BASE^® Blog

In January 2020, another Health Reimbursement Arrangement was made available to employers to implement into their businesses.  The Excepted Benefit Health Reimbursement Arrangement (EBHRA) was created due to regulators recognizing that some employers may wish to offer tax-free reimbursements to their employees without regard to whether they are enrolled in their employer-sponsored group health plan.  This new HRA created the opportunity for employees to still offer employees that do not participate in the group health plan tax-free dollars to pay for eligible health care expenses.    

The Excepted Benefit Health Reimbursement Arrangement (EBHRA) allows employers who offer a group health insurance plan, to reimburse employees not enrolled in the group health insurance plan, up to an additional $1,800 for premiums paid towards excepted benefits and out-of-pocket medical expenses.

The BASE® EBHRA is for businesses of all sizes looking to maximize tax benefits while expanding the benefit package available for their employees.  This HRA is for employees who have been offered the employer-sponsored group health plan but is not required to enroll to participate in the EBHRA.  Eligible excepted benefits are COBRA, dental, vision, short-term medical plans, and other qualifying out-of-pocket health care expenses. 

Check out the 3 reasons why an employer would want to offer the EBHRA:

Provides flexibility for both employees and employers.

With the EBHRA, employees can select the benefits they want without having to pay for what they don’t.  Unlike other health benefits, the EBHRA does NOT require employees to be enrolled in the employer-sponsored group health insurance plan nor an individual health insurance plan.  This helps employees choose the combination of health options that works best for them. 

With the EBHRA, employers get to decide what the reimbursement limit is, up to the maximum contribution limit.

Offers potential savings for all.

With the EBHRA, employees can take advantage of the cost savings and additional tax breaks.  The $1,800 available is tax-free and can be used to pay for qualified excepted benefit premiums and out-of-pocket health care expenses. 

With the EBHRA, employers have a predicted and anticipated cost when offering additional health benefits to their employees.  With reimbursements 100% deductible as a business expense for employers, there are no taxes paid on the amounts given to employees and money not used by employees can be returned to the employer instead of being rolled over to the next year. 

Is unlike anything else in the health benefits game.

With the EBHRA, employees can pay for excepted benefit premiums and qualified out-of-pocket expenses.

With the EBHRA, employers of any size can offer this health benefit and can be combined with other health benefit plans to maximize tax savings. 

The EBHRA requires a group health plan to be offered, so it works well alongside the Integrated HRA or QSEHRA, offering more resources for employees and valuable tax savings for employers.  This benefit is just another health benefit that will help maximize savings and help with recruiting and retaining talent.  For more information contact BASE® at 888.386.9680 or visit www.BASEonline.com. 

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