BASE^® Blog

In recent years, businesses are finding that offering a traditional group health plan doesn’t work.  Whether it’s because it is too expensive, it’s too complex for their business structure, or the one-size-fits-all doesn’t meet their needs.  No matter the reason, another HRA has emerged as a great alternative. 

The Individual Coverage Health Reimbursement Arrangement (ICHRA) gives employers of any size the ability to reimburse their employees for their qualified individual insurance premiums or insurance premiums and non-insured health care expenses.  Employers can choose to offer to all employees or to specific classes to fit any budget. 

The BASE® ICHRA is an IRS-approved tax savings plan that allows employers to offer a more personalized health benefit.   Employers can set a budget and create some predictability when it comes to health benefits, while providing a medical benefit without paying group benefit rates.

To start, the employer must decide which employees are eligible for enrollment into the ICHRA by separating them into classes and establishing a monthly reimbursement allowance.  Eligible employees will select an individual health plan, pay for the health plan and any out-of-pocket expenses.  The employees will submit their premium and eligible out-of-pocket expenses for reimbursement.  The employer will then reimburse the employee on a tax-free basis, up to their maximum amount established. 

The ICHRA helps employers offer a health benefit that helps control cost, is simple to administer, and is personalized to their business.  This benefit allows employers to set a defined benefit limit for each employee, having greater control over the health benefits budget, while helping to reduce the risk of unexpected costs.  The ICHRA is a great fit for a variety of employers, including those:

• With significant group rate increases year to year
• With a high number of variable hour employees ( Hospitality or retail industry)
• Looking to set a budget and help create predictability
• Adding a benefit package when they didn’t offer one before

In turn, employees benefit from the ICHRA by having the power to choose the individual health insurance plan that works for them to meet their personal needs and provide them with more control over their health care. F

For more information on the BASE® Individual Coverage HRA (ICHRA), contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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The 2023 PCORI fee deadline is on July 31, 2023.  The annual PCORI fee is funded in part by certain health insurers and sponsors of applicable self-insured health plans, including HRAs, to fund the Patient-Centered Outcomes Research Institute to support clinical effectiveness research. 

The Patient-Centered Outcomes Research Institute (PCORI) is an independent nonprofit organization that has a mission to fund research that will provide patients, their caregivers, and clinicians with the evidence-based information needed to make better-informed health care decisions.

• For plan years that ended on or after October 1, 2022, and before October 1, 2023 (including calendar year plans), the fee is $3.00 per person.
• For plan years that ended on or before October 2022, the fee is $2.79 per person.

If you, your clients, or any business you know utilizes the BASE® Section 105 HRA, ICHRA, QSEHRA and/or Integrated HRA, they have been notified on how to handle the IRS Form 720 for the purposes of addressing the PCORI fee.  Not all HRA clients will be required to pay the fee per IRS and Department of Labor guidance issued in September 2013. 

• HRA (with only 1 employee) – Business owners with these HRA plan designs in place are exempt from paying the PCORI fee. (Note:  QSEHRA plans must pay fee regardless of participant size according to Notice 2017-67). 
• HRA (with 2 or more employees) – Business owners with two or more employees that have an HRA in place are required to pay the fee by July 31, 2023. These clients have been notified, and you may find a copy of the notice sent as a downloadable PDF document in your online BASE® Business Partner account in the “Resources” section under “Supporting Documentation” labeled PCORI Fee Information.

A current form can be found here, with instructions.  Employers that fail to pay the fee, or the incorrect amount, could be subject to penalties.  For complete instructions on completing the Form 720, please visit the IRS website.

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With the continuous rise of health care expenses, employers are looking for ways to help offset them for their employees but also are finding it challenging to provide a budget-friendly health benefits plan.  With options like a Section 125 Cafeteria Plan, it allows employers to give the employee benefits a boost while staying in budget with the bottom line. 

The 125 Cafeteria Plans are an employer-sponsored benefit plan that lets employees pay for eligible health care expenses on a pre-tax basis.  Called a “cafeteria plan” because it is like walking through the cafeteria, selecting the dishes an individual wants to eat, employees can choose the type of health care benefit they want on their “plate” and keep walking past the ones they don’t want to participate in.        

The BASE® 125 Cafeteria Plans allow employers to customize the benefits they offer to their employees, save money, and allow employees who are paying for health care expenses, insurance premiums, or dependent care expenses to do so on a pre-tax basis. 

The BASE® 125 Cafeteria Plans provide access to quality benefits, while providing a variety of affordable benefit options that complement the current health benefits in place. 

Employers can offer one or all four of the following pre-tax options to their employees:

1. Flexible Spending Account (FSA)
2. Limited Purpose FSA (LPFSA)
3. Dependent Care Assistance Plan (DCAP)
4. Premium Only Plan (POP)

There are 3 rules for cafeteria plans – 1) eligible benefits, 2) eligible employees, and 3) eligible companies.

Eligible Benefits.  The employer’s cafeteria plan can cover one or multiple benefits. 

Eligible Employees.  The benefits the employer decides to implement into the business must be made equally available to employees in the same situation.  For example, but not limited to, employee start date, employee waiting periods, special enrollment periods, and any combination. 

Eligible Companies.  All eligible employees of regular corporations, LLCs, partnerships, sole proprietorships, and anyone owning 2% or less of an S-corporation.

For more information on the BASE® 125 Cafeteria Plans, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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