Establishing an HRA Can Make Your Arizona Group Health Insurance Affordable

Continual increases in health insurance premiums have adversely affected Arizona businesses. No employer has been left unaffected. Some small businesses have even had to drop their group health plans due to skyrocketing costs. Neither John McCain nor Barrack Obama has health insurance plans that address the cost of premiums for the employer or their employees. With no help on the horizon from our government, employers have at least one possible solution to retain affordable Arizona health insurance by establishing a Health Reimbursement Arrangement (HRA) plan for their employees.

HRA’s are an employer funded plan designed to reimburse employees for certain medical expenses (For a list of eligible expenses). Though an HRA is not health insurance, it is a supplemental health insurance plan that will pay for a wide range of health expenses, including an employee’s privately owned health policy premium. HRA’s are notional arrangements, meaning no funds are expensed until reimbursements are made. Those reimbursements are tax deductible to the employer and tax free to the employee. HRA’s are made available due to IRS code section 213d and IRS publication 502. For more detailed IRS information click here.

Unlike group health insurance plans, the employer decides what their monthly contribution level is going to be for each classification of employee they establish.
The monthly cost is fixed and only alterable by the employer. Also, employer dollars spent on the HRA are only paid when claims are filed. If an employee leaves a company they do not have the right to the funds an employer has allocated for their HRA plan. That unspent money stays with the employer and contributes to their bottom line.

Instead of paying additional monthly premiums to an insurance company for an expensive low deductible group health insurance plan, employers who establish an HRA can provide additional benefits and reduce their costs by increasing their deductibles and covering their employees likely out of pocket expenses with an HRA. For those employers who cannot afford group health insurance premiums, they can now provide a valuable tax favored health benefit for their employees by establishing an HRA

Benefits of an HRA

• Cost Savings


• Expand Benefits


• Flexibility


• Predictable Costs


• Separate Employee Classifications


• Tax Advantage

By establishing an HRA Arizona employers can have an effective means to manage the monthly costs associated with any Arizona group health insurance plan and make their premiums affordable.