If you want your new health insurance to start on January 1st then you must enroll before December 15th. You can still enroll until January 15th, but your policy won’t start until February. We know you’ve been hearing OEP over and over the last few months, but that’s because we can’t stress enough how important it is. Not only is this the only time you can enroll in a new plan. This is the only time you can review your current plan and make sure you have all of the coverage you need within your budget. You’re in control of your health and there’s plenty of plan and carrier options out there ready to help you stay in control.
Guaranteed Coverages
The Affordable Care Act (ACA) brought a lot of change to the health insurance industry. All of which center around making sure everyone has access to affordable coverage. The ACA introduced the “10 essential benefits”. Which are 10 health care benefits that every marketplace plan must cover regardless of tier, plan type, cost, or provider.
Ambulatory patient services
Emergency services
Hospitalization
Laboratory services
Mental health and substance use services
Pregnancy, maternity, and newborn care
Prescription medications
Preventative and wellness services and chronic disease management
Pediatric services
Rehabilitative and habilitative services
Not only are health plans required to cover these benefits. Insurers are also prohibited from denying or charging more for a plan based on pre-existing conditions. So thanks to the ACA you are guaranteed to get a plan that covers all of your basic needs without having to pay an arm and a leg.
Your Options
You’ve got nothing but options during the OEP, from plans to plan tiers to possible subsidies and then some. Let’s go over the basics and give you a good starting point in your search.
The first thing you have to do is choose a plan type. While every Marketplace plan is legally required to cover the “10 essential benefits”. Plans can offer extra benefits and they can all be structured differently. So, this step is a big one because it sets the foundation for the coverage you have.
HMOs offer you the option of choosing from a local network of participating physicians, hospitals, and other healthcare providers and facilities. As part of these health insurance policies, you must choose a primary care physician (PCP) from this network. Your primary care physician (PCP) will get to know you and help you organize all of your medical care. They are also responsible for referring you to any specialists. Without this recommendation, your HMO would not cover a specialist visit. A HMO plan’s out-of-pocket costs are frequently lower than those of other types of health plans as long as you stay in-network. In general, an HMO may make sense if you prioritize lower expenses and don’t mind using a PCP to oversee your treatment.
PPOs offer a vast network of participating providers, so you can choose from a wide range of hospitals, clinics, and healthcare facilities. Unlike HMOs, PPOs provide some coverage for providers outside of their network, but not as much as they would for an in-network provider. Another significant distinction between PPOs and HMOs is that you aren’t required to choose a PCP and you can see a specialist without a referral. A PPO is often a smart option if you want more control over your options and are willing to pay extra for it. It would be especially useful if you travel frequently because you would not have to see a primary care physician.
Exclusive Provider Organization (EPO)
EPOs also allow you to choose from a network of participating providers. Except in cases of emergency, most EPO plans do not cover care outside of their network. As a result, if you see a provider or facility that is not part of the plan’s local network, you will most likely be paying for the whole cost of services. As for PCPs, EPOs can go either way, some require you to choose a PCP and others don’t, it just depends on the insurance company you choose. In either case, as long as the specialist is in the plan’s network, you will not require a referral from your primary care physician. If you need cheaper monthly rates and are ready to pay a larger deductible when you need medical treatment, an EPO plan may be for you.
Point of Service (POS)
POS plans combine the benefits of PPOs and HMOs. A POS’s provider network, like an HMO, is often smaller than a PPO plan, and in-network care expenses are typically lower, as with a PPO. In POS plans, you must select a primary care provider (PCP) from a network of physicians and other primary care specialists. If you need to see a specialist, you have to get a referral from your PCP.
However, just like with PPO, you have the option of seeing in-network or out-of-network experts. However, if you visit an out-of-network provider, your part of the costs will be higher, and you will be responsible for submitting any claims. POS insurance plans are a terrific option for many people, especially if you’re looking to save money and don’t need out-of-network healthcare services. If you are prepared to coordinate your care through a primary care physician, a POS plan may be perfect for you.
Health Expense Accounts
There are also separate savings plans you can buy to help you save up money specifically for medical costs.
An HRA, or health reimbursement arrangement, is a form of health expense account provided and owned by your employer. Because they own the HRA, your employer is the only one who can contribute to it. They can also determine if you can roll over unused cash to the next year. The money in it is used to pay for eligible expenses including medical, pharmaceutical, dental, and vision care, as defined by the employer.
