April 08, 2012
Understanding Health Reimbursement Arrangements
A Health Reimbursement Account (HRA), also known as a health reimbursement arrangement, is an IRS approved, tax advantaged, health benefit plan that reimburses employees for out of pocket medical expenses and individual health insurance premiums. Let me just clarify that an HRA is not health insurance. HRAs allow the employer to make contributions to an employee's account and provide reimbursement for eligible health care expenses. This is an excellent way to supplement health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance.
Basically, HRAs are notional accounts. Meaning, no funds are expensed until reimbursements are paid. Through an HRA, employers reimburse employees directly only after the employees incur approved medical expenses and file a claim.
How Does an HRA Work?
Health Reimbursement Arrangements may seem pretty complicated, but in reality, they’re really simple. A HRA is really just a system that allows employers to reimburse employees for medical expenses tax-free. There are some basic points on how HRAs work.
The employer selects the monthly allowances for the employees. These allowances can be different based on the job function or health need of each employee. This allowance isn't actually paid to the employees yet until they make reimbursements.
Employees pay for their own medical care. This can be a doctor visit, individual insurance, prescription medicine, or a number of other qualified expenses. The employer then reimburses the employees up to the amount of their allowances. Allowances build up from month to month assuming the employee isn't spending the full amount.
What Makes Health Reimbursement Arrangements Different?
Unlike Health Savings Accounts (HSA), there is no limit to the amount of money an employer can contribute to an employee’s HRA.
An HRA may reimburse any expense considered to be a qualified health care expense by the IRS, including expenses for health insurance policies. Within IRS guidelines, employers may restrict the list of reimbursable expenses in any way they choose.
HRA balances may roll forward from year to year. Employers can design the HRA not to allow balances to rollover from one year to the next. However, limiting the roll over feature defeats a key Health HRA advantage. Employers may allow employees to have access to their Health Reimbursement Arrangements after retirement. However, employers may not pay/distribute cash or other benefit balance to any employee.
Reporting features make real-time monitoring of HRA liabilities, reimbursements and utilization easy. Employers can change plan benefits at any time or cancel the entire plan at any time. In addition, HRAs allow employers to establish plan-year maximum reimbursements for any given category of expense and to establish a maximum balance that any participant class may hold at a time.
Posted by Wiley Long at 11:00 AM | Comments (0)
March 16, 2012
Health Savings Accounts Tax Advantages
Health Savings Accounts (HSA) are tax-advantaged accounts that a taxpayer can set up with a qualified HSA trustee (usually a bank or an insurance company) to pay or reimburse qualified healthcare expenses. The only condition to be able to start an HSA is that you must have a high deductible health plan (HDHP) that is compatible to work with an HSA. You don’t need other permission or authorization from the IRS to set up an HSA.
As of 2012, the deductible that the IRS had set to be able to establish an HSA is between $1,200 and $5,950 for individual plans or between $2,400 and $11,900 for family plans.
Only certain policies allow you to start a Health Savings Account, so be sure you are getting an HSA-qualified plan.
When it comes to premiums, high deductible health insurance plans usually have lower premiums compared to other traditional health insurance plans because they cover fewer items. With an HSA, you can pay for healthcare expenses that are not usually covered by your plan such as dental and vision care.
If you withdraw funds from your HSA to pay for qualified medical expenses, the distribution is tax-free. However, if you use it for other purposes aside from medical expenses and you haven’t reached 65, you will be subjected to an additional 20 percent tax penalty.
What Are HSA Benefits?
OTC Drugs. Last year, over-the-counter drugs except for insulin are no longer covered unless you present a prescription from your physician.
Tax deductions. Contributions made by you or your employer can be deducted from your annual tax income even if you don’t itemize. The contributions placed by your employer in your savings account can be excluded from your gross income. The balance rolls over every year so you don’t need to you worry about your funds being forfeited at the end of the year.
Tax Free. Interest and other earnings in your HSA account grow tax-free. Distributions are also tax-deferred if used for qualified medical expenses.
Portable. With an HSA, the money is yours to keep even if you change jobs or you leave the work force.
Posted by Wiley Long at 11:15 AM | Comments (0)
February 16, 2012
Health Savings Accounts Favored By Employers And Employees
With the skyrocketing costs of health care, businesses are trading their PPO (Preferred Provider Organization) plans in for Health Savings Accounts. This move is strongly favored by employees because it can mean quality healthcare coverage and tax deductions.
