Premium Savings for You and Your Employees
Combining a high deductible health plan with a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) is a smart way to balance benefit, cost, and protection. You can realize as much as 25% savings on your premium costs, while your employees will get peace of mind by funding an HSA to pay for current and future qualified medical expenses. Use the premium savings gained by switching from an expensive, low deductible plan to an economical high deductible Health Reimbursement Arrangement (HRA) plan to reimburse your employee for a portion of their deductible.
Health Savings Accounts: Security, Affordability, Flexibility for the Employee
The Health Savings Account (HSA) was created in Medicare legislation signed into law in December 2003. It is a financial account, used in conjunction with qualified high deductible health plans (QHDHP), owned by an individual in which contributions to the account are used to pay for current and future qualified medical expenses. Contributions to an HSA can be made by the employer or the individual, or both. If the employer makes a contribution, it is not taxable to the employee. If the individual contributes, through a salary reduction arrangement the dollars used will be pre tax.
The funds may be used to pay for qualified medical expenses of account owners and their spouse and dependents as long as they are dependents on the owner’s tax return. In addition to the usual and customary healthcare costs usually covered by insurance, HSA funds can be used to pay for wellness benefits, over-the-counter and prescription drugs, COBRA premium payments, health insurance premiums for individuals receiving unemployment compensation, qualified long-term care, and Medicare and retiree health insurance premiums.
An HSA belongs to the employees and is completely portable, so they can take it with them from one job to the next. Also, no “use it or lose it” rules apply to the account, as is the case with other types of plans. All funds in the HSA are fully vested, unspent balances remain in the account until spent, and the account can grow through investment earnings, just like an IRA.
Additional highlights of a good HSA program include offering an HSA debit card or checkbook to make using the fund simple, the indexing of contribution limits for inflation (so they will change every year), allowing employees to rollover funds from other Medical Savings Accounts into their HSA, and the availability of online HSA tools so that employees can manage their account anytime, anywhere.
HSA Advantages for Employers
Because an HSA must be coupled with a QHDHP, the health insurance premiums can be substantially lower. Employers often find that these premium savings are large enough to cover the HSA contributions they make on behalf of their employees, without increasing their current outlay for health care benefits. Since HSA contributions are tax-deductible, you may realize significant savings.
While the QHDHP required to offer an HSA will save you money, using an HSA administrator will save you time. The HSA administrator manages all aspects of the plan including enrollment, distribution of funds, and providing monthly statements to your employees. In addition, if you use the HSA administrator recommended by Assurant Health in combination with an Assurant QHDHP, no administrative fee will be charged.
While no claim adjudication is required for HSA distributions, the administrator will take care of all the banking arrangements needed for investments and distributions. The administrator also sends employees monthly statements with information about their contributions and disbursements, as well as debit card transactions with purchase amount and place of purchase.
Health Reimbursement Arrangements: Put Your Employees at Ease
If you are concerned with how your employees will react to the substantial out-of-pocket expenses of a qualified high deductible health plan (QHDHP), you can give them some peace of mind by reimbursing a portion of their qualified medical expenses through a Health Reimbursement Arrangement. You can fund the reimbursements using premium savings gained by switching from an expensive, low deductible plan to an economical, high deductible plan.
Contributions made by the employer can be excluded from employee’s gross income, reimbursements may be tax free if used to pay for qualified medical expenses, and any unused amounts in the HRA can be carried forward for reimbursements in later years.
Costs associated with qualified medical expenses incurred by employees and their spouse and dependents, as long as they are dependents on the employees tax return, are reimbursable through an HRA.
In addition to the usual and customary qualified medical expenses, employees can be reimbursed for amounts paid for health insurance premiums, for long-term care coverage, and for items not covered under another health plan.
HRA Advantages for Employers
HRA
reimbursements are tax deductible, and employers do not need to pre-fund an account. Reimbursements may be made from a business’ general account, allowing for greater control of cash flow reimbursement is only required when and if a medical expense is incurred. Additionally, if the employee terminates, the employer retains ownership of the funds.
Employers have great flexibility in HRA plan designs. The employer determines the maximum amount of annual reimbursements, who pays healthcare expenses first — employees or the employer through HRA reimbursements, whether HRA funds may be rolled over to the next year and the amount that can be rolled over, and whether to place a cap on the amount that can be accumulated over time and the amount of the cap.
An HRA is also a great way for employers to transition employees from the typical traditional low deductible rich benefit plan to a high deductible health plan. Business owners who may not be eligible for an HRA can set up an HSA account.
An expert HRA administrator makes employee reimbursements easy. And, if you select the administrator recommended by Assurant Health combined with a specially designed Assurant Health plan, no setup or separate monthly service fee will be charged.
Consumer Directed Plans Save You Time and Money
The benefits of an Assurant Health Consumer Directed plan are clear, simple to realize, and easy to implement. You save money on premiums, your employees have peace of mind and control their own funds, and administrators take on the duties of implementing the investing and reimbursing of funds. Contact Assurant to discuss how you can benefit from these plans today.