A health savings account (HSA) is a bank account that you can use to pay for qualifying health care bills or to save for retirement. An HSA is available when combined with a qualified high-deductible health plan (HDHP), which has lower premiums/plan contributions and greater deductibles than a regular health plan. If you have an employer-sponsored health plan, the account is opened through the HSA provider chosen by your company. You, your employer, and others can contribute to your HSA up to a yearly limit determined by the IRS.
Flexible Spending Account (FSA)
An FSA is an employer-sponsored savings account that helps manage out-of-pocket healthcare bills. FSAs are tax-advantaged accounts, which means you can contribute to them before taxes and spend the money tax-free. FSAs allow account holders to save for eligible healthcare expenses by deducting pre-tax money directly from their paychecks. FSA funds can be used to cover deductibles, co-pays, and medical visits for you, your spouse, and any qualified dependents. Employers may contribute to their employees’ FSAs, but they are not obligated to do so.
Health Insurance Subsidies
Marketplace plans have two types of subsidy. The first type, known as the premium tax credit, lowers your monthly insurance costs. The cost sharing reduction (CSR) is a sort of financial aid that reduces your deductibles and other out-of-pocket payments when you visit the doctor or stay in the hospital. To get either sort of financial aid, you must enroll in a health insurance Marketplace plan.
Premium Tax Credit
A premium tax credit, sometimes known as a premium subsidy, is a tax credit that reduces or eliminates the amount of money that you would otherwise have to pay for getting individual or family health insurance. Unlike other tax credits, the premium tax credit can (and typically is) given upfront and all year. Each month, the IRS gives money to your health insurer, so you don’t have to pay as much yourself. Your tax return is then compared with the premium tax credit the following spring. You can also choose to pay full price for a health plan in your state’s exchange and then get the full premium tax credit on your tax return. Few people do this, however, because the cost of coverage without the advance premium tax credit is often out of reach for those who do qualify for the premium tax credit.
You must apply for coverage through the Marketplace and give information about your age, residence, household size, citizenship status, and expected income for the following year in order to receive the premium tax credit. Following the submission of the application, you will receive a decision indicating the amount of premium tax credit you qualify for. You can then choose to have the tax credit paid in advance, claim it later when filing your tax return, or a combination of the two.
Who’s Eligible?
To be eligible for the premium tax credit beginning in 2024, you must meet the following requirements:
Have a household income of at least the Federal Poverty Level (FPL), which is $14,580 in 2024.
Lack of affordable coverage through a workplace (including a family member’s employer)
Not be eligible for Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).
Have U.S. citizenship or proof of legal residency (Lawfully present immigrants with household incomes less than 100 percent FPL may also be eligible for tax subsidies through the Marketplace if all other eligibility standards are met).
If you’re married you must file your taxes jointly.
Cost Sharing Reduction
Cost sharing reductions are the second type of financial aid available. When you utilize covered health care services, cost sharing reductions reduce your out-of-pocket costs related to deductibles, copayments, and coinsurance. Cost sharing reductions are available to anyone who qualifies for a premium tax credit and has household incomes ranging from 100 to 250 percent of the poverty line. Cost sharing reductions (CSR) are only available through silver plans, as opposed to the premium tax credit, which can be applied to any metal level of coverage. CSRs are applied to a silver plan for qualified individuals, basically making deductibles and other cost sharing more comparable to that of a gold or platinum plan. Individuals earning between 100 and 250 percent of the FPL can use their premium tax credit to any metal level plan, but they can only receive cost sharing subsidies if they choose a silver-level plan.
Health Plan Tiers
When you buy health insurance through the federal or state Marketplace, the plans available are divided into four metal tiers: bronze, silver, gold, and platinum. The metal tiers allude to the portion of your medical treatment that each tier will cover, not the quality of care you will receive with one of these plans. Which plan tier you pick determines the amount of the bill you pay. The higher the coverage, the higher the cost, but the less you will have to pay out of pocket.
