Looking to 2022 with HRAs

With all the craziness and unpredictably of the past couple of years, there is one thing that is still looking strong heading into 2022.  Health Reimbursement Arrangements. 

A Health Reimbursement Arrangement (HRA) is a tool for business owners to increase their tax savings and provide employees with health benefits.  With five different HRAs to choose from, there is an HRA for all business types whether they offer a group health insurance plan, or their employees are responsible for individual health coverage.  Each one helps businesses fend off the rising cost in of health care and provide a more affordable benefits package for their employees. 

According to a Kaiser Family Foundation survey, about 59 percent of employers offer health benefits.  Other employers are unable to afford the cost of group coverage but would like to offer benefits to remain competitive in a tight labor market.  The HRA offers options to virtually every type of employer to offer some form of benefit option in the form of an HRA.  Looking ahead to 2022, BASE® has seen an increase in the number of employers interested in reimbursing employees for individual health insurance coverage with an ICHRA, while also seeing larger employers that are interested in reducing the cost of premiums by implementing an Integrated HRA.  Big or small, there is an IRS-approved HRA to expand benefits for business owners in 2022:

Section 105 HRA

The Section 105 HRA allows for small business owners, who can legitimately hire their spouse, deduct up-to 100% of health care costs, including individual health insurance premiums and qualified out-of-pocket health care expenses as a business expense.  This HRA is for employers classified as a Sole Proprietor, Partnership, C Corp, or S Corp. 

The business owner saves an average of over $5,900 annually in tax savings, helping to reduce the high cost of health care expenses. 

Integrated HRA

The Integrated HRA allows for businesses to couple with a high-deductible health plan to suppress the yearly increases in health care costs.  This HRA is for a business with a group health plan, looking to lower the cost of health insurance premiums, keeping their employees’ coverage the same, and supplementing their deductible costs. 

The employers can reduce the group health insurance premiums by 10-50%, reducing the overall cost of the insured plan. 

Qualified Small Employer HRA (QSEHRA)

The QSEHRA allows small businesses, who do not offer a group health plan, to reimburse employees for their health insurance premiums and health care expenses or just health insurance premiums.  This HRA is for businesses with less than 50 full-time employees who maintain minimum essential coverage (MEC). 

The employers can help their employees pay for their health care coverage, tax-free, with allowance caps, giving more control over the health care costs. 

Individual Coverage HRA (ICHRA)

The ICHRA allows employers to reimburse employees, separated into specific classes for qualified insurance premiums or insurance premiums and out-of-pocket health care expenses.  This HRA is available to any sized business looking to streamline benefits and cut costs without reducing value to their employees’ health benefits. 

The employers can choose the contribution level that works for their budget and save money by not providing a traditional group health plan to all employees. 

Excepted Benefits HRA (EBHRA)

The EBHRA allows employers to reimburse employees an additional $1,800 for premiums paid towards excepted benefits not included in the traditional group health plan.  This HRA is available to businesses with a group health insurance plan in place, but the employees do not have to participate in the group health plan to participate in the EBHRA. 

The employers can maximize savings and tax benefits and expand their health benefits package. 

So, what can we expect for 2022?  The HRA will still be a great option for businesses committed to providing health benefits to their employees while controlling health care costs.  With 5 strong HRAs available, 2022 will set up businesses to save thousands of dollars in tax savings, help their employees pay for health care costs, and provide a great benefits package.  For more information, contact BASE® at 888.386.9680.

Employers Can Help Employees Save on Child & Dependent Care Expenses

For so many, the cost of putting children in daycare, nursery school, or care for an aging parent can be a significant expense.  But employers can help by providing the BASE® Dependent Care Assistance Plan (DCAP) to help employees pay for their eligible child and dependent care expenses.  Employers offering this type of benefit are allowing employees to be reimbursed with tax-free dollars for eligible dependent care expenses so that the employee and his or her spouse may work.

The BASE® DCAP allows employees to use tax-free dollars to pay for their employment-related dependent care expenses.  No matter the dependent care service, children, disabled spouse, or legal dependents, the BASE® DCAP provides additional financial assistance to take care of dependents (children, disabled spouse, or legal dependents), tax-free. 

What are eligible expenses? 

In general, expenses that are in connection to keeping the participants gainfully employed, such as…

  • Before and after school programs
  • Daycare
  • Adult and elderly care programs

What are ineligible expenses? 

In general, expenses that have nothing to do staying gainfully employed, such as...

  • Schooling for a child in kindergarten and above
  • Babysitter when the participants want to go to out for dinner and to the movies on a Friday night
  • Payment for care when the participant is not legally responsible for the child or adult requiring care

Even though the BASE® DCAP is considered an employer-provided plan, the pre-tax contribution from the employees not only reduces the employee’s payroll taxes, it also reduces the employer’s share of payroll taxes resulting in a financial benefit for the employer too.  The employees can continue to work, establish funds, and pay for their dependent care costs.  With the funds being transferred on a pre-tax basis, employees save on federal, state, Social Security, and Medicare taxes, thus the employees will also see an increase in their take-home pay. 

The BASE® DCAP helps the employer enhance their benefits package by helping make dependent care more affordable for their employees.  The addition of this benefit can help recruitment and retention of employees.  Click here to watch a short video and learn more about the BASE® DCAP or call 888.386.9680.