The quality and variety of a company’s health insurance benefits remain among the top priorities for employees when considering a job in 2021, according to numerous studies, including recent ones from the Hartford and MetLife

“QSEHRAs and IHRAs have gained little traction since they were introduced,” said Rob DeNinno, a principal at Precision Benefits Group in Philadelphia. “But depending on the employer, both can save a small business and its employees a significant amount of money,” and provide a competitive health benefit. 

DeNinno saidthat, although “it depends on the client and the situation, we find that these kinds of plans can be a very cost-conscious remedy” for small businesses. “They’re essentially a ‘self-fund’ for out-of-pocket costs and may offer a lower cost option for saving medical premium dollars,” he said.

There are the tax savings as mentioned above. But in addition, when set up correctly, these plans may relieve an employer from having to go through the annual angst of comparing and selecting group health insurance plans as well as the headaches involved with re-enrollment and premium increases. An employer has better control over costs. It gives an employee more choice because they can use the money to purchase their own healthcare plans that they find more suitable.

Most important, it can be a way for smaller companies to attract workers by providing a health insurance benefit that they otherwise would have been unable to offer.

However, there are downsides to HRA plans like these.

“HRAs can add a layer of complexity to small businesses that already have limited time to dedicate to things outside of their core business,” said Noah Glassman, president of benefits firm Philadelphia Life and Health Inc. Glassman says that in his experience, the actual benefit to the employees is often not realized due to not knowing how to use it.

Both Glassman and DeNinno say that an employer may realize more benefits by instead offering a high deductible group insurance plan combined with a Health Savings Account which still allows tax-free reimbursement of qualified medical expenses – but not premiums.

But different from QSEHRAs and IHRAs, any money contributed to a Health Savings Account plan doesn’t have to be used by the employee by the end of the year, and whatever is left stays with the employee instead of reverting back to the company. 

“Most small business owners have difficulty understanding how these options work,” DeNinno said. “Unfortunately, without proper explanation from consultants, they tend to opt for the more expensive plans because they are familiar with them.” This is unfortunate because with the right fit, both small business owners and their employees can save a significant amount of premiums.

Click HERE to read full article by Gene Marks, Philadelphia Inquirer, June 8, 2021.