Bronze plans will cover 60% of costs; you will pay 40%
Silver plans will cover 70% of costs; you will pay 30%
Gold plans will cover 80% of costs; you will pay 20%
Platinum plans will cover 90% of costs; you will pay 10%
Why You Need Health Insurance
The most important advantage of having health insurance is having access to the care you need. Health insurance provides you with access to a vast network of doctors, specialists, hospitals, and laboratories. This network collaborates with you and with one another to assist you in focusing on prevention and wellness. In fact, the majority of healthcare plans provide free preventative services, such as immunizations and testing. To help you stay healthy and avoid illnesses and their consequences.
Furthermore, the Affordable Care Act requires Marketplace plans to cover pre-existing diseases. This means that even if you have a pre-existing condition, you can receive care without being rejected coverage or charged extra because of it. Because you’ll have regular access to the doctors and experts you need, your healthcare plan will also help you manage your care for any chronic illnesses you’re living with.
Your health insurance covers all of the greatest strategies to maintain your health. Having access to this type of continuous care can essentially lead to a longer and better quality of life. According to the National Library of Medicine, persons between the ages of 17 and 64 who did not have health insurance had a 40% higher mortality risk than those who did!
How EZ Can Help
Working with an agent saves you time and stress because you won’t have to decipher legal language or read fine text. Agents handle all of the legwork. So, you may rest assured that your coverage will best match your financial and medical requirements. Not to mention, EZ agents can save you hundreds of dollars on your health insurance premiums each year. We accomplish this by scouring the market for the most affordable plans, both on and off the market. In addition to locating and utilizing any available savings.
We don’t only assist you in finding a plan, we also assist you in keeping it up to date. When the time comes, we are also here to help you in filing claims with your insurance company and renewing your policy. To begin, enter your zip code in the box below. Alternatively, contact 877-670-3557 to speak with one of our licensed agents.
You’re not the only one who wants to know what the difference is between an ICHRA and a QSEHRA. This is one of the more common questions business owners ask when they’re trying to decide which benefits to offer their employees. Both plans are health reimbursement accounts (HRAs). They make it possible for you, the employer, to give your workers benefits that are both affordable and tailored to their needs. They each let your employees save money exclusively for their health care needs. While ICHRAs and QSEHRAs are similar in what they offer, they work in different ways. Understanding them is the first step in deciding if you’d like to offer one or the other depending on your budget and how you’d like your employee benefits to work.
What are HRAs?
Before we get into these two types of HRAs let’s look at what a standard HRA is. A HRA might be the best way for a small business to help its workers get coverage at a price they can afford. HRAs are not health insurance plans. Instead, they are a way for employers to reimburse their workers for their health care costs that is allowed by the IRS. These are not accounts like HSAs or FSAs. Instead, they are agreements (hence the name), which makes them easier to use than bank accounts.
Employers don’t have to have a pre-funded account for distributing the money, but they can if they want. They keep the money until an employee files a claim for reimbursement. So, if an employee doesn’t ask for reimbursements or doesn’t ask for the full amount, the employer gets the money. On top of that, there are no taxes on the reimbursements!
An ICHRA is a tax-free health benefit paid for by an employer that reimburses employees for their qualifying medical costs. With an ICHRA, employers give their workers a tax-free allowance each month to pay for certain medical costs. Employees then buy the health care services and things they want, like individual health insurance coverage, and the company reimburses them up to their allowance amount. Your employees can compare their options for individual coverage on the government health insurance marketplace.
There is no annual limit on how much an employer can contribute, and you can give different classes of workers different allowance amounts. There are two more things to keep in mind. First, employees and their families are only qualified for the ICHRA if they have coverage through a qualifying individual health insurance policy. If the employee or a family member who is part of the individual plan loses benefits, they can no longer get reimbursements.
Second, there are limits on the insurance tax credit in the ICHRA. Specifically, if an employee takes part in the ICHRA, they are no longer qualified for premium tax credits. Because of this, workers are free to opt out of the ICHRA as long as their allowance amount is considered “unaffordable” and wouldn’t provide minimum value under the ACA.
ICHRA Process
Here’s a step by step process for operating an ICHRA.
You set the allowance – The amount of tax-free money you give to an employee for qualified costs is set by you. There can be different amounts for each type of employee. Such as full-time employees, part time employees, seasonal workers, etc. In general, ICHRA allowances for each class of workers should be the same. You can, however, give different allowances within that employee class based on the age of the worker or the size of their family.
Employees receive healthcare – Employees pay for their own health care with their own money. They can buy the health goods and services that are right for them, such as individual health insurance.
