HRA Proves to be a Benefit Option for Retirees

Health