One of the big draws for any employer is the benefits it offers to its employees. Health care being one of most appealing. Here are some of the types of self-funded health care plans you can provide.
HRA: Health Reimbursement Account
You, as the employer, set aside a fixed amount of money into the Health Reimbursement Account (HRA) each year for your employees to use. The money is available at the beginning of each year, and funds may roll over to the next year, depending on your plan. The account is funded by the employer only.
This plan can pair with your FSA Account, with funds coming out of the FSA first up to the available balance, and then rolling into this account for qualified medical purchases including co-pays and coinsurance. HRAs can also be used to purchase common health care expenses like over-the-counter items.
- No need to pre-fund the account; contributions can be made monthly, quarterly or annually
- You determine contribution timetable
- You determine contribution and rollover amounts
- You determine allocation of unused funds upon termination or retirement
- Ability to reimburse employees from tax deductible dollars
- Can be customized to meet your needs
FSA: Flexible Spending Account
A Flexible Spending Account (FSA) is a self-funded health care plan that allows employees to pay for many out-of-pocket medical expenses using tax-free dollars. As the employer, you set the contribution limit, and allow your employees to fund their own accounts with pre-tax money. Employees can withdraw from these funds to pay for qualified health insurance premiums and out-of-pocket medical costs.
FSAs are meant to be used within a calendar year. At the end of the year, the employer may allow an additional month or two to use the funds, or enable a fixed amount to carry over into the next year.
The types of FSA programs Benefit Providers can set up for your employees include: Healthcare FSA, Limited FSA, Dependent Care FSA, Adoption Assistance Account. Other pre-tax plans include: Commuter Transit/Parking Plans, Education Reimbursement Accounts, Premium-Only Accounts, and Simple Cafeteria Plans.
- Minimal employer expense
- Pre-tax dollars enables an approximate 10% savings for both employers and employees
- Employers avoid payroll tax payments on amounts employees contribute to their FSA
- Variety of FSA types available
HSA: Health Savings Account
A Health Savings Account (HSA) offers the ability to set aside pre-tax money to pay for qualified medical expenses including deductibles, co-pays, coinsurance and other out-of-pocket expenses in order to reduce healthcare costs (not to exceed IRS maximums). It can also help with high-deductible health insurance plans to cover out-of-pocket costs. Unspent money rolls over at year’s end.
Employers, employees and others can contribute to the HSA, but to be eligible, the employee must be covered under a HAS-qualified High-Deductible Health Plan (HDHP).
- Pre-tax contributions reduce payroll costs
- Employer can contribute
- Funds are available immediately after contribution
- Funds can be used to pay for COBRA benefits during unemployment
Related: What is Self Funding?
QSE HRA: Qualified Small Employer Health Reimbursement Arrangement
The Qualified Small Employer Health Reimbursement Arrangement (QSE HRA) can beef up your benefits package by helping employees pay for medical coverage with tax-free funds for qualified healthcare expenses including insurance premiums, co-pays, deductibles, vision and dental care, etc. This account is funded by the employer only, with set benefit limits.
Employees can secure their own medical insurance, whether inside or outside of the marketplace, enabling them to find the coverage that best suits their personal needs.
- Contributions are 100% tax deductible as a business expense
- Available to employers with fewer than 50 full-time employees
- Controlled funding limits
- No prefunding required
- Plans can include employees only or family coverage
Benefit Providers Can Create the Right Self-Funded Health Care Plans for Your Business
Explore the range of self-funded health care plans and benefits that Benefit Providers/ECCA Payroll Services can offer. As a full-service benefits provider, we offer plan selection, plan administration, accounting, legal and administrative services. Contact us at 703-370-2226 or firstname.lastname@example.org.