Business Owners Use Health Reimbursement Arrangements and Health Savings Accounts to Reduce Taxes

Dec. 20, 2011 - PRLog -- As health costs and health insurance rates continue to rise, many savvy small business owners are using Health Reimbursement Arrangements and Health Savings Accounts to reduce their annual premiums and taxes by thousands of dollars. By moving from the group coverage market to high-deductible plans available through the individual market, employers can cover more employees while drastically reducing health care costs. eTXHealthinsurance explains how this works at eTXHealthinsurance.com/The-eTXHealthinsurance-Complete-Protection-Strategy.htm.

According to the International Foundation of Employee Benefit Plans, 43 percent of U.S. corporations now offer high-deductible health insurance plans to workers. Health Savings Accounts and Health Reimbursement Arrangements are often set up to help employees manage the health care spending required before benefits begin. With either option, pre-tax dollars are designated to meet plan deductibles and other care that’s not covered, such as eye care and orthodontia.

Health Savings Accounts favor employees because they get to keep account funds that they don’t need for health care. The balance can grow with tax-free earnings until employees retire and are allowed to spend the money on something other than health care.

Houston’s Astrium North America, Inc. embraced HSA plans when it was faced with huge increases in premiums. As its director of business administration, George Owoc switched them to a Blue Cross Blue Shield of Texas HSA plan with 100-percent coverage after a $5,000 deductible for a renewal rate that increased one percent last year.

The business and its employees had been spending close to $15,000 per person per year with a traditional $250-deductible plan. With the money saved in premiums, Astrium now contributes enough to an employee’s HSA to meet the plan’s deductible.

Health Reimbursement Arrangements are also used to help employees meet plan deductibles, but they keep more money in the company because the employer retains ownership of HRA dollars. Statistically, only 20 percent of employees incur out-of-pocket costs that exceed $1,000. Thus, the majority of workers leave HRA funds with the company.  

One example of how this works can be found at Austin-based Whole Foods Market. Full-time employees have high-deductible plans, but they don’t have premiums deducted from their pay. They also have a HRA based on seniority, and employees can choose which expenses they want to pay for with HRA funds.

Those who already have a HSA-qualified high-deductible plan have until April 17, 2012, to make the maximum allowable contribution in exchange for 2011 tax deductions. HRAs may be set up until December 31. eTXHealthinsurance has online resources explaining how to establish and use a HRA at www.eTXHealthinsurance.com/texas-hra.htm. Further information regarding Health Savings Accounts is also available at www.eTXHealthinsurance.com/health-savings-accounts-in-texas.php.

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About eTXHealthinsurance:

eTXHealthinsurance has become a leader in providing educational resources that enable Texas families, individuals and small businesses to keep their health care costs low. Online information explaining how to keep premiums and out-of-pocket costs down is available at www.eTXHealthinsurance.com/how-to-guide.htm and www.eTXHealthinsurance.com/health-savings-accounts-in-texas.php.

Texas residents seeking health insurance options in the individual market may use eTXHealthinsurance online resources to compare plans and apply online. Individuals and small companies may also schedule consultations with professionals to compare coverage options by calling 1-866-585-7664 between 9 AM and 11 PM Eastern.

eTXHealthinsurance also provides tools to lower healthcare costs that are not covered by insurance at www.eTXHealthinsurance.com/additional-benefits.htm.