What to Know About Health Arrangements for Employees and in Retirement


        When looking into options to provide health coverage for employees, Health Reimbursement Arrangements (HRA) are often chosen by different businesses. This is a popular option for firms to give to their retired employees, as it gives a predictability (maximum number) for their yearly health costs. However, there are limitations on what they can cover. Some are put in place by the company, others by the Internal Revenue Service (IRS). HRA’s are an attractive option because funding them is tax deductible for the company, but they are not the only option available.

          A Flexible Spending Account (FSA) can be created. The employee will decide how much goes into this account, using some of their pre-tax salary to fund it. Typically, if there is any unused money at the end of the year, it cannot be rolled over to the next. A Health Savings Account (HSA) is paired with a high-deductible health plan to pay for medical and dental costs not covered by their plan. It cannot be used to pay premiums and is funded by the employee and/or the employer. The biggest difference with an HSA is that the employee will keep the account if they change jobs. With all these choices to make, it is the course of wisdom to seek out the advice of a Qualified Tax Professional to determine the best course for you and your business.

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