Traditional health insurance models are failing, causing widespread frustration at a broken system. U.S. employers spent an estimated $1.3 trillion to cover Americans with healthcare benefits last year. With tight budgets to juggle, employers are looking for a way to save.
Cutting benefits to reduce spending or shifting costs to employees cannot fix this challenge successfully—and certainly not equitably. One in four adults say that in the past 12 months they have skipped or postponed getting the care they needed because of the cost.
What’s the alternative? It’s alternative funding. These models are gaining momentum, with 29% of large employers considering it in the near term as a potential path toward a more accessible and affordable health benefits landscape.
- Health Savings Accounts (HSAs) are tax-free medical savings accounts for employees. Employers pay for a low-cost, high-deductible health plan (HDHP) and employees use their HSAs to pay for out-of-pocket medical costs.
- Unlike HSAs, Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount—usually set by the employer—per year. Any unused amounts may be rolled over to be used in subsequent years.
- A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is an HRA designed for employers with fewer than 50 employees; it is a health coverage subsidy plan that small employers use instead of a group health plan.
- Individual Coverage Health Reimbursement Arrangements (ICHRAs) are similar to QSEHRAs except that they are available to employers of all sizes.
- A Medical Expense Reimbursement Plan (MERP) is an employer-provided plan that can be funded by both employers and employees, supplements a group health plan, and reimburses employees for out-of-pocket costs from qualifying medical expenses.
There are so many ways to think outside the box. Get all the details in our webinar, “The Shift Away from Traditional Health Insurance.”
The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. This communication does not constitute a legal opinion and should not be relied upon for any purpose other than its intended educational purpose.
