As leadership teams evaluate small insurance options -health of the company, a common question 
we receive is, "How can we repay the tax-free employees for medical expenses?" There are four major medical expense reimbursement plan options. To help clarify what type of diet will help your business achieve its goals, here's a simple breakdown of the four primary medical reimbursement accounts used by small businesses today.
In this article, we will cover:
- Health Savings Accounts (HSA)
- health reimbursement arrangements (HRA)
- health care reimbursement plans (HRPS)
- flexible spending Accounts (FSA)
health Savings Accounts (HSA)
HSA is a personal bank account belonging to an employee who makes the payment or reimbursement of eligible medical expenses tax free
Although HSAs are often known as 'social advantages' -. offered alongside a high deductible health plan sponsored by the company - they are really more like IRA because individuals can set them up and help them out. their own
We talk about HSA more in this article, but for a summary of "101" are the features of HSA key:
- eligible medical expenses include not care medical refunded (as defined by the IRS) and insurance premiums for the unemployed.
- Must have a high deductible health plan to open an HSA.
- employees belonging and portable after termination.
- Anyone can help (company, employee, etc.).
- There are annual contribution limits ($ 3,350 / year for singles and $ 6,750 / year for the family in 2016).
health reimbursement arrangements (HRA)
an HRA is a health plan funded by the employer used to reimburse employees for out of pocket medical expenses.
CRH are used in one of two ways: 1) gives the employer an integrated HRA, combined with a high-deductible health insurance plan. Or, 2) the employer offers a standalone HRA that employees can use on a variety of medical expenses -. Including insurance premiums
Self HRAs, however, are much less common today that the health reforms have placed limits on the use of autonomous HRAs for most companies. If a company wants to pay Medicare premiums, they often set up a limited purpose reimbursement scheme for health care -. Which we will discuss below
For a detailed discussion of CRH, see this article. To summarize:.
- Eligible medical expenses include unreimbursed medical care and health insurance premiums (as defined by the IRS) - if the company can limit the categories of pay in the plan documents
- owned and financed company. Employees generally do not have access to funds after.
- No annual contribution obligations.
healthcare Repayment Plan (HRP)
A HRP is a type of medical plan designed for the repayment premium refund. HRP is funded and administered by the company. Employees can use their allowance to reimburse individual and health insurance premiums qualified family. HRPS are often the basis of a ROP program or health benefits to defined contributions, and can be designed to comply with the new reforms of the health reform market.
For a detailed discussion of HRPS, see this article. A summary of HRP characteristics :.
- Eligible medical expenses include eligible Medicare premiums and preventive care (as defined by the IRS)
- owned and financed company. Employees generally do not have access to funds after.
- No annual contribution obligations.
Health Flexible Spending Accounts (FSA)
RTA Health offer a tax-free way for employees to save for qualified medical expenses in a single year. RTA can be paired with a health plan or used alone. Fund expire if not used by the end of the year plan.
For a detailed discussion of RTA, see this article. A summary of the FSA characteristics :.
- Eligible medical expenses include out-of-pocket medical expenses (as defined by the IRS), excluding insurance premiums
- must be established by a business.
- can be financed by the employees or the company.
- limit maximum annual contribution of $ 2,500 per employee.
Conclusion
If your small business is looking to reimburse employees for medical expenses, there are four main types of repayment plans to evaluate: HSA, HRA, HRPS and ASF. What is the right plan? The answer depends on several factors such as the company's spending the kind wishes to pay, how much the company wants to contribute (if applicable), and the flexibility of the plan for the company and employees.
To see how the four types of plans compare, here's a quick and easy to read comparison chart (Download Free PDF).
What questions do you have about how to reimburse employees for medical expenses? We would like to hear from you. Leave a comment or question below.
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