Employees submit proof – When an employee has a medical expense, they must show you proof. Such as a receipt or a letter from their insurance company explaining the services they received.
You review – When an employee has a medical cost, they must show you proof. Like a receipt or a letter from their insurance company explaining the services they received.
You reimburse the employee – The company pays back the worker up to the amount of their allowance. Both the business and its workers do not have to pay taxes on these reimbursements, but once the employee’s allowance limit is hit, they can’t get any more reimbursements.
Who Can Offer An ICHRA?
Even though ICHRAs are available to all organizations, a company can’t give both the ICHRA and a QSEHRA. You also can’t offer both an ICHRA and a group health plan to the same group of employees. For example, you could offer full-time employees a traditional group health plan and part-time employees an ICHRA, but you couldn’t give full-time employees an option between the group health plan and the ICHRA; it’s one or the other. ICHRAs are a good choice for businesses with 50 or more workers. Under the ACA’s employer mandate, you must give at least 95% of full-time employees health insurance that meets the minimum necessary coverage. Meaning they include the “10 essential benefits”.
What Is A QSEHRA?
A qualified small employer HRA (QSEHRA) is an official health benefit that has been approved by the IRS. It lets small businesses with fewer than 50 full-time employees pay their workers tax-free for their health insurance premiums and other health-related costs. With a QSEHRA, workers don’t have to sign up for a certain type of health insurance in order to be eligible. This gives them the freedom to choose any insurance plan they want.
Payroll taxes do not have to be paid on any QSEHRA reimbursements by you or your employees. If an employee has health insurance that offers minimum essential coverage (MEC), he or she may not have to pay income tax on reimbursements. Because these reimbursements are not taxed, workers don’t have to count their QSEHRA as income at the end of the year. Unlike traditional group health insurance, the QSEHRA doesn’t have minimum employer contribution limits. This means that you can give this benefit to your employees even if you don’t have a lot of money, but there are limits on how much you can give.
Also, there are no participation requirements to offer a QSEHRA. So you don’t have to have a certain number of workers registered in the benefit in order to offer it. Employers can set monthly budget caps with a QSEHRA, which gives them full control over their costs. Once the limits have been set, they can’t be broken. Also, because a QSEHRA doesn’t need to be pre-funded, costs are only paid out when an employee has a qualifying expense. Any money that isn’t used stays with you.
Who Can Offer a QSEHRA?
For your company to be qualified for the QSEHRA benefit, it must have fewer than 50 full-time employees. According to the Affordable Care Act, if you have 50 or more full-time employees, your company is a large employer. This means you can give an individual coverage HRA (ICHRA), but not a QSEHRA. In addition to having to be a certain size, an eligible employer cannot give a QSEHRA and any other group plan at the same time. If an employer wants a QSEHRA and already has a group health insurance policy, they can cancel it and become qualified.
Which Is Better For My Business?
If you want to use an ICHRA or a QSEHRA, you need to think about a few different things. You should start by thinking about your workers and what they need. Benefits are used by many employers as a way to keep good workers and attract new ones. Your benefits should be as personalized as possible to the people on your team. An ICHRA is likely your best choice if you want a more flexible health benefit. Such as more customization with employee classes, no limits on yearly contributions, or meeting the employer requirement.
But a QSEHRA is the way to go if you want a health benefit that is less expensive than group health insurance, easy to set up and run, and works for qualified small employers with less than 50 workers. No matter which HRA you choose, you’ll be picking a customizable health benefit that will give your workers more control over their own healthcare decisions while saving your company money.
Working With EZ
HRAs are a great way for employers to help their workers’ pay for medical costs they have to pay for on their own. Employers can keep costs down while giving their workers a perk that lets them pay for their own medical care. There are different kinds of HRAs, so most businesses will be able to find one that works for them. This is what makes HRAs so special and why they are becoming more and more popular. We’re also here to help if you need help figuring out the complicated world of insurance.