While the tax deduction for Health Savings Account contributions can be up to $3,050 for individuals and $6,150 for families in 2012, Golden Rule points out that HSA advantages go far beyond tax deductions.
Health Savings Accounts' Two Main Advantages:
For Golden Rule, Health Savings Accounts have two advantages. They are tax-privileged and they allow you to get lower health insurance premiums with a qualified high-deductible health plan. Plus, preventive care is 100-percent covered in plans obtained post health care reform through in-network providers.
One of the best things about having an HSA plan is that it allows you to keep more of your money in your own account than in Uncle Sam’s or in your insurer’s.
According to Richard A. Collins, CEO of UnitedHealthcare’s Golden Rule Insurance Company, Health Savings Accounts make financial sense fοr many families because thеу mаkе it possible to save tax free fοr medical expenses. He also says that since you - not your employer - own your HSA, you have the power to do what you want with the money when you want to use it.
Research conducted by RAND Health Insurance Experiment revealed that Health Savings Accounts change the way people handle their medical care. The consumer choice aspect of HSA plans can save money on both ends of the healthcare spectrum.
The study showed that HSA plan holders were able to cut their healthcare expenses, even when they seek medical treatment. This could be because consumers make better decisions regarding their healthcare. The study also revealed that 65 percent of the decrease in healthcare costs was from consumers “initiating care less often.”
Amelia Haviland, a RAND statistician, says that unlike earlier time periods, it seems that today’s patrons саn shape thе level аnԁ mix of medical services provided when they receive medical care. At nominal amounts, part of thе savings reflects choices fοr less-costly treatments, nοt јυѕt a reduction іn thе number of services.
According to Haviland, a couple of things help reduce rising healthcare costs. These are less use of name-brand medications and specialists. With Health Savings Accounts, the solution to control high healthcare costs might just be right under your nose.
Posted by Wiley Long at 11:25 AM | Comments (0)
January 10, 2012
Can Health Savings Accounts Help Small Businesses Fight Health Care Costs?
According to a recent study commissioned by HSA provider ACS and conducted by Bucks Consultants, more small business owners and employees are turning to Health Savings Accounts as a low-cost healthcare option.
Health Savings Accounts (HSA) are owned by the employee, rather than the employer, even if the employer funds that HSA. These funds can be used to pay for qualified health care expenses, or kept for retirement.
Marcia Wagner, principal and founder of the Wagner Law Group, said: “Health Savings Accounts have gained popularity among small business owners for one simple reason: efficiency.” She added that HSA plans and Health Reimbursement Arrangements give people some "skin in the game." They have less to lose if they shop for coverage and actively manage as much of their own healthcare decisions as possible.
Close to 80 percent of polled small business owners reported that a high-deductible health plan that can work with a HSA is the key in controlling healthcare costs. In addition, 56 percent of HSA holders think that their HSA-qualified plan is more affordable than most other kinds of health plans.
Having an HSA plan can create real cost savings for small businesses particularly when employees are motivated to shop for the best health insurance.
Posted by Wiley Long at 01:05 PM | Comments (0)
December 01, 2011
Difference Between Health Savings Accounts And A 501(C)3
If you are wondering if Health Savings Accounts are the same as 501(C)3 corporations, the answer is no. A 501(C)3 corporation is a tax-exempt organization formed for educational or charitable activities. Health Savings Accounts, on the other hand, are simply a tax-advantaged way of saving money when it comes to paying for medical bills.
A Health Savings Account also helps reduce your income taxes - both federal and almost always state taxes. HSA contributions tax-deferred and withdrawals are tax-free when used to pay for qualified medical expenses.
A Health Saving Account must be combined with a qualified high-deductible health plan. These deductibles start at $1,200 for individual coverage and $2,400 for family coverage.
HSA plans do have underwriting policies, so pre-existing health conditions might cause your application to be denied. Our independent agents can suggest which companies have less strict underwriting policies to help you find coverage.
Rates for HSA-qualified plans are significantly lower than standard co-pay plan premiums. In addition, premiums have been rising only about half as fast as other kinds of health insurance.
Maintaining your health will make it easier for you to switch plans if you do see a rate increase. Our site offers instant quotes to help you compare prices from the major insurance companies offering HSA plans.
