A Guide Towards Health Reimbursement Account: Pros and Cons

1. A Guide Towards Health Reimbursement Account: Pros and Cons

2. Introduction • As you may know, HRAs (Health Reimbursement Accounts) are healthcare plans paid by a company to reimburse the medical expenses of its employees, their dependents, and obviously spouses. • An HRA administration is helpful for designing HRAs to give employees greater control and more choice over their healthcare coverage. HRAs are funded solely by an employer, and cannot be funded through deductions in an employee’s salary. • HRAs are a lot like IRAs or other tax-advantaged accounts, but it comes with a twist. To help offset qualified medical costs, money is contributed to an HRA plan. The big difference is that money can be withdrawn from the account for a medical expense at any time without penalty. • The employers are required to fully fund the HRAs and experienced HRA plan administrators can strategize and handle them.

3. Some facts about HRAs • HRAs provides more financial control for the employers. • HRAs provide choice for the employees. • HRAs allow employers to lower health insurance costs. • HRAs allow employers to fix healthcare cost. • Handling HRAs is an easier job with the help of HRA administration. • HRAs are exempted from state insurance rules.

4. Health Reimbursement Account Pros Reimbursements Under HRAs Are Tax Deductible Any reimbursements that are issued to an employee for a qualified medical expense becomes a tax deductible expense. In simple words, the cost of providing health care coverage becomes close to a neutral cost for the employer. Funds Never Become an Employee’s Property Employees commonly file claims to the HRA to receive funding for qualifying medical procedures. Under HRA administration, they don’t have ownership of the money in HRA funds. Employers Understand What Their Maximum Expenses Will Be The costs of an HRA don’t involve an uncertainty as the employers always know what their maximum expense will be. So, budgeting becomes more accurate by taking help from the HRA plan administrators.

5. Health Reimbursement Account Cons HRAs Are Not Available to People Who Are Self-Employed People who are self-employed/work for themselves do not have access to the benefits of an HRA. However, they are responsible for the employer side of taxes in matters like Medicare or Social Security. There Are Several Rules and Restrictions That Are in Place for HRAs It is important to have professional assistance for the HRA administration because it is difficult to navigate an HRA plan. Especially if a business is implementing an HRA plan for the first time, they do require help. But, not every HRA administrator is created equally.