Small businesses often face the challenge of offering competitive health benefits to their employees while staying within budget. In this blog post, we'll introduce you to a valuable solution that can help bridge this gap: Health Reimbursement Arrangements (HRAs).
Understanding HRAs
A Health Reimbursement Arrangement is an employer-funded benefit plan designed to reimburse employees for qualified medical expenses. It allows small businesses to provide essential health benefits while maintaining control over healthcare costs. HRAs come in various forms, but for small businesses, the two most common types are the Qualified Small Employer HRA (QSEHRA) and the Individual Coverage HRA (ICHRA).
Types of HRAs
Qualified Small Employer HRA (QSEHRA): Tailored for businesses with fewer than 50 full-time employees, the QSEHRA allows employers to reimburse employees for health insurance premiums and eligible medical expenses.
Individual Coverage HRA (ICHRA): Ideal for larger small businesses, the ICHRA enables employers to reimburse employees for individual health insurance premiums and qualified medical expenses.
How HRAs Work
The process is straightforward:
Setting Up the HRA: Employers establish the HRA, set contribution limits, and outline reimbursement rules.
Employee Participation: Eligible employees enroll in a qualified health plan, incurring expenses as needed.
Reimbursement: Employees submit proof of eligible expenses to the employer, who then reimburses them based on the HRA's guidelines.
Benefits for Small Businesses
Cost Control: Small businesses can budget for healthcare expenses by setting specific contribution limits.
Tax Advantages: Contributions by the employer are tax-deductible, and reimbursements to employees are tax-free.
Competitive Advantage: Offering an HRA can help attract and retain top talent by providing valuable healthcare benefits.
Flexibility: HRAs can be customized to fit the unique needs of the business and its employees.
In our next blog post, we will dive deeper into the benefits and considerations of Health Reimbursement Arrangements, helping you make informed decisions about implementing one for your small business.
Stay tuned for part two, where we'll explore the advantages, compliance, and best practices of HRAs for small businesses.
NY Small Health has a team of friendly experts to help you navigate the thick, murky waters of commercial health insurance and group plans to help you get the most bang for your buck and score great benefits for your staff.
For more information on your business's health benefits and insurance options, especially if your company is located in New York, click here.