Maximizing HRA-105 for Healthcare Savings

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Healthcare costs in the United States can be expensive, making it challenging for individuals and families to afford quality care. Fortunately, Health Reimbursement Account (HRA) 105 can be a valuable tool to help offset these costs. There are a few ways to be able to use HRA-105 either as a small-group plan for employees, or as a married, sole proprietor with no employees, but whose spouse works in your business.

What is an HRA-105?

An HRA-105 is an employer-funded account that reimburses for eligible medical expenses. The funds in the account are tax-free and can be used to pay for qualified medical expenses, such as deductibles, copayments, and coinsurance. The HRA-105 is different from other types of HRAs, as it allows for greater flexibility in plan design and funding arrangements. It also can provide benefits to the married, sole proprieter, giving them the ability to deduct 100% of their family’s health insurance premiums as well as 100% of their non-insured medical expenses from state, federal, and self-employment taxes.

How to Use an HRA-105 to Save Money on Medical Bills?

  1. Understand your plan: It is essential to understand what expenses are eligible for reimbursement under your HRA-105 plan. Knowing the details of your plan can help you avoid confusion and save money on out-of-pocket medical expenses.

  2. Keep track of your medical expenses: Keeping a record of your medical expenses can help you accurately report them to your employer or taxes for reimbursement and write-offs. Also, by tracking your expenses, you can monitor your healthcare costs and identify areas where you may be able to save money.

  3. Use in-network providers: Many HRA-105 plans require the use of in-network providers to receive reimbursement. By using in-network providers, you can take advantage of negotiated rates, which are often lower than out-of-network rates.

  4. Use your HRA-105 to pay for eligible expenses: When you receive an eligible medical bill, use your HRA-105 funds to pay for it.

  5. Maximize your HRA-105: If your HRA-105 plan allows rollover funds from year to year, you can accumulate unused funds to help cover future medical expenses. This can help you save money on medical bills in the long run.

How to Use an HRA-105 to Save Money on Health Insurance Premiums?

  1. An employee whose employer offers an HRA-105 needs to choose a high-deductible health plan (HDHP): An HDHP typically has lower monthly premiums than traditional health insurance plans. By selecting an HDHP, you can save money on monthly premiums, and your HRA-105 can be used to help cover the higher deductible.

  2. An average married, self-employed sole proprietor with no employees can choose either a HDHP or a private plan and add pre-tax dollars to the HRA-105 to pay for essential health benefits plan, excepted benefit health plan premiums, over the counter medications, deductibles, copayments, and more.

  3. Use HRA-105 funds to pay for health insurance premiums: If your HRA-105 plan allows, you can use your funds to pay for your health insurance premiums. This can help reduce your out-of-pocket costs and lower your overall healthcare expenses.

  4. Shop around for health insurance: If you are not currently enrolled in an HDHP, consider shopping around for health insurance to find a plan that offers lower monthly premiums. By doing so, you can maximize your HRA-105 and save money on your overall healthcare expenses.

Federal regulations limit the use of HRA-105 plans to an employer with only one employee, unless the employer (i) offers a coverage under a group health plan that provides “minimum essential coverage” under the Affordable Care Act (“ACA”) to all employees within the affordability standards of the ACA, or (ii) the HRA plan itself provides at the employer’s expense “minimum essential coverage” under the ACA. HRA-105 can be a valuable tool for saving money on medical bills and health insurance premiums. By understanding your plan, keeping track of your expenses, using in-network providers, and maximizing your HRA-105, you can reduce your healthcare costs and take control of your healthcare spending. Contact me here (McGarrityLLC.com) to learn more about HRA-105 and how it can benefit you.

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