- Small business health insurance costs are rising every year, leading employers to partner with employees to lower costs.
- There are several ways to reimburse an employee for healthcare costs, such as offering a health reimbursement arrangement.
- While health insurance and its related reimbursement can take many forms, there are critical federal rules employers must follow.
- This article is for small business owners and human resource professionals who want to learn about health insurance reimbursement, how they work and what options are available.
Employers have many options for offering health insurance to employees. However, price is often the deciding factor when businesses choose health insurance benefits for their employees.
Employers understand that health insurance benefits can attract and retain top talent and boost employee satisfaction. However, not every business can offer fully sponsored health insurance, and employees must often foot a significant portion of the bill. In these cases, the employer may want to offset some of their employees’ expenses.
Fortunately, reimbursement options exist, but it’s crucial to handle health expense reimbursement correctly and comply with applicable legal requirements. We’ll explain what employers need to do to reimburse team members for health insurance costs.
Did you know? Business health insurance requirements state that companies with 50 or more full-time employees must provide group health insurance coverage to their employees.
Can employers reimburse employees for health insurance?
Employers can help with employees’ health insurance expenses in several ways. However, if you don’t use a pretax shelter provided by the IRS, such as a health reimbursement arrangement (HRA), there could be significant tax consequences.
What is an HRA?
An HRA is an employer-funded and -owned group health plan that allows employees to be reimbursed, tax-free, for some medical expenses. There is a cap on how much employees can be reimbursed annually. Any money