If you want to learn more about your choices for group insurance, you can get in touch with us at EZ. We’ll put you in touch with a highly trained person who can help you decide if an HRA is right for you and your business. You’ll save time, never have to deal with trouble, and never have to pay for our services. EZ.Insure will put you in touch with a specialized agent for free, so let’s get started! Put your zip code into the box below to get a price right away. Call 877-670-3531 to talk to your own agent.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was created to provide economic assistance to families, workers, and businesses during these uncertain times. One important thing the CARES Act has done is to allow more flexibility for Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), or Health Reimbursement Arrangements (HRAs). Now, some over-the-counter medications and other common healthcare items will be eligible for reimbursement. Prior to the passage of this act, these medications were only eligible for reimbursement with a prescription.
The CARES Act has made over-the-counter medications eligible for reimbursement through HSAs, FSAs and HRAs.
The Changes
If you are an employer who offers HSAs, FSAs, or HRAs, it is important that you make your employees aware of the new rules put in place by the CARES Act. They can now use their HSA or FSA to get reimbursed for over-the-counter medicine, as well as for healthcare items like feminine hygiene products. Before this act was passed, employees needed a prescription from their doctor just to get something as simple as Tylenol reimbursed through their HSA, FSA, or HRA. The change began retroactively as of January 1, 2020, which means reimbursements can be filed for over-the-counter medicine or other newly eligible products purchased anytime since January 1, 2020.
What Is Considered Eligible?
The CARES Act has made thousands of items eligible for reimbursement, including the following medications and healthcare products:
Feminine hygiene products will also be covered for reimbursement.
Acne medications
Sleep aids
Digestive aids, including laxatives
Tampons, pads, and liners
Cold, cough, and flu medicine
Allergy and sinus medicine
Anti-inflammatory medicine
Pain relievers
Baby rash ointments
Medications for eczema and psoriasis
Acid controllers
You and your employees might have had a rough year, but the government has been working on ways to lessen some of the burdens. These over-the-counter medications and other healthcare products being offered for reimbursement without a prescription will allow your employees to seek treatment for simple things without having to go to the doctor and pay a copay.
If you do not already offer a HRA or group insurance to your employees, but are considering choosing to help them with healthcare costs, EZ can help. We can review all the available plans in your area and help guide you towards the most affordable ones with the best coverage options. You care about your employees and we care about helping you find a plan that meets all your needs. We will provide you with one agent to work with you and compare all available plans in your area for free. To get instant quotes, simply enter your zip code in the bar above, or if you wish to speak directly with one of our agents, call 888-998-2027. There is no hassle or obligation.
If you are thinking of offering group insurance or a HRA to your employees, or if you are already offering them one or both, you might be wondering how to withhold employee insurance premiums and your contributions from their paycheck. Do the deductions come out of their paycheck pre-tax or after-tax? In some cases, you can deduct their premium and your contributions from their paychecks pre-tax; other premiums may need to be deducted after-tax. It is important to know what kinds of contributions can be deducted pre-tax, as well as the advantage and disadvantages of doing so.
Pre-Tax Deductions
Group health insurance deductions can be taken pre-tax.
Taking a pre-tax deduction means that you, the employer, withdraw money directly from your employees’ paychecks to cover the cost of benefits before income or payroll taxes are withheld. Internal Revenue Code (IRC) Section 125 allows for payroll deductions to be taken pre-tax for certain benefits, including:
In order to know which pre-tax benefits are exempt from state and local taxes, you will have to check your state and local laws.
What is the advantage of deducting premiums and contributions from your employees’ paychecks pre-tax? For employees, when premiums and contributions are deducted pre-tax, the amount of income that they have to pay taxes on is reduced, in some cases by up to 40%.
Doing this not only benefits your employees, it also benefits you; pre-tax deductions lower your tax liability, including the Federal Unemployment Tax (FUCA), State Unemployment Insurance (SUI) and FICA. For every dollar contributed to a retirement account, FSA or insurance plan, an employee’s taxable income is decreased accordingly. Your employees’ paychecks will effectively be lowered, meaning you will pay less in payrolltaxes.
The drawback is that your employee might owe taxes on the money you withheld in the future. This is because they did not pay any federal, state, and local taxes on the contributions at the time they were withheld. These taxes were simply deferred. For example, when your employee retires and begins drawing on their 401(k), they will owe taxes on the money they use from their pre-taxed 401(k) plan.
After-Tax Deductions
Contributions to retirement plans and other benefits are deducted after income and payroll taxes are deducted.
