Search entire book
FREE at Amazon.com
Health Reimbursement Arrangements (HRAs): A Great New Way for Employers to Fund Employee Health Benefits
HRAs, along with HSAs, which are discussed in Chapter 6, represent the newest and most cutting-edge development in employer-sponsored health benefits. HRAs are sometimes called “Section 105 plans” after the IRS Code section that governs them.

HRAs are similar to FSAs, with three important distinctions:

  • HRAs must be 100 percent funded by employers and cannot be funded by employees through salary reduction.
  • HRAs can be either “use it or lose it” or “use it or keep it”—whichever the employer chooses to offer for each HRA.
  • HRAs can be used to cover generally everything an FSA can cover plus
    • Individual/family health insurance premiums
    • Medicare and long-term-care insurance premiums
    • Preventive care such as weight loss and smoking cessation
    • A wider list of medical items like over-the-counter medicines.

HRAs today are so new, and the rules have been changing so fast, that few employers currently are taking advantage of the many benefits they offer. Among employers that do offer HRAs, the two most common uses are:

  • Paying part of the employee's deductible medical expenses so that employees will choose employer health plan options with a higher deductible. For example, some employers offer a $5,000-deductible health insurance plan with a $2,000 “use it or keep it” HRA. Each year any unspent amounts in the employee's HRA may or may not be carried forward for future years.
  • Funding specialized employee benefit programs such as weight loss, maternity, or smoking cessation. The HRA is a relatively simple vehicle for employers to administer for a specialized or single-purpose benefit without recasting their entire group health benefits plans.

But the biggest use of HRAs tomorrow, as you will see throughout Part II of this book, will be for employers to provide tax-free reimbursement to employees for the premium on their own individual/family health insurance policies.

HRAs for Employers: How to Use HRAs to Save $2,000 to $6,000 per Employee Each Year While Getting Your Employees Better Health Insurance
How Health Reimbursement Arrangements (HRAs) Work  
Comparison of Features: FSAs, HRAs, HSAs, and Section 125 Cafeteria Plans

New-Employee HRAs—–Short-Term Health Insurance Coverage for New Hires (“Waiting Period Coverage”)
New employees historically became eligible for health benefits from their first day on the job. However, due to the high cost of employer-sponsored health insurance and to protect the health benefits of their existing employees, many companies have been forced to add “waiting periods” before new hires become eligible for health benefits.

This is because today some employees choose jobs more for the health benefits than for the wages—especially in lower-paying industries like retail and hospitality. You really can't blame them:

  • What would you do if you had a child who needed a $30,000 operation?
  • What would you do if your spouse had a condition requiring $500 or more in medication per month?
  • What would you do if you just found out that you had cancer and you didn't have health insurance?

To protect their employer-sponsored group health benefit plans, many employers offering good health benefits have added waiting periods of 30 to 270 days before new hires become eligible for health benefits. 

The solution to be able to protect your company's group plan while still being able to recruit the best employees with coverage from day of hire is to extend your waiting period and offer waiting period coverage —a short-term health insurance policy funded by your company with a new-employee HRA.

Former-Employee HRAs – COBRA Alternatives (CAP) and Early Retiree
  Programs  
High-Deductible HRAs— A Way to Encourage Your Employees to Adopt High-
  Deductible Insurance  
Coordinating High-Deductible (and other) HRAs with Health Savings Accounts 
Supplemental HRAs for Dental, Vision, and Other Items—Filling the Gaps in
  Group and Individual/Family Health Insurance  
Wellness HRAs—Programs to Improve Health and Productivity

 

  
  ADDITIONAL RESOURCES FOR THE NEW HEALTH INSURANCE SOLUTION
   



New Health Insurance Solutions for individuals, families, self-employeds, and businesses.

  



View the basic chapter table, expanded topical table, and pdf table of contents.

  



View the html or download a pdf version of the October 2005 press release.

    



Read excerpts on each topic discussed in The New Health Insurance Solution.



Read full reviews of The New Health Insurance Solution by Newsweek, The Wall Street Journal, Forbes, etc.



Read selected portion of reviews by Newsweek, CNN, The Wall Street Journal, Forbes, etc.
   



Read endorsements of The New Health Insurance Solution.

  



View other books written by New York Times best-selling author Paul Zane Pilzer.

  



View contact information including phone numbers and email addresses for book publicist, author, etc.