Employer Options for Health Insurance

Most employees not only wish to be paid, they wish to have access to benefits. Or ways to reduce the amount they have to pay for ever increasing health insurance costs. As an employer you have several options you can offer for health care. However, there are laws that govern what kind of coverage at a minimum you must provide. Most of this is driven by the total number of employees you have. The Affordable Care Act set the limit at 50 full time equivalent employees. If you have more than 50 full time equivalent employees, then you must offer group health insurance. If you have less than 50 you have several options and a few are listed below.

High Deductible Health Plan

A High Deductible Health Plan (HDHP) is a health insurance plan that contains certain requirements with respect to deductibles and out-of-pocket expenses. The deductibles are generally higher than for a standard health insurance plan. Out-of-pocket expenses are generally not covered (up to a maximum amount) until the annual deductible is reached. Due to the nature of these health plans the premiums are generally lower.

HSA

A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.

Per IRS regulations, employer contributions to employee HSA’s must meet compatible contribution rules. If the contributions do not meet the rules, they will not be tax-deductible to the employer. This means that an employer must contribute the same amount for all individual plans. However, they can offer a different amount for family plans but all family plans must be the same amount. For example, an employer can contribute $75 per month to an employee-only HSA and $150 to family HSA plans.

HRA

A Health Reimbursement Arrangement (HRA) is a tax-advantage benefit that allows both employees and employers to save on the cost of healthcare. HRA plans are employer-funded medical reimbursement plans. The employer sets aside a specific amount of pre-tax dollars for employees to pay for health care expenses on an annual basis.

FSA

A health Flexible Spending Arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from contributions.

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