An HRA is a tax-qualified health plan that employees can use to pay for uninsured medical expenses. The HRA may be used for deductibles, co-pays or other out-of-pocket expenses for employees, their spouses or dependents.
How Does an HRA Benefit Employers?
- With rising health insurance costs, employers can use the HRA to offset higher deductibles for employees but keep more control of the overall company cost, now and in the future.
- Fringe dollars contributed to an HRA are not subject to FICA, FUTA, SUTA or workers compensation.
- Funds used to pay claims for qualifying medical expenses are tax-deductible to the employer and are tax-free to the employees (including FICA).
- The Contractors Plan allows contractors to set a fixed contribution amount per employee or vary amounts depending upon the employee's labor classification on different contracts.
- Contractors may also offer the HRA as an option in a Total Fringe plan. Total Fringe allows contractors to present their employees with a full menu of benefits that they can customize to suit their needs while spending all of the required fringe. Regardless of the number of or types of benefits offered, employers upload one fringe file and send in one fringe check each month.
What Are the Benefits to Employees?
- Employees can begin using funds in the HRA as soon as they are contributed.
- Employees receive a debit card to make payments directly at the hospital, doctor's office or pharmacy. They can also choose to submit claims for reimbursement.
- Account balances are updated daily and may be viewed online at any time using MyContractorsPlan.com.
- There is no "use-it-or-lose-it" rule. Funds in an HRA roll over from year to year.
- Employees who have balances in their accounts upon termination can continue to submit claims even after they no longer work for you.
Compliance and The Contractors Plan HRA
- The HRA is a bona-fide fringe benefit plan for prevailing wage contracts.
- All contributions to the plan are 100% vested when made.
- The HRA is held by The Contractors Plan Trust, which uses an independent third-party trustee and an experienced third-party administrator for claims.
- Complies with DOL and IRS requirements
- Our experts will design your plan to maximize both the savings for your company and the advantages to your employees.