The rising cost of healthcare benefits for employees is a concern for many employers. As the cost of health insurance premiums continue to increase, some employers are looking for alternative options to provide their employees with quality healthcare coverage. One such option is Health Reimbursement Arrangements (HRAs), which many employers are making the switch to.
HRAs are employer-funded, tax-advantaged accounts that reimburse employees for eligible healthcare expenses. This includes expenses such as deductibles, copays, and coinsurance. HRAs are becoming increasingly popular among employers as a way to provide healthcare benefits while controlling costs.
One reason why employers are making the switch to HRAs is the flexibility they offer. Unlike Flexible Spending Accounts (FSAs), which have a “use it or lose it” policy, HRAs allow employers to rollover any unused funds from year to year. This means that employees can use the funds in their HRA to pay for healthcare expenses now or save them for future healthcare expenses.
Another benefit of HRAs is that they allow employers to customize their healthcare benefits to meet the specific needs of their employees. Employers can choose the types of expenses that are eligible for reimbursement, the amount of funding for each employee, and the timing of the reimbursement.
HRAs also offer tax advantages for both employers and employees. Employers can deduct the cost of providing the HRA as a business expense, and employees do not pay taxes on the funds they receive from the HRA.
Overall, the switch to HRAs is a win-win for both employers and employees. Employers can control healthcare costs while providing their employees with quality healthcare coverage, and employees can have more flexibility and control over their healthcare expenses. If you’re an employer looking for an alternative to traditional health insurance, consider making the switch to an HRA.