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HSA BANK - Health Reimbursement Arrangements (HRA)
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Health Reimbursement Arrangements, or HRAs, are a way for employers to help offset their employees’ healthcare expenses, while gaining tax advantages. Employees are given money from their employer to spend on out-of-pocket medical expenses. All employer contributions to HRAs that meet with IRS rules are 100% tax deductible to the employer and tax-free to the employee.
When an employer augments a benefits package with an HRA, it sends a strong message to employees that their employer cares about their health and well-being, and it helps employers attract and retain staff. Benefits for employers and employees include:
• Control - Employers decide how much to contribute and what medical expenses the funds can be used for. Employees control how best to spend their healthcare dollars.
• Tax savings - Employer contributions are tax-deductible, lowering their payroll taxes. Funds are also tax-free to employees, so they don’t increase their income tax burden.
• Flexibility - Employers choose whether to allow funds to carry over each year. And the money stays with the organization when employees leave.
• Productivity - Healthy and happy employees are more engaged in their work and are better for the employer’s bottom line.
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