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Health Reimbursement Arrangements (HRA)
Corporate Office: 250 South Executive Drive, Suite 300Brookfield, WI 53005 800.627.3660
www.NISBenefits.com
Overview• The Crisis of Rising Healthcare
Costs • The Solution – Tax-Free HRA • A Strategy for a Winning HRA
Solution• Why HRAs Work Better than HSAs
for Public Sector Employers
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Healthcare costs are rising at unsustainable levels, especially for seniors.
Costs Spiraling Out of Control
• Seniors spend 3 times more• 65 year olds need $250,000 to pay for
medical expenses
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Between 1999 and 2011, Costs Rose 160 Percent!
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011
Something Has to Give
Employee•Rising out-of-pocket health care expenses that are no longer covered by employer
Employer•Reduced revenues •Unsustainable increases in healthcare costs•Employers forced to reduce benefits, pre- and post-employment
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HRA Solves Problems for Both Employer and Employee
• Employer deposits funds tax-free• Employees take control of their own funds• Account earns interest tax-free
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• Insurance premiums, deductibles and co-payments
• Prescription drugs, eyeglasses• Hospital and doctor procedures• Other unreimbursed medical
expenses, IRS section 213(d)
for employees, their spouses and eligible dependents
The HRA Pays for Medical Expenses no Longer Covered by the Employer Plan….
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Employer Win Participant Win
Save FICA Matching Saves ALL taxes
Provides needed cash for out-of-pocket medical expenses
Win/Win HRA Scenario:Exchange an HRA for Special Payments Made to Retirees
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Without an HRA:
With an HRA:
Which would you rather have?$15,750 without an HRA or $25,000 with an HRA?
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Why an HRA Works Better than the HSA for Public Sector Organizations
1. Can be used for Health Insurance Premiums
2. Less restrictive3. Open to all employees and
retirees 4. More carry-over flexibility5. No conflict of interest6. Local plan control7. No employee contributions
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More “Wins” for Participants• HRA can be used by the employee, spouse and eligible dependents• Funds are invested and professionally managed • Individual accounts are established with 24-hour online access and
800# customer support
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More “Wins” for Employers
• Enhanced recruiting and retention• Flexible funding options• No admin headache - all servicing
done by Third-Party Administrator (TPA)
• Turnkey TPA system provides all necessary documents and forms
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Things to Remember:• Public employers and employees are
facing financial challenges of unprecedented proportions
• An HRA can provide creative solutions where both employer and participant win
• HRA solutions work better than an HSA for public sector employers and participants
• Administering your HRA is a breeze with our TPA
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Important Notice
The general information contained in this presentation is provided to assist entities that are considering a Health Reimbursement Arrangement (HRA) as an option for their employee and/or retiree’s health coverage. It is not intended as legal or tax advice from Retirement Plan Services of America, Inc. or any other company. Entities considering an HRA should seek the advice of their independent legal counsel to determine the application of this information to their specific circumstances. To ensure compliance with requirements imposed by the IRS, we inform you that any discussion of U.S. federal or state tax consequences contained in this communication (including any hand outs) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.
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For More Information, Contact:
National Insurance Services, Inc.Aaron A. Casper AIF©[email protected]
Retirement Plan Services of America, Inc.Larry [email protected]
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