Posted by Wiley Long at 03:00 AM | Comments (0)
October 04, 2011
Health Savings Accounts Lower Out-Of-Pocket Costs
Like all high-deductible plans, those that are qualified to be combined with a Health Savings Account (HSA) now cover preventive health care. That's only true for plans purchased after health care reform, though.
HSA Plans are high-deductible policies combined with an HSA. Like other high-deductible plans, HSA Plans are often less expensive than co-pay plans. They could be a more affordable route for employees struggling to pay for rising rates on group coverage.
As of 2011, the maximum HSA contribution for individuals is $3,050 or $6,150 for families. Those who are at least 55 can make an additional annual contribution of $1,000. Contributions can be deducted from taxable income to reduce federal and usually state taxes. Only a handful states remain where HSA deposits can not be used as state tax deductions.
Any HSA contributions that are not needed for health care can grow with tax-free earnings. It may be wise to start with a relatively low deductible, and move to a higher deductible as your HSA balance grows. That way you won't get caught with a lot of out-of-pocket costs. To research what HSA Plans are available, just run instant quotes on our site.
Posted by Wiley Long at 02:18 AM | Comments (0)
August 01, 2011
Enrollment In Health Savings Accounts Is Still On The Rise
According to the America’s Health Insurance Plan (AHIP), enrollment in a high-deductible health plan coupled with a Health Savings Account (HSA) increased by 14 percent this year. The biggest increase came from the large-group businesses, which rose by 26 percent from January 2010 to 2011.
If you’re a business owner, you should investigate how a health savings account can save you money even if you are self employed. If you have employees, an HSA Plan can mean big annual savings on the cost of health insurance benefits.
Your employees will need to start their own HSA, but we can recommend financial institutions that offer health savings accounts. HSA contributions are tax deductible. The maximum contribution allowed depends on whether you set up a family or individual plan.
Investing in HSA plans can cut the cost of health care coverage, reduce taxes and give tax-free earnings. That's why an HSA can benefit both employees and business owners. We've explained all the details here on our website, and have HSA experts ready to answer your questions. Just call to arrange for a free consultation at no charge.
Posted by Wiley Long at 07:59 AM | Comments (0)
June 02, 2011
An HSA Can Be Just What Small Business Owners Need
Over the past six years, health insurance premiums have significantly risen by at least 87 percent. This is not only the problem of small business owners, but of all Americans who are paying for their health insurance every year. According to insurance companies, premiums are on the rise due to the constant increase of health care costs.
Such an increase is a major problem because business owners need to pass this burden on to employees. Sometimes, it may also mean dropping the benefit entirely. A Health Savings Account or HSA can just be what small business owners need to solve this problem.
Going with HSA insurance with a high deductible, brings down the cost of premiums. An HSA can help with out-of-pocket expenses for medical costs until the deductible is met. Your employer may even place contributions in your account. What’s good about having an HSA is that the money you place in it earns tax-free and unspent money is remains yours even if you leave the job. Health Savings Accounts can even reduce your taxes.
To have an HSA plan, you need to have a qualified high-deductible health plan. On our site, you can check out which plans you need to qualify for an HSA. Get an instant HSA insurance quote and compare different HSA plan options from different trusted companies.
Visit http://www.health--savings--accounts.com for more information on Health Savings Accounts and HSA Plans.
Posted by Wiley Long at 12:39 AM | Comments (0)
May 25, 2011
Are Health Savings Accounts Linked To Employment?
Unlike a flexible spending account, Health Savings Accounts are independent of employment. Meaning that a Health Savings Account (HSA) is yours to keep whether you become unemployed or not. Even if your employer does not offer an HSA plan, you can start one on your own. Simply purchase an HSA-qualified high-deductible health plan and you’re ready to open your own HSA.
Getting an HSA plan is beneficial because the money you place in your health savings account earns interest tax-free. You get to use the money in your HSA for future qualified medical expenses.
Withdrawals from your Health Savings Account for qualified medical costs are also free of tax and you don’t even have to itemize deductions to claim your HSA contribution. Your HSA funds even roll over at the end of the year to continue growing tax-free the next year.
Although you own your HSA, your employer can make contributions to your health savings account. The contributions are tax-deductible on the employer’s part and are not included in your gross income. If you decide to leave that job or lose it, the contributions made by the employer stay with you. Even after you retire, you get to keep and use the money in your HSA.
