The Case for Combining Health Reimbursement Arrangements and High Deductible Health Plans

Both employers and employees save money and gain flexibility when consumer-driven High Deductible Health Plans (HDHP) are offered alongside an employer-funded Health Reimbursement Arrangement (HRA). Pairing the HDHP with an HRA can enable the company to reimburse the employee for out-of-pocket expenses toward their high deductible.

Employer Advantages

Planning for Cost Control

Each year employers choose the amount they want to contribute to the HRA for each employee’s coverage, thereby creating their maximum reimbursement amount for the whole company. The savings are felt by the employer as employees with lesser medical costs submit less expenses for reimbursement over the plan year.

100% Tax-Deductible

Employer contributions are fully tax-deductible.

Designed for Your Company Flexibility

On an annual basis, as the sole contributor of funds to the reimbursement account, the company can design a plan to suit your workforce needs flexibly.

Low Risk of Fraud

Only after a claim is filed by the employee and adjudicated by the insurance company does the employer pay out the reimbursement to the employee.

Hiring & Retaining Talent

An HRA can help you retain your top employees by helping them see that their higher deductible from their HDHP allows them to guide their own health care expenditures and be reimbursed for them.

Job offers that include employer reimbursements via an HRA can round-out a well-designed total compensation package and show that the company is in-tune with employee healthcare needs for flexibility.

Employee Advantages

Reduced Healthcare Costs

When the HRA is combined with the company’s HDHP, employees experience savings via lower monthly premiums.

Not Taxable Income

When the employer contributes (or pays out the qualified medical expenses to the employee), that dollar amount does not count as part of the employee’s taxable income.

How benefEx Can Help

At benefEx, we’re here to help employers navigate the ever-changing benefits landscape. We are New Jersey’s premier employee benefits consulting service, helping clients across the United States effectively approach health benefits design. Contact us to discuss how pairing a Health Reimbursement Arrangement with your High Deductible Health Plan can lower your company costs and appeal to the best talent.