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Health Reimbursement Arrangements (HRAs) Established by U.S. Department of the Treasury Revenue Ruling 2002-41, Health Reimbursement Arrangements enable employers to reimburse employees for IRS-approved expenses on a tax-free basis. Under a Health Reimbursement Arrangement (HRA), employees are reimbursed for eligible health care expenses that are not covered under the employer's health plan. Typically, these include deductibles, hospital co-pays and uninsured expenses such as dental expenses, eyeglasses or hearing exams. Basically, there are no limits to how an HRA can be designed. Also, HRAs can include the significant optional benefit of carrying funds over to the next year. Here is an example of how a HRA could work: Employer changes health benefits to include a hospital co-pay and coinsurance. This will reduce health premium by 20% to 30%. According to two leading insurance companies, 8-12% of the total insured lives covered under a medical plan can expect to incur a hospital expense. Let’s assume the employer has 20 employees and a total population of 50 insured lives. Therefore, we can expect to see 4-6 hospital claims per year. The employer liability for these expenses is significantly less than the premium reduction. Done properly, HRAs are great news for corporate America. That’s where Benefit Tax Link comes in. Benefit Tax Link is your resource for tax saving benefits and provides over 30 years of expertise in advising and managing the benefits that help employers save on the cost of providing a quality benefit plan to employees. (Also see Carl DeRiso, Principal). Benefit Tax Link provides: • Consultation and advice on the HRA appropriate to your business and employees. • Employee information program to explain your HRA and procedures. • 24/7 Web access to account balances and check claim status. • Online Health Care Expense Table to review eligible/ineligible expenses. • Online Tax Calculator to assist employees in calculating taxes saved. • Reimbursement claims paid monthly or bi-monthly. • Evolution Benefits’ Prepaid Benefits Card available. • Plan documentation to meet all government requirements. • Annual discrimination testing. • Information and online forms (hardcopy also available). |
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