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Group Advisors, Inc. specializes in Consumer Driven Health Care. We employ a full-time CPA on-staff who will walk you (and your CPA if you like) through the process AT NO CHARGE TO YOU, we’ll design a plan to meet your healthcare needs AND budget constraints. Simply call 866-366-3528.
But what is Consumer Driven Healthcare? See below. |
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Healthcare Reimbusement Account (HRA)
What is an HRA?
HRA stands for Health Reimbursement Arrangement. It is an employers promise to reimburse their employees for qualified medical expenses. Employers can choose to reimburse up to 100% of the qualified medical expenses. Any amounts the employer reimburses are tax deducted to the employer and are NOT taxable income to the employee.
Why HRA?
It’s simple, Premium Savings and tax benefits. To better explain this, below is a chart that shows potential premium savings to an employer that currently offers a $10 copay plan, with no Hospital deductible. This employer has 10 total employees. 5 are enrolled as single and 5 are enrolled as Family.
The High Deductible Health Plan (HDHP) consists of a plan with a $1000 deductible for Single and $2000 Deductible for Family. Deductible only applies towards Inpatient hospitalization Xray/Lab and Outpatient Surgeries. Normal Office visits are still $10 copay and Rx are still copays.
As you can see, if all 10 employees and their family members are treated in the hospital this year and have maxed out their deductible, the employer will still save $1956. Put simply, at worst case scenario, you still SAVE.
National average shows only 20% of employee’s maxes out their deductible per year.
Let’s say half of the employees max out their deductible. The Employer saved almost $9500!
The idea is to spend less in premium; self insure the deductible, with a fully insured medical plan, that will pay 100% after the deductible is met.
There are also many more benefits and features to an HRA, please Contact Us to learn more.
Healthcare Spending Accounts (H.S.A)
What is an H.S.A?
H.S.A stands for Health Savings Account.
It is like a Savings Account that one may have with a bank, but any monies that goes into this account, goes in Tax Free (or tax deductible), grows tax free, and can only be used for qualifying medical, dental and vision expenses.
Unlike an HRA, H.S.A requires a medical plan that meets the criteria’s set by the IRS. A compatible health plan usually consist of no first dollar benefits except for Preventive care. This means, besides Preventive Care, for all office visits, Prescriptions, Hospitalization, Xray/Labs, etc, one must meet the high deductible first, and then insurance kicks in and pays thereafter. H.S.A accounts are Portable and owned by the employee, so if they leave the company, they take what’s in their H.S.A account with them.
Most employees will prefer to have an H.S.A account, versus an HRA Fund. Most employers would prefer to offer an HRA type plan, then an H.S.A compatible health plan.
Why?
Because the employer has total control of the HRA fund. What’s not used at the end of the year, the employer keeps. The employer sets what they consider are qualified medical expenses.
Then what are the benefits to an employer to offer an H.S.A?
The main benefit is the premium savings. Since the plans are deductible first, prior to receiving any benefits, premiums are often much less expensive than premiums for an HRA type plan.
See below for an example.
The group below currently offers a copay type plan that has a $10 copay for office visits, Rx copays and no deductible for hospitalization. The H.S.A compatible health plan has a $1200 Deductible for Single and $2400 Deductible for Family. Besides Preventive care, the Deductible has to be met for all services, and then the insurance carrier will kick in pay 100% of all cost, less copays. After the deductible, they will have copays as usual.
As you can see, even if the employer matches the deductible at 100%, they still save almost $6000. For the employee, if they only spent $369 (the national average per year), then they still have $831 left in their account that rolls over into next year. It’s a win win situation for both employers and employees. Please Contact Us to see if offering a H.S.A or HRA is right for you.
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