Health Reimbursement Arrangements are IRS-approved, employer-funded health benefits that employers use to reimburse their employees for their qualifying health care expenses.
Despite the growing popularity of Health Reimbursement Arrangements, many employers are hesitant to implement an HRA into the business due to a few common myths and misconceptions.
MYTH 1: HRAs don’t qualify as a real health benefit.
Despite some employers never hearing of them, they are in fact an IRS-approved formal health benefit that employers can use to reimburse their employees. As with other health benefits, employers must follow the rules when implementing an HRA, such as some rules surrounding contribution limits, reporting requirements, and more.
MYTH 2: HRA reimbursements are subject to taxes.
HRA funds aren’t subject to federal or state income taxes and as long as the HRA complies with all IRS regulations, the contributions and reimbursements are not subject to payroll taxes for employees. *Except for 2% or greater shareholders of an S-Corporation.
MYTH 3: HRAs are too complex to administer.
HRAs can be implemented and administered with ease if done right, by a third-party administrator, like BASE®! With user-friendly portals and apps that simplify administration, day-to-day operation, and reimbursement, it will be easy for employers to set up, fund, and manage the HRA while employees can find it easy to keep track of and request reimbursement for their eligible expenses.
These are three of the most common myths showing that you can’t always believe every misconception you hear. BASE® has been administering HRAs since 1999, starting with one type of HRA and today we have a variety of HRAs available to meet various business needs. BASE® HRAs can be customized to suit an employer’s bottom line, while adding value to any benefit strategy.
To learn more about the BASE® HRAs available, contact BASE® at 888.386.9680 or visit www.BASEonline.com.
The Employee Retirement Income Security Act (ERISA) is a federal law to protect employees participating in employer-sponsored benefit plans. Despite the fact that ERISA is required, there are several myths and common misconceptions around ERISA making it difficult to understand.
ERISA was designed to protect employees and mandates that health plans must be in writing. The Summary Plan Description and Plan Documents fill in the gaps of other documentation to help comply with federal regulations.
The BASE® ERISA Wrap is designed to wrap around existing certificates of insurance and benefit plan booklets to provide the required provisions and information and protect the plan and the employer from steep penalties and fines.
MISCONCEPTION: Plan Documents are optional.
It is a common misconception that Plan Documents are optional, but ERISA has strict requirements for these types of documents. Many employers mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for a Summary Plan Description (SPD) and Plan Documents, but they don't include the required or recommended provisions that protect the plan and the employer.
MISCONCEPTION: Carrier documents are all that employers need to be in compliance.
Compliance gaps present a real problem for employers without the proper documentation in place. Carrier documentation lacks some required information, including:
- ERISA plan numbers
- Plan Administrator (Employer or Carrier)
- If employer is part of the Pay or Play Provision of the Affordable Care Act
- Grandfathered Disclosure, which must be included if medical plan still grandfathered
MISCONCEPTION: ERISA only applies to very large companies.
Virtually all employers, regardless of size or number of participants should have an ERISA Wrap in place to satisfy federal requirements. ERISA applies to virtually all employer-sponsored benefit plans, regardless of size. If one employee participates, ERISA applies.
The BASE® ERISA Wrap combats these misconceptions and delivers a solution with a customized Wrap SPD and Wrap Plan Document with the required ERISA provisions and information to achieve compliance. To learn more about BASE® ERISA Wrap, contact BASE® at 888.386.9680 or visit www.BASEonline.com.
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