HRA Proves to be a Benefit Option for Retirees
Health Reimbursement Arrangements (HRAs) are tax-free accounts that help employees pay for eligible health care expenses. With an HRA, the employer funds the account, and employers are finding it’s a great benefit option for retirees to use the funds to get reimbursed for qualified health care costs.
BASE® has been administering Health Reimbursement Arrangements for over 25 years and with each passing year, has seen more employers looking to provide an HRA to their retiree employees as part of their health care benefit strategy.
A Retiree-Only HRA can be used to reimburse qualified health care expenses, including premiums for individual coverage and Medicare, incurred after retirement. Employers may further restrict the types of qualified health care expenses that are eligible for reimbursement.
The Inflation Reduction Act (IRA) of 2022 introduced significant changes to Medicare Part D, which improved coverage for retirees but presented financial challenges for employers sponsoring group Medicare Part D plans. To mitigate potential cost increases, employers might consider directing retirees to individual Medicare Part D plans through the marketplace exchanges and leverage Health Reimbursement Arrangements (HRAs) for funding.
With this approach, retirees gain all the benefits of Medicare Part D while employers can enjoy a reduction in their administrative effort and potentially in their coverage costs. Many employers have done exactly this over the years as individual market insurance coverage has become more attractive compared to group plan coverage.
If you are an employer looking for retiree benefit options or work with employers looking for options and want to learn more about how a Retiree-Only HRA might benefit them, contact BASE® at 1.888.386.9680 for more information.
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