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How Small Business Owners Can Cut Their Health Insurance Costs in Half
Posted by | Posted in Health | Posted on 19-04-2010
Small business owners can now take advantage of Health Reimbursement Arrangements, or HRAs, as a way to cut their health insurance expenses in half. As health insurance premiums continue to grow, fewer small businesses are offering group coverage to their employees. For small businesses with healthy employees, establishing HRAs can be a great way to help their employees obtain permanent, portable individual health insurance at a much lower cost than conventional group coverage.
What is a Health Reimbursement Arrangement?
A Health Reimbursement Arrangement, or HRA, is simply an agreement by an employer to reimburse the employee for their health insurance premiums and other specified medical expenses. This is considered to be a tax-free fringe benefit for the employee.
Because family and individual health insurance plans are underwritten (meaning that the insurance company has the option of excluding a condition or declining an application all together), they are much less expensive than are group plans. In fact, they typically cost less than half as much.
HRAs are also known as Section 105 plans, named after the section in the U.S. Tax Code that governs them.
How Health Reimbursement Arrangements Work
In today’s business climate employees are quick to go elsewhere if they see a better opportunity. Providing good benefits is essential to retaining the best employees, but group health insurance can be too expensive for some small business owners.
An HRA allows you to reimburse your employees for their individual health insurance expenses, taking you out of the middle. Employees carry their own private coverage which is totally portable and not tied down to their employment.
You no longer have to administer the plan, and you no longer have to shop it every year. When employees carry their own private coverage, there are also no COBRA issues to deal with when employment terminates.
When you establish an HRA for your employees, you define what expenses that you will be reimbursing, and how much you will reimburse. For example, you may say that you will reimburse up to $300/month for covered health insurance and medical expenses. If the employee uses less than that, any excess credit accumulates for future disbursement.
When the employee has a qualified medical expense, they would submit it to you for reimbursement, up to the amount of their HRA balance. You then simply cut a check for the amount of the reimbursement. It’s that simple. You count it as a business expense, and your employee pays no taxes on that reimbursement.
Keeping Your Employees Healthy
Most of your employees will incur medical expenses every year, including dental expenses and eye glass expenses. Through an HRA you can reimburse your employees for these expenses with tax-free dollars.
The best businesses are about more than just selling widgets and making money. The more the business cares about the employees and the more the employees care about the business – the more fun we have and the more successful we are. So why not reimburse for preventive benefits like smoking cessation programs, weight loss programs, or even just annual physicals.
The great thing about HRAs is that you are the architect. You get to decide what expenses you will reimburse. You also have the right to exclude part time employees, employees who have worked for you for less than three years, and those under age 25.
How to Establish Your HRAs
When you establish an HRA, all you have to do is furnish a Summary Plan Description to all plan participants. The Summary Plan Description simply describes who is eligible, and the benefit limits that can be reimbursed. For instance, it may list the minimum number of hours they must work, their minimum age, and the number of months they must be employed. It will list the benefit limit for reimbursement of health insurance premiums, out-of-pocket expenses, term life premiums, and possibly other expenses. You must also keep a Plan Document in your files, which documents the same information.
A Better System for Employer and Employee
If you have a small business of healthy employees, an HRA may be a no-brainer. Keep in mind that because your employees will be applying for individual health insurance coverage instead of group coverage, their premiums will be much lower but the plans will each be individually underwritten.
Your employees will each get to choose the insurance plan and deductible that best fits their individual needs. Many are choosing Health Savings Accounts as a way to further reduce their health insurance costs. Once everyone is approved they will have permanent coverage that is not tied down to their employment. And you can get out of the insurance business, for good.
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Help answer the question about health
What are the health risks of my use of smokeless tabacco every so often?I dip about once every other day, if not once every 3 days. What are the health risk if I rotate where I put the lip in my mouth along with the amount I use it. Seeing that most frequent users dip 2-3 times a day, I feel that the health risks associated with them don't complelely apply to my use.
Trickle-down economics" and "trickle-down theory," in United States political rhetoric, are characterizations by opponents (principally Democrats) of the policy of lowering taxes on high incomes and business activity. Proponents of these policies claim that they will promote new investment and economic growth, thereby indirectly benefitting people who do not directly pay the taxes. Opponents characterize this as a claim that the people who would otherwise pay the tax will distribute their benefit to less wealthy individuals, so that a fraction will reach the general population and stimulate the economy.[1] Proponents of the policies generally do not use the terms "trickle-down economics" themselves.
Today "trickle-down economics" is most closely identified with the economic policies of the Ronald Reagan administration, known as Reaganomics or supply-side economics. A major feature of these policies was the reduction of tax rates on capital gains, corporate income, and higher individual incomes, along with the reduction or elimination of various excise taxes. David Stockman, who as Reagan's budget director championed these cuts but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[2]
The term "trickle-down" comes from an analogy with a phenomenon in marketing, the trickle-down effect.
simple solution if it’s passed Stop paying taxes And get rid of Congress and senate in nov!
The Pledge of Allegiance
I Pledge Allegiance to the flag of the United States of America and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.
The Obama plan hopes to offer a public option, it’s called competition, the thing Republicans claim to support. It’s what you have in a truly free market, you have choices, and if the people choose the public option the private Insurance companies will have to lower their prices to compete, or they go out of business. That’s called a free market: what part of that do you not understand?
As for the American public, the reality that Obama is not up to the job seems to finally be setting-in; the poll numbers are now headed steadily south- is he already facing his Waterloo on this legislation?
Barack Obama will never say to your face what he actually plans to do. Everything’s rolled-out in a Trojan horse. Theyll be no private insurance industry left after five years. Why should we give Government medical insurance to 15 million illegals?
One free start is to look in the mirror and see that you are one big fat load…should it surprise you if you have diabetes or high blood pressure? You don’t need to go to a Dr for that…just a pair of eyes. Why should I pay for your laziness and crappy eating habits?
I am Teddy. Once you read this you cannot get out. Finish reading this until it is done! As I said, I am Teddy. I am 7 years old and have no eyes and blood all over my face. I am dead. If you don’t post this in 12 threads, I will come to ur house at midnight and hide under ur bed. When ur asleep I’ll kill you.
3 out of 4 liberals agree: paying for illegal aliens healthcare is the shiznet.
Overhauling the nation’s health care system is a bad idea… SAY NO!
Eric Cantor pampered GOP Crime Family Princess sucking government healthcare benifits from taxpayer premeiums. But this sniveling filthy Likud-OPEC-GOP-POS says that Amercians can’t have “dangerous” government run healthcare benefits, like those we buy for his soft pampered GOP criminal ass. All GOP criminals and their corporate owned DEM insect facilitators need waterboarding for months then to be hunted as his crime family cheers for abortion doctors.