Want to see more? On our website, it's quick and easy to compare rates for HSA-qualified insurance plans. You can learn about starting your HSA and selecting an HSA administrator here, too.
Posted by Wiley Long at 04:17 AM | Comments (0)
May 01, 2011
Health Savings Account Tax Tip
Although Health Savings Accounts have been around since 2004, many people are still missing out on the tax savings they offer because they don't understand how a Health Savings Account (HSA) works.
HSA Plans are really simple. They're so easy to use that you don't even need to itemize deductions to take advantage of their savings when you file your taxes.
Kathy Pickering of H&R Block says, "You put your money into the Health Savings Account tax free, and then it grows tax free. The interest you earn on it is tax free, and when you take money out for qualified medical expenses, that's tax free as well." Any HSA funds you don't spend on qualified health care, unlike money left in a flexible savings account, just roll over year to year and continue earning tax-free interest.
Pickering points out that: "If you can hold on to your Health Savings Account, say as you lose your job, if you move to a new job, you can still use those funds and then if you can hold on to it until retirement. That's just additional money that you can use later when you need it." You can continue to withdraw funds tax-free to pay for qualified health care or spend the money for whatever you like and just pay taxes on the amount withdrawn.
Posted by Wiley Long at 11:31 AM | Comments (0)
April 01, 2011
Health Savings Accounts Are A Great Option For Employers
With the advent of Health Savings Accounts, high-deductible health plans became more attractive to employees. Even if they have to pay for high out-of-the-pocket expenses for medical bills before the insurance coverage starts when they meet the deductible, there are advantages. Health Savings Accounts allow consumers to save in order to pay for future qualified medical costs with tax-free earnings and tax-free withdrawals.
Small employers are given two HSA plan options to offer employees. A small-group HSA-qualified plan may help with underwriting concerns for employees who have pre-existing health conditions. On the other hand, if each employee is underwritten individually by getting their own plan, they may be able to keep the insurance policy if they leave the company.
Employers have the option to give fixed monthly contributions to the individual or family HSA accounts of their employees. The contributions are tax-deductible on the employer’s part and are not included in the gross income of employees. If the employee decides to leave, the contributions made by the employer stay with the employee.
Many insurance companies, such as Blue Cross Blue Shield, offer HSA plans, but it is best to keep your HSA administrator separate from your insurance company. That way, you can switch HSA-qualified health insurance without having to change administration on your HSA. That's important because you might want to change your high-deductible health plan to get a lower rate since premiums are increasing often.
Posted by Wiley Long at 05:23 AM | Comments (0)
February 24, 2011
What Can Health Savings Accounts Do For Entrepreneurs?
When you start your own business, you may find that individual health insurance is among your biggest expenses. A Health Savings Account (HSA) can be a great asset for both the self-employed and small business owners.
If buying an individual health insurance plan is similar to renting, then investing in an HSA plan can be thought of as similar to investing in a home, which allows you to build equity. While a Health Savings Account can only work with a high-deductible policy, that's the type of health insurance that has low premiums.
Rather than send high premiums to an insurer every month, you can invest the money you save on premiums in a tax-advantaged Health Savings Account. As long as your health remains good, you'll have few medical expenses and won't need to use your HSA funds for your deductible.
If you do have health care expenses, you can withdraw pre-tax deposits from your HSA to cover them. You can also pay for many expenses not covered by standard health plans, such out-of-pocket costs for dental, prescriptions or vision services.
As long as you can leave funds in your HSA, the money remains tax-deferred because the balance will automatically roll over at the end of the year. When you reach retirement age, you're free to withdraw the money for uses other than health care similar to IRAs. Learn more about the tax advantages of an HSA and how to set up your own at: http://www.health--savings--accounts.com
Posted by Wiley Long at 01:21 AM | Comments (0)
February 18, 2011
Health Savings Accounts Reduce Business Costs
If you’re a business owner, you should investigate how a health savings account can save you money even if you don't provide health insurance for your employees or you are the sole employee. You can typically get lower rates on a group plan than on an individual plan and group plans tend to have better coverage. Add a health savings account (HSA), and now you can reduce your and/or your employee's income tax, too.
Your employees will need to start their own Health Savings Account, but high-deductible health insurance providers can recommend financial institutions that offer health savings accounts.
