An HRA Can Enhance Your Company Benefit Package While Helping To Contain Costs and Boost Employee Morale

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Increasingly employers find themselves trying to balance the need to reduce health insurance benefits, due to high cost, without shifting financial burden to their employees. HRAs are helping employers achieve this balance and save money.

With health insurance premium increases averaging 15% plus per year, employers by the thousands have been turning to Health Reimbursement Arrangements or HRA Plans to help save money.

HRAs came into being in 2002, when the IRS issued guidelines for this new benefit in Notice 2002-45, (see Notice 2002-45 at HRAs are special employer funded accounts setup to reimburse specific medical expenses directly to employees.

One of the more popular ways employers are using a HRA is in combination with a higher-deductible health insurance plan. The employer benefits from reduced insurance costs, but the effect to the employee is cushioned with an HRA. For example, an employer may decide to raise the health plan deductible from $500.00 to $2,000.00 per year. The employer then establishes a Deductible Gap HRA and informs employees that the new HRA Plan will reimburse employees for qualifying expenses applicable to the deductible from $501.00 to $2,000.00, (up to $1,500.00 annually). Experience has shown only 25% to 30% of employees will incur claims under this scenario.

The second most popular way employers have found to use a HRA is called the Comprehensive Plan. The Comprehensive HRA Plan is normally offered in lieu of company sponsored health insurance. Here the employer simply tells the employees the company will reimburse all eligible employees up to a predetermined limit, such as $200.00 per month. The funds can be used to reimburse out-of-pocket medical expenses, or to reimburse employees for individual health insurance premiums.

For more information on how your company can take advantage of HRA Plan Designs contact Gene Ennis, Core Documents, Inc. toll free 888-755-3373 or on the web at

Core Documents, Inc., a nationwide leader in providing low cost IRS and DOL compliant Plan Documents for Section 125, FSA and HSA Plans since 1997 has developed several HRA Plan Document kits that will allow any employer to establish these Plans for a one-time fee of $299, plus $69 annually for document maintenance and consulting, see more information at Core Documents will soon be offering a new software program entitled CoreData that will help employers self-administer HRA plans. Call us toll free at 888-755-3373.

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Gene Ennis
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