After-tax premiums and contributions are deducted from your employees’ paychecks after income and payroll taxes are deducted. Unlike pre-tax deductions, these will not affect your employee’s taxable income. However, you and your employee will owe more payroll taxes with after-tax deductions. If premiums are deducted after-tax, your employees will not pay taxes when using the benefits in the future, such as when they withdraw money from a post-tax retirement or health arrangement plan. Common after-tax premiums include:
Some retirement plans (such as a Roth 401(k) plan)
Disability insurance
Life insurance
Major medical coverage purchased by an employee on their own
Need Help?
If you need help finding group insurance, a HSA, FSA, or HRA, then EZ.Insure can help. We want to make sure that you save as much money as possible, which is why we compare all plans in your area, for free. We will assess your business’ and employees’ needs and find the best plan that will help cut costs, not coverage. If you need help figuring out which plans qualify for pre-tax and post-tax deductions, we can help with that too. We will answer your questions and guide you through the process. To start comparing plans for free, simply enter your zip code on the bar above, or to speak directly with an agent, call 888-998-2027.
Despite the fact that health insurance is an important and very popular employee benefit, many small business owners have been canceling their group insurance policies. For some business owners, even the tax credits that are meant to help provide coverage to employees do not offset the price of group insurance enough. For other business owners, the problem might be not enough participation in their group insurance plan, because employees are choosing to purchase individual coverage. We know that this can present a dilemma to many small business owners; after all, you want to make sure that your employees are healthy and happy. Remember you have other options to provide healthcare to your employees. So if you do decide to cancel your group insurance plan, you should first understand what other health benefits you can offer employees, as well as how to cancel your group plan.
Canceling Your Group Health Insurance Plan
The good news is that you can cancel your group health insurance plan if you really need to. Most group health insurance plans are a unilateral contract, meaning that you can cancel your plan at any time during the year. Some carriers require you to provide 30 days notice, but this is not always necessary. Be aware that some insurance carriers have penalties if you do decide to cancel early.
To get a better understanding of your carrier’s cancellation process, take a look at your contract; in fact, it is always a good idea to be fully aware of this information before you sign up for any plan. To get the cancellation process started, you will need to call a customer representative at your insurance company. Once you’ve spoken with a representative, you will usually need to confirm your cancellation in writing, either by letter or fax; some companies will even accept an email. Be sure to confirm exactly what you need to do to cancel your coverage so you will not be billed for the following month.
While you have every right to cancel your group insurance benefits, you should be aware that, under the Affordable Care Act, you are required to give employees at least 60 days advance notice prior to the cancellation date. This will allow them to take advantage of their 60-day Special Enrollment Period and choose a new insurance plan.
Signing Up For A HRA
You can offer your employees other benefits, such as a HRA, and choose from different kinds that would benefit you and them more.
Even if you choose to cancel your traditional group health plan, you still have other options for helping your employees pay for healthcare. For example, you can choose to offer them a Health Reimbursement Arrangement (HRA). HRAs have been growing in popularity among employers because of their flexibility and lower costs when compared with traditional group healthcare. With these arrangements, you give employees a set monthly amount to spend on their own health insurance policy. Your employees have the option to use this allowance to buy their own individual health insurance plan and get reimbursed for qualified health insurance premiums up to the amount of their reimbursement allowance. The are a few different types of HRAs to choose from, including:
QSEHRAs (Qualified Small Employer HRAs)are for businesses that have fewer than 50 employees. In order for employees to receive the tax-free reimbursement, they must have an individual health plan and submit a claim. With a QSEHRA, you can choose the monthly reimbursement amount, but you must offer the same amount to all employees, and there are set limits on how much you can reimburse them each month.
ICHRAs (Individual Coverage HRAs)are for businesses of any size. With these arrangements, you can create “classes” of employees, such as part-time or full-time, and offer them different monthly reimbursement amounts. With an ICHRA you can offer as much money as you would like; there is no limit on monthly reimbursement amounts.
ICHRAs are especially popular because you can customize them to meet your company’s needs. You can choose any monthly reimbursement amount, as well as whether to reimburse your employees for premiums only or premiums and qualified medical expenses. You can also choose whether to structure reimbursement the same for all employees or to vary the amount by family size.
