Debunking HRA Myths
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.
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