| With group health insurance rates continuing to | | | | easy to set up and to manage. The employer |
| rise, more small business owners in Colorado are | | | | simply provides a fixed monthly tax-free |
| turning to Health Reimbursement Arrangements | | | | contribution to an HRA for each participant. The |
| (HRAs) as a way to help their employees obtain | | | | Health Reimbursement Arrangement then enables |
| health insurance. With this type of arrangement, | | | | employees to obtain reimbursement for qualifying |
| the business reimburses employees for the cost | | | | medical expenses, including health insurance |
| of their individual health insurance plans, instead of | | | | premiums. |
| offering a group plan. | | | | Your employees can then select an affordable |
| What Is an HRA? | | | | plan customized to their own needs and budget. |
| A Health Reimbursement Arrangement (HRA) is | | | | One great advantage to the employee is that the |
| an arrangement where an employer reimburses | | | | coverage is totally portable - if they ever leave |
| employees tax-free for qualified medical | | | | their employer they can take the coverage with |
| expenses, including health insurance premiums. | | | | them. They do not have to worry about COBRA, |
| HRAs are also known as Section 105 plans, | | | | or about being tied down to their job just |
| named after the section in the U.S. Tax Code | | | | because they need the health insurance. |
| that governs them. | | | | These plans are primarily being adopted by small |
| Group health insurance in Colorado is "guaranteed | | | | companies with employees who are all in good |
| issue," meaning that the insurance companies | | | | health. Because insurance companies are allowed |
| must accept any applicant, regardless of | | | | to "underwrite" individual health insurance |
| pre-existing health conditions. As a result, group | | | | applications, someone with some pre-existing |
| insurance premiums are about twice as expensive | | | | health problems could be denied coverage. |
| as individual plans, and approximately 40% of | | | | The average group health insurance premium for |
| small business owners can no longer afford to | | | | a family is nearly $14,000 per year. However, the |
| offer health insurance to their employees. | | | | average premium of an individually underwritten |
| Companies cannot purchase individual health | | | | plan can be much less than $300 per month. So it |
| insurance for their employees, but if they have an | | | | is not surprising that as more small business |
| HRA set up they can reimburse them for their | | | | owners learn how they can use an HRA to |
| medical expenses, including the cost of health | | | | reimburse individually underwritten health insurance |
| insurance. The reimbursement is considered a | | | | plans, their popularity continues to soar. |
| tax-free fringe benefit to the employee, so it is a | | | | By Wiley Long - President, ColoHealth - The |
| better value than simply receiving a pay increase. | | | | state's leading independent health insurance |
| Because some companies are now offering online | | | | agency specializing in Colorado health insurance |
| HRA plan set up, they are also now extremely | | | | plans. |