BASE® Integrated HRA
The BASE® Integrated HRA is available for employers with a group health insurance plan in place who are looking to reduce the overall cost of insurance coverage. The BASE® Integrated HRA, also known as a Medical Expense Reimbursement Plan (MERP), is an employer-paid reimbursement program, designed to specifically assist employees with medical expenses. This means savings for employers and more options for employees.
With the flexible design of the BASE® Integrated HRA, any employer can take advantage of its tax savings. By coupling a group health insurance plan with the BASE® Integrated HRA, employers are able to suppress the yearly increases most commonly associated with traditional forms of health care.
The BASE® Integrated HRA gives employers the flexibility to help their employees pay for medical expenses not covered by their health insurance, which further enhances and expands benefit plans to retain and attract quality employees. Overall the Integrated HRA gives employers the flexibility to help their employees pay for medical expenses not covered by their health insurance.
Benefit to Employer:
Employers can choose to raise the deductible on their current group health insurance plan, which will reduce the overall cost of the insured plan. The employer will utilize the BASE® Integrated HRA to self-insure a portion of that deductible to keep the employees responsibility of the deductible maintainable. All reimbursements to the employee are tax-free to the employee and tax deductible to the employer.
Protection of Funds.
HRA funds are held by the employer and only paid to the employees once a qualifying expense has been adjudicated by BASE®. No prefunding necessary. Without having to directly fund the account, this does not tie up funds that the employer could be utilizing elsewhere.
Employers have more control of the overall cost of their benefit plans by utilizing the BASE® Integrated HRA. By coupling a group health insurance plan with the BASE® Integrated HRA, employers are able to suppress the yearly increases most commonly associated with traditional forms of health care.
This plan is portable and works with any carrier, health insurance plan, or group benefit plan. Since there are no restrictions on the type of health plan that can be paired with an HRA, employers are free to choose the perfect plan for employees.
All reimbursements are 100% deductible as a business expense.
Benefit to Employee:
Employers only reimburse an employee once a plan eligible expense has occurred. No prefunding of an account is necessary. Instead, the employer reimburses eligible expenses once they have actually been incurred, following enrollment into the plan.
All reimbursements are considered non-reportable and non-taxable income.
Integrated HRA Plan Eligibility
This plan helps employers cut health care costs by shifting more responsibility to their employees regarding the management of their health care expenses. Plus, all reimbursements are 100% deductible as a business expense. Guidelines for qualifying for this type of plan include:
Integrated HRA Savings
This is an approach to healthcare – not just a product! The BASE® Integrated HRA has been proven to reduce client's health insurance premium increases by 10-50%. Employers have complete control in deciding what expenses to reimburse, over what period of time, etc., which means:
- Shifting costs from the employer back to the employee
- Employers can continue to offer benefits while controlling premiums
- Participants get greater savings, more funding control and premium reduction
The BASE® Integrated HRA is designed to reduce the overall group health insurance cost for the organization and its employees. This process is done by the employer funding part of the employee's deductible after the employee's portion has been met, through the HRA. The organization selects and maintains a group health insurance plan with lower premiums (due to a higher deductible) for its employees and partially insures a portion of the employees' costs. There is no pre-funding of the HRA balances. BASE® maintains the HRA on behalf of the organization as their expense and claim administrator.
Frequently Asked Questions
There are many potential reasons why an employer may look at enrollment into a BASE® Integrated HRA:
- The employer is decreasing insurance premium rates.
- The employer is instituting or adding a benefit plan for their employees.
The BASE® Integrated HRA can be coupled with your current health benefit plans already in place such as the 125 Cafeteria Plan or your group insurance plan.
Medical expenses incurred prior to your enrollment in an HRA are not eligible for reimbursement. Only those expenses incurred after you establish a plan can be included. The IRS reiterated this position in a document published in March 1999 titled "Retroactivity". The IRS also issued Revenue Ruling 2002-58 to address issues caused by some plans that were still out of compliance.
Click here for a comparison on HRA and HSA plans. One thing to remember is that an HSA qualified health insurance plan can be utilized with an HRA.