Wondering how to reimburse for health insurance? An HRA allows business owners to reimburse their employees on the tax-free grounds for health insurance premiums or qualified medical expenses. This is a huge win for business owners who're looking for a more affordable, efficient method to offer small business health insurance for their teams without having to hassle having a pricey, one-size-fits-all group plan. Let's walk-through what you need to know.
The mechanics of an HRA are surprisingly simple. At a high-level, employees purchase their own health expenses and employers reimburse them.
Here's how it operates:
- Employers design their plan and set reimbursement allowances
- Employees pay for their own health insurance and medical bills
- Employees provide evidence of their expenses
- Employers reimburse the worker as much as the set limit
Using HRAs to reimburse for health insurance
QSEHRA: a Qualified Small Employer HRA allows small employers to set aside a set amount of money every month that employees may use to purchase individual medical health insurance or use on medical expenses, tax-free. What this means is employers reach offer benefits in a tax-efficient manner without the headache or headache of administering a traditional group plan and employees can choose the program they want.
- A main thing to keep in mind is that all employees should be reimbursed at the same level.
- The QSEHRA is made for employers with under 50 employees to reimburse for premiums and medical expenses when the plan allows.
ICHRA: a person Coverage HRA allows employers associated with a size to reimburse any amount monthly for healthcare expenses incurred by employees on the tax-free basis, starting anytime of the season.
- The distinguishing element of this HRA is the fact that employees could be split into a limitless number of classes, like hourly vs. salary or even according to location, and can be reimbursed at different levels.
- The ICHRA is perfect for companies of any size.
- There aren't any limits to how much a company can offer for reimbursement.
How to reimburse for health insurance
With Take Command’s platform, employees can simply snap a picture of their receipts for reimbursement. Additionally, employers possess a lot of flexibility over what's reimbursed. Understanding these options will go a long way towards helping the employer achieve their objectives and keep their budget under control, so let's take a look at those!
- Insurance Premiums Only: Employers can limit reimbursements to simply go towards eligible premium expenses. Typically, this describes individual medical health insurance premiums but tend to likewise incorporate eligible dental premiums, vision premiums, etc. as long as the worker has Minimum Essential Coverage (MEC) for QSEHRA or a qualified health plan for ICHRA.
- Insurance Premiums and Medical Expenses: Most employers choose to allow medical expenses to be reimbursed too. Note: Employers can choose to exclude categories of expenses (i.e., “prescriptions”) as long as the exclusion is used fairly to everyone.
Ready to reimburse for medical health insurance?
If you are searching for a hassle-free method to offer affordable benefits, an HRA is unquestionably worth taking into consideration. If you’re prepared to begin, establishing a small business HRA is a breeze! We is here to assist clean up any confusion surrounding small company medical health insurance options. Don’t hesitate to give us a shout via our chat feature online. We'd gladly help.
