additional money to help with the rising cost of health care.

To learn more about creative benefit strategies to contain the cost of health care, contact BASE® at 1-888-386-9680.

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Introduced with the signing of the 21^st Century Cures Act on December 13, 2016, the BASE® Qualified Small Employer Health Reimbursement Arrangement (QSE HRA) helps employers offer their employees a more attractive benefit package.  This new legislation instituted an arrangement allowing employers to help their employees pay for medical coverage for themselves and their families, tax-free.  The employees can use the money for insurance premiums, co-pays, deductibles, eye care, dental care, or any other qualified health care expense.  The amount provided is tax-free to the employees and 100% tax deductible to the employer.  With a QSE HRA, employees have the ability to secure their own medical insurance either on or off the Marketplace.

Additional regulations were recently introduced by the IRS with Notice 2017-67.  Few significant changes for the QSE HRA are in store; the Notice includes proposed regulations providing more defined guidelines with a request for feedback by January 19, 2018.  In the meantime, these new regulations took effect on November 20, 2017.  Failure to comply could result in a $100 per employee, per day penalty.

So what is in store for the QSE HRA in 2018?

Statutory Dollar Limits increased to $5,050 self-only/$10,250 family

• Must provide proof of Minimum Essential Coverage (MEC)
• Written Notices must be distributed 90 days prior to every plan year or on/before first day of eligibility while including eligibility date and limits
• Offered on same terms to all employees

Some other requirements mentioned in Notice 2017-67 regarding the QSE HRA for 2018 are Substantiation Requirement, Coordination with Premium Tax Credits, Failure to Satisfy the Requirements to be a QSE HRA, Interaction with HSA Requirements, and Effective Date.

To learn more about the NEW QSE HRA Notice 2017-67, click the link to read the full notice, or call 1-888-386-9680 and let BASE® help you fully understand what is in store for the QSE HRA in 2018.

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The BASE® Flexible Spending Account is a good option that could provide extra funds during the expensive holiday months. The FSA is a BASE® product under the 125 Cafeteria Plan that employers can offer to their employees to help reduce the taxation on out-of-pocket medical expenses not covered under insurance plans. It is an easy way for employees to save tax dollars throughout the year by setting aside money from their paycheck on a pre-tax basis into a special account that can be used to pay for certain out-of-pocket medical expenses.

The FSA can work for many different kinds of employers. However, the ideal candidate is a company that has one or more employees who pay for qualifying non-insured medical expenses such as dental, vision, co-pays, deductibles, prescriptions, and chiropractic. Not to mention, a variety of other qualifying eligible expenses such as band aids, sunscreen, contact lenses, etc.

While this product greatly benefits the employee, it helps employers save money as well. When employees choose to participate in the plan it reduces the employers share of FICA and FUTA taxes on the elected amount. Employees have the opportunity to save tax dollars throughout the year on over 4,000 eligible expenses. The higher the plan utilization, the more the employer saves!

Leah L., an FSA client, realized the benefits the FSA provided to her employees. “We originally decided to implement the BASE® 125 plan for the tax savings it provided, and I would say that is the biggest benefit.  Not only do our employees save when funds are transferred from their wages on a pre-tax basis, but our company also sees valuable tax savings. Not everyone is great at saving for a rainy day, but this has helped many of our employees be able to save for medical expenses, both expected and unexpected. This plan is very user friendly for both the employees and employer, and I would definitely recommend taking advantage of the BASE® 125 plan.  The BASE® staff is very easy to work with, and is great at helping out in a very timely and efficient manner.”

One proven way to maximize participation is by simplifying the reimbursement process. BASE® offers a variety of ways to reimburse medical expenses including the swipe of a card or the use of a mobile device with photos of receipts. Colleen, another FSA client, mentions the benefits of the FSA for her company and the opportunity for employees to use a debit card. The debit cards make the process seamless and can increase participation. “Aside from the tax savings for both our firm and our employees, one of the biggest benefits is the debit card. It is extremely convenient to swipe the card at the point of service for covered items and services.”

Contact BASE® today to see how your company or clients can start saving today with the BASE® FSA!

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