Keeping Your Employees Notified
As mentioned above, you will have to notify your employees once you decide you are going to cancel your group insurance policy. If you choose to offer your employees a HRA instead, make sure to keep your employees in the loop about this as well. This is especially important if you decide to offer a QSEHRA, as they will need to have their own individual health plan to participate. Your employees might feel like they are “losing” healthcare if you switch from a traditional group plan to a HRA, so make sure to thoroughly explain the HRA that you chose and its benefits. There will also be new rules for them to get used to.
If you choose to switch to a HRA, explain to your employees:
How the HRA works
The benefits of a HRA, such as more flexibility
How to request reimbursement
Need Help?
If you’re looking to save some money and are ready to ditch your group health insurance plan, the first thing you should do is come to EZ.Insure. We will provide you with your own agent who will assess your business’ needs, and suggest ways to offer your employees the best health benefits possible without breaking the bank. When you use EZ.Insure, you will save time, money, and the headaches that come from trying to research and compare all the different plans out there. EZ understands how important it is to save money, which is why we will instantly compare all available plans in your area for free. To start saving, simply enter your zip code in the bar above, or to speak directly to an agent, call 888-998-2027.
Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) are both great options for employees and employers who want to save money on group health insurance costs. Many employers and employees wonder if they can have both at the same time, and the answer is: yes! If you are willing to offer your employees both, a HRA and HSA, you need to have an understanding of how the two benefits interact with each other in order to get the most out of each.
The Difference Between HSAs & HRAs
HSAs are savings accounts that work alongside your employees’ health insurance plan. Employees are only eligible for a HSA if they are enrolled in a qualified high-deductible health plan. Your employees can contribute money to the account, which then acts like a bank account for medical expenses; you can also contribute to their HSAs, and receive some of the tax benefits. The money that you both contribute is pre-tax, earns tax-free interest, and will not be taxed when employees withdraw it to use for qualified medical expenses.
HRAs are not savings accounts like HSAs, they are arrangements that allow employers to reimburse employees for medical expenses. They are intended to help employees pay for out-of-pocket health-related expenses, and are often used in place of a traditional group health insurance plan. Depending on the type of HRA you offer, there may or may not be a limit on the amount that you can reimburse your employees in a given year.
The Different Types of HRAs
First, let’s take a look at the different types of HRAs you can offer your employees. There are integrated HRAs, which are offered alongside traditional group health insurance, including:
There are 5 different HRA types to choose from to offer your employees.
ICHRAs (Individual Coverage Health Reimbursement Arrangements), whichallow tax-free reimbursement of benefits for any size business, and for any amount.
EBHRAs(Excepted Benefit HRAs), whichare limited to paying for excepted benefits, such as premiums for vision and/or dental coverage and premiums for plans that are exempt from ACA rules (short-term plans).
Standalone HRAs do not have to be tied to a group plan. These include:
QSEHRAs (Qualified Small Employer HRAs) – These are meant for businesses with less than 50 employees that do not offer a group insurance plan. Business owners can set up a QSEHRA for their employees to help pay for benefits tax-free.
Spousal HRAs– These are for employees who are covered by a spouse’s group plan. They cannot be used to reimburse employees for their premium payments.
Retiree HRA– These are for former employees. They allow you, the employer, to help pay for any retired members’ insurance premiums and medical expenses.
When Offering Both HSAs & HRAs
In order for your employees to be eligible for a HSA, they must have a high-deductible health insurance plan (HDHP) that is HSA-qualified. If you choose to offer a HRA and a HSA, then the HRA has to follow the same rules as a HDHP, and cannot begin paying out until your employee’s minimum “deductible” amount is met.
Limited-purpose HRAs will reimburse employees for expenses exempt from HSA deductible, such as dental work.
Another way to offer a HRA that is HSA-qualified is by offering a limited-purpose HRA that only reimburses employees for expenses that are exempt from the HSA deductible requirement. Expenses exempt from the HSA deductible are:
Health insurance premiums
Dental
Vision
Long-term care premiums
Wellness and preventive care such as check-ups and quitting smoking or weight loss programs
You want to help your employees with their healthcare costs, but there is nothing wrong with also wanting to offset the costs of group health insurance. One way to do this is by offering both a HRA and a HSA. It can be done! As long as you follow the guidelines, then everyone can benefit from these arrangements. If you are unsure or need some help, then we can assist you. To compare plans, and to find a plan with the most coverage and savings, enter your zip code in the bar above. Or to speak directly to one of our licensed agents, call 888-998-2027.
