HSAs and HRAs: do your employees complain about the cost of insurance deductibles? Consumer-directed plans can help.
Health Savings Accounts (HSA) are owned by the employee but the employer can make contributions. This special savings account is coupled with a specific type of insurance plan called a qualified high deductible health plan. The high deductible makes the cost of the insurance plan less than other types of plans. Employees save money in their HSA tax free in order to pay for the deductible. Unlike a Flexible Spending Account, money in an HSA rolls over from year to year. Banks usually charge a nominal monthly fee for an HSA.
A Health Reimbursement Arrangement (HRA) is a mechanism for setting aside money for an employee's health expenses. There is no separate bank account and the money set aside is fully owned by the employer. The employer contributes to the plan and is exempt from payroll taxes creating savings for the company. The employer can also designate what types of medical expenses will be reimbursed under an HRA giving the employer maximum control.
Key features of Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) Feature HRA HSA Funding Group-funded Group and employee funded Fund owner Group Employee Requires high No Yes deductible health care plan Eligibility All eligible employees Anyone without coverage and no Medicare Portable Group discretion Yes Tax Group reimbursements are * Group contributions not Contributions tax-deductible for the group subject to payroll taxes and tax-exempt for the * After-tax member member. contributions are tax-deductible from gross income. * Pre-tax contributions can be made through payroll deduction. Allowable Eligible IRS expenses Eligible IRS expenses and withdrawals (generally limited to insurance under specific employer covered benefits) conditions. and insurance under specific conditions. Year-to-year Group discretion Yes rollover
This page is brought to you by the Detroit Regional Chamber's Health Care Central ... the hub for all business related health-care issues. For learn more about this initiative, visit www.detroitchamber.com or call (866) MBR-LINE.
The Detroit Regional Chamber offers a variety of consumer directed plans including the new Flexible Blue product for Health Savings Accounts. For more information, call your independent agent or Lazanda Anderson at (313) 596-0362.
RELATED ARTICLE: Health Care CENTRAL
The Detroit Regional Chamber sponsors a wide range of special health insurance options. Packages are designed exclusively for small and mid-sized employers and self-employed entrepreneurs. Through Blue Cross Blue Shield of Michigan and Blue Care Network, many plans are available including traditional, Preferred Provider Organization, Point of Service and Health Maintenance Organization. These plans may include extensive benefits normally available only to large firms. Visit the Health Care Central section of our Website at www.detroitchamber.com for more details.
Betty Jackson-Moore is director of insurance programs at the Detroit Regional Chamber.