Another benefit of HRAs? Healthy employees.

Another benefit of HRAs? Healthy employees.

Health Reimbursement Arrangements (HRAs) are a type of employer-funded health benefit plan that reimburses employees for their individual health insurance premiums and other eligible medical expenses on a tax-free basis. This means that the money that employees receive through an HRA is not considered taxable income. While many people are well-versed with the financial advantages of HRA, such as tax savings and assistance in covering out-of-pocket medical costs, there are also several surprising health benefits of HRAs for employees.

Leveraging HRA for Employee Well-being and Business Success

Choosing Take Command as your HRA administration partner means benefiting from advanced HRA software and a knowledgeable team dedicated to optimizing your employees’ health and well-being. A healthier workforce is essential for business growth and success. At Take Command, we recognize the link between employee health, satisfaction, and business prosperity. Our HRA solutions are designed to improve healthcare access for your employees, leading to better health outcomes, higher morale, and a stronger business bottom line. Partner with us to explore how HRAs can transform your employees’ health and well-being and contribute to your business’s long-term success. 

Financial Advantages of Health Reimbursement Arrangements

HRAs are primarily known for their financial benefits, which can significantly help employees manage their healthcare expenses. Here are some of the basic financial advantages of an HRA:

Tax Savings: One of the primary benefits of an HRA is the tax savings it offers. The reimbursements that employees receive for their individual health insurance premiums and other eligible medical expenses are tax-free. This means that the reimbursed amount is not considered as taxable income, which can lead to considerable tax savings for both employees and employers.
Covers Out-of-Pocket Expenses: Medical expenses can add up quickly, and often, employees have to bear a significant portion of these costs as out-of-pocket expenses. An HRA helps alleviate this burden by reimbursing employees for these eligible out-of-pocket medical expenses, making healthcare more affordable. See below for a list of eligible medical expenses. 
Flexibility: Unlike a one-size-fits-all group health insurance plan, an HRA provides employees with the flexibility to choose the individual health insurance plan that best suits their needs and the needs of their families. This flexibility can lead to more personalized and suitable healthcare coverage.
Employer Control: Employers have control over the design of the HRA, including the amount of funds contributed to each employee’s account and the types of expenses that are eligible for reimbursement. This allows employers to tailor the HRA to fit their budget and the specific needs of their workforce.

While these financial benefits are well-recognized and highly valued, there are also several surprising health benefits associated with an HRA that we think deserve some extra attention.

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Eligible Medical Expenses for HRA Reimbursement

HRAs can cover a wide range of medical expenses, making them a flexible and valuable benefit for employees. While the employer can customize the list of eligible expenses for their specific HRA, the IRS provides a general list of medical expenses that can be reimbursed through an HRA. Here are some common eligible expenses:

Health Insurance Premiums: Premiums for individual health insurance policies, including policies for dental and vision care.
Prescription Medications: Costs of prescription medications and insulin.
Medical Services: Fees paid to healthcare professionals for medical services, including doctors, dentists, optometrists, chiropractors, and psychologists.
Hospital Care: Fees associated with hospital care, including room and board, surgeries, X-rays, and lab tests.
Mental Health Care: Fees for mental health care, including therapy and counseling.
Preventive Care: Costs associated with preventive care, including screenings, vaccinations, and physical examinations.
Medical Equipment and Supplies: Costs of medical equipment and supplies, including eyeglasses, contact lenses, hearing aids, crutches, and wheelchairs.
Over-the-Counter Medications: Over-the-counter medications without a prescription are eligible for reimbursement.

→ Related: The Complete List of HRA Eligible Expenses

The Surprising Health Benefits of HRAs

HRAs are primarily known for their financial benefits, which include tax savings, coverage of out-of-pocket medical expenses, employer control over contributions, and the flexibility for employees to choose individual health insurance plans. However, beyond these financial advantages, HRAs also offer several surprising health benefits that contribute significantly to the overall well-being of employees:

Encourages Preventive Care: Preventive services, screenings, and vaccinations are essential for maintaining good health and preventing diseases. However, the cost associated with these services often discourages employees from seeking them. By covering out-of-pocket costs, HRAs make it more affordable for employees to access these essential preventive services, which can lead to early detection and treatment of potential health issues.
Supports Mental Health: Mental health is a crucial component of overall wellness. HRAs can be used to reimburse for mental health services, such as therapy or counseling, making it easier for employees to seek the help they need. This support is vital for managing stress, anxiety, and other mental health issues that can impact an employee’s well-being and productivity.
Facilitates Personalized Healthcare: Every individual has unique health needs, and a one-size-fits-all approach to healthcare may not be suitable for everyone. HRAs provide employees with the flexibility to use the funds for services that are most important to their personal health needs, encouraging a more personalized approach to healthcare.
Reduces Stress: Financial stress is a significant contributor to overall stress levels. Medical expenses can be a significant burden, and the worry about covering these costs can lead to increased stress. By helping employees manage their healthcare costs, HRAs can help reduce financial stress, contributing to better mental health and overall well-being.
Enhances Overall Well-being: With better access to preventive services, personalized healthcare, and reduced stress, employees are likely to experience improved overall well-being. This not only benefits the employee but also leads to a healthier, happier, and more productive workforce.

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HRAs offer a range of surprising health benefits that contribute to the overall well-being of employees. By encouraging preventive care, supporting mental health, facilitating personalized healthcare, reducing stress, and enhancing overall well-being, HRAs play a crucial role in promoting a healthier and more productive workforce.

The Business Case for Improved Employee Health through HRAs

Offering HRAs is a strategic move that can lead to improved employee health, which in turn positively impacts the business bottom line and employee morale:

Increased Productivity: HRAs facilitate access to preventive care and personalized healthcare, leading to healthier employees who are more likely to be productive and engaged in their work. They have higher energy levels, better mental clarity, and are less likely to suffer from fatigue or burnout.
Reduced Absenteeism: Poor health is a major cause of absenteeism. By making it more affordable for employees to access essential healthcare services, HRAs can help reduce the number of sick days taken, leading to less disruption in the workplace.
Improved Employee Morale: Employees who feel cared for and supported by their employer are more likely to have higher levels of job satisfaction and morale. Offering HRAs demonstrates a commitment to employee well-being, which can lead to better employee retention and a more positive workplace culture.
Enhanced Company Reputation: Companies that prioritize the health and well-being of their employees are often viewed more favorably by both current and prospective employees, as well as the wider community.

Ultimately, implementing HRAs not only underscores a company’s commitment to its employees’ well-being but also cultivates a work environment characterized by higher productivity, reduced absenteeism, bolstered morale, and an elevated company reputation – all of which are integral to a thriving business.

How to Make the Most of HRA Benefits

To maximize the benefits of an HRA, both employers and employees need to actively participate in making the most of this valuable health benefit. Here are some ways to optimize the advantages of HRA benefits:

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Encourage Preventive Services: Employers should actively encourage their employees to take advantage of preventive services, screenings, and vaccinations. Regular communication about the importance of preventive care and the coverage provided by the HRA can help increase the utilization of these essential services.
Promote Awareness of Mental Health Services: Mental health is often overlooked, but it is a crucial component of overall wellness. Employers should promote awareness of mental health services and encourage employees to seek help if needed. Providing resources and information about available mental health services and how they can be reimbursed through the HRA can help break down barriers to accessing mental health care.
Educate About the Flexibility of HRAs: Many employees may not be fully aware of the flexibility offered by an HRA. Employers should educate their employees about the different types of eligible expenses that can be reimbursed through the HRA and encourage them to use the funds for services that are most beneficial to their personal health needs.
Provide Resources to Manage Stress: Chronic stress can have a detrimental impact on both mental and physical health. Employers can help their employees manage stress by providing resources and tools, such as stress management workshops, mindfulness programs, or access to online resources.

By taking proactive steps to encourage preventive care, promote mental health awareness, educate about the flexibility of the HRA, and provide resources to manage stress, employers can help their employees make the most of their HRA benefits, leading to a healthier, happier, and more productive workforce.

Wrapping It Up: The Multifaceted Benefits of HRA

HRAs offer a range of benefits that go beyond the financial advantages commonly associated with them. Not only do they provide tax savings and help cover out-of-pocket medical expenses, but they also encourage preventive care, support mental health, facilitate personalized healthcare, reduce stress, and enhance overall well-being. These surprising health benefits make HRAs a valuable tool for promoting a healthier, happier, and more productive workforce.

Employers are encouraged to consider offering HRA to their employees and to actively promote its utilization for overall health and well-being. Similarly, employees are encouraged to make the most of this benefit by taking advantage of preventive services, seeking mental health support if needed, using the funds for personalized healthcare, and managing stress effectively.

For more information on setting up an HRA for your employees, get in touch with Take Command. Our team of experts can guide you through the process and help you design an HRA that best fits the needs of your workforce.

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