HSA contributions are tax deductible and the maximum allowed contribution depends on the employee's age and whether he sets up a family or individual plan.
Investing in an HSA helps employees and the self-employed get health care coverage at an affordable rate. It also allows them to set surplus money aside to cover health care costs tax free and it reduces tax liabilities. An HSA can benefit both employees and business owners. See more details about HSA benefits on our website.
Posted by Wiley Long at 04:23 AM | Comments (0)
January 27, 2011
Health Savings Accounts Save Businesses Money
Can health savings accounts save you money as a business owner? Whether you are the only employee or you are providing health insurance for your employees, you can typically get lower rates with group plans than with individual plans. Group plans typically offer better coverage, too, and health savings accounts that work with group plans "sweeten the pot."
In addition to lower rates and better coverage through group plans, health savings accounts offer a couple more advantages. The set-up and management work for health savings accounts falls to the employees. That reduces paperwork for your business.
In exchange for doing Health Savings Account that work, employees can take tax deductions for their contributions into their health savings account. The maximize amount employees may contribute depends on their age and whether they set up a family or an individual account. The high-deductible health insurance plans that work with a health savings account, typically have lower premiums than full-coverage plans.
Health savings accounts can offer savings for both employers and employees. To see the options available to set up health savings accounts, just visit our website.
Posted by Wiley Long at 12:31 PM | Comments (0)
November 21, 2010
Health Savings Accounts: A Tax-Savvy Alternative
A health savings account (HSA) or a health reimbursement arrangement (HRA) offers more than the medical tax deduction, which has a high threshold. It's been argued that these plans work best for the healthy and wealthy, though.
For 2011, the minimum deductible for family coverage is $2,400 and out-of-pocket costs that include the deductible cannot exceed $11,900. Those numbers are $1,200 and $5,950 for individual coverage. There are no minimum contribution requirements and family contributions may be up to $6,150, while individuals may contribute up to $3,050.
Contributions may come from an employer, employee or anyone else (such as from parent to child) as long as there is a qualifying high-deductible health insurance plan.
Contributions may be made via pretax payroll deductions or tax-deductible contributions by an HSA owner, who has until April 15 to make a contribution for the preceding year. That means you can wait to make contributions until after you have incurred expenses and convert known after-tax payments to pretax ones.
Even though your employer contributes, an HSA remains yours whether you lose your job, change jobs or retire and the funds at not lost at yearend as is true with flexible spending accounts.
You are not allowed to have an HSA plan if your spouse has family coverage through a low-deductible plan. An HSA owner may have supplemental coverage for accidents, dental care, disability, long-term care, vision care, etc. You can use an HSA to pay medical expenses for your spouse or dependents even if that person isn't covered under your insurance. Only your spouse can inherit and use HSA funds tax-free to for healthcare, though.
Qualified expenses that are reimbursable from an HSA include things like contact-lens solution, nursing homes, special education and wigs after chemotherapy (see IRS Publication 502). There's a 20 percent penalty for non-qualified uses, plus you'll owe income taxes on the amounts if you're under 65. If you're 65 or older, you'll have no penalty regardless of how you spend HSA funds, but you'll still have to pay taxes.
Unlike an HSA, an HRA may or may not be paired with a high-deductible policy and your employer owns that account. No one but your employer may make contributions to your HRA, and your employer controls many plan details so it's inaccurate to generalize about HRA details. To learn more about these types of healthcare arrangements, see the resources at http://www.health--savings--accounts.com
Posted by Wiley Long at 04:55 PM | Comments (0)
November 18, 2010
Health Savings Accounts Are Good For Business
If you are a business owner, here are some of the advantages of a health savings account (HSA) for you and your employees.
With an HSA, your employees are responsible to set up and maintain their own accounts. Shifting this work to employees saves you paperwork and time.
Because an HSA may be combined with a group health plan, you're employees will have better coverage than is typically available through individual plans. You'll find lower rates on group plans than on individual plans as well.
Your employees can also lower their taxes with a wide range of tax-deductible healthcare-related expenses, such as dental care.
Look into the advantages of tax-advantaged health savings accounts on our website. You can also read about how to set up an HSA, how to choose the best HSA administrator and more with HSA for America online resources.
Posted by Wiley Long at 10:53 AM | Comments (0)