In 1960, consumers paid directly for 50% of their Health Care expenses. Today the consumer pays, on average, only 15% of Health Care expenses.
As the consumer’s out-of-pocket costs declined so did their interest in controlling the cost of Health Care. The employer was left picking up the ever-increasing costs. Enter the Health Reimbursement Arrangement (HRA).
Formula Benefits has been in the Business of Administrating HRA’s since their inception in 2004. The cost, only $2.95 per employee per month, regardless of single or family coverage.
An HRA is an employer-funded account typically used in conjunction with an increase the medical plan deductible. This increased deductible will help save on medical premiums, plus reimbursements paid to the participant are tax deductible to the employer.
No use-it-or-lose-it rule, like FSA’s;
Ability to rollover all, or a portion, of un-used HRA funds; un-used funds can revert back to the employer.
Absolute Employer Design Flexibility
The account can be designed to suit the needs of the employer by reimbursing:
All 213(d) Qualified Medical Expenses
- Or -
Certain Qualified Medical Expenses (Deductibles, Co-pays, Dental, etc.)
HRA Example:
Increasing the deductible from $300 to $1000 will immediately
reduce premiums.
An HRA is implemented to help offset the increase in deductible
to the employee.
The employee then pays the first $300 of the new increased
deductible. The additional $700 (difference between the new and old
deductible) is reimbursable out of the HRA.
In the past, you were insuring the “gap” between $300 and
$1000. However, not all employees will incur expenses in excess of $300.
Therefore, under an HRA, you will only be paying for employees who actually
use this portion of their medical benefit. Thus, saving your company
money.
If you have any questions regarding HRA’s please contact
Formula Benefits at 651-686-0108 extension 123.