5 Reasons Why an HRA is the Better Option for Local Governmental Employers

Governmental organizations are moving towards High Deductible Health Plans (HDHPs) to help cut the cost of health care. According to National Insurance Service (NIS), they have found that Health Reimbursement Arrangements (HRAs), in conjunction with a HDHP, are a better fit regardless of plan design or insurance carrier.

The BASE® Integrated Health Reimbursement Arrangement is an employer-funded plan that reimburses employees for qualified out-of-pocket medical expenses. By coupling a group health insurance plan with the Integrated HRA, employers claim a tax deduction for the reimbursements made through this plan, and the reimbursement dollars received by employees are tax-free.

5 reasons the BASE® Integrated HRA may work better for school districts, counties, cities, & other local governmental employers:

  1. No Restrictive Plan Design Requirements.The employer is free to customize a plan that works for the business - any plan, no matter the deductible, can be used with no contribution limits.
  2. All Employees are Eligible to Participate.Current employees, including retirees, can participate.
  3. Rollover allows employers to save more and have more options. An employer can design the HRA so that the employee shares in a portion of the unused funds.
  4. Eligible Reimbursements.The HRA can be used tax-free to reimburse eligible health care expenses such as deductibles, co-pays, prescription drugs, eyeglasses, dental, and other qualified expenses.
  5. No Conflict of Interest.HRAs are not tied to any insurance carrier which gives an employer more flexibility when changing carriers.

Not only does the HRA do the above, but the plan criteria reflects what has been agreed to between the employer and employee giving local plan control, and gives employees an increased sense of responsibility for their health care choices and helps bend the curve of the health care costs.

Take a look at school districts for instance. School districts looking to save money and provide their employees with a competitive benefits plan are finding just that by implementing an HRA. Two examples below:

  • A school district saved $690,000 in an eleventh-hour insurance switch to a plan with an HRA and a higher deductible to get lower health insurance premiums.
  • A school district on the west coast switched insurance in favor of a new high deductible plan and an HRA, helping them to save $275,000.

BASE® has worked with many school districts to provide valuable savings for tight budgets. Michella Drummond, BASE® Sales Representative, worked with an Iowa school district to help them save thousands of valuable tax dollars. The school used the HRA to buy down on their group health plan and saved thousands by picking the higher deductible plan that kept their employees deductible low.

Casandra Mueller, a BASE® Sales Representative, said, "School districts can save a lot of premium dollars by raising the deductible on their health plan, and then reimburse the difference in deductibles from their previous plan to their new deductible, saving the school district thousands of dollars by being smart with their benefit dollars and only reimbursing the back half of a deductible if an employee needs it."

What the BASE® Sales Representatives want school districts to know is that:

  • All employees have out-of-pocket (OOP) expenses
  • School districts are on tight budgets
  • Districts want to provide their employees with a great benefits package
  • BASE® is here to help

School districts have a set budget, but with the money saved from implementing an HRA, this could mean more opportunities for the school to put savings towards departments that need it the most.

BASE® provides cost-effective benefit options that could save a local governmental organization, such as school districts, $30,000-70,000 a year. If you work with school districts in your area, be sure to reach out to BASE® at 1-888-386-9680 for a savings analysis.

Turn Dependent Care into Tax Savings with the BASE® DCAP

In 2019, only 42% of workers had access to dependent care assistance.  For many Americans, the cost of daycare, supervision for an aging parent, or care of an incapable spouse is a significant monthly expense.  Let BASE® help turn your employee’s dependent care expenses into tax savings!

The BASE® Dependent Care Assistance Plan (DCAP), a fringe health care benefit that allows employees to pay for their employment-related dependent care expenses on a pre-tax basis.  When an employer sponsors a DCAP, employees can elect up to the government established limit of $5,000, having it deducted pre-tax from their paychecks helps to reduce the amount of income subject to taxes.

Under the DCAP, the money set aside on a pre-tax basis can be used for a child/children under the age of 13, a dependent such as a parent, spouse, or sibling incapable of self-care, or disabled dependent that receives care outside the home.

Qualifying expenses for the DCAP are outlined below:

  • Daycare, preschool, and pre-kindergarten expenses
  • Before and after school care
  • Adult and elderly care programs

The biggest benefit to both the employer and employee is the tax savings.  The employee can continue to work and have the peace of mind knowing they are establishing funds to help pay for the cost of their dependent care expenses, and see an increase in their take-home pay by saving on Federal, State, Social Security, and Medicare taxes.

Employees can save 25-40% in taxes for every dollar they elect.  Check out the example below on how an employee could turn their dependent care expenses into tax savings >>>


Based on $5,000 election & 27% tax rate (22% Federal & 5% State)

Monthly Tax Savings:  $112.50

Annual Tax Savings:  $1,350.00

Want to find out what you could be saving?  Check out the BASE® 125 Cafeteria Plan Tax Savings Calculator!

With the addition of this 125 Cafeteria Plan, the employer can offer an enhanced benefits package that will help with recruitment and retention of employees, and reduce the employer’s share of payroll taxes by allowing their employees to elect pre-tax contribution for their dependent care.

No matter the eligible dependent care expense, the BASE® 125 Cafeteria Plan provides additional financial assistance to allow employees to take care of their family with pre-tax dollars, helping to stretch their hard-earned dollars.  Employers can save valuable tax dollars while providing a service to help their employees pay for their dependent care.  Click here to read more about the BASE® DCAP or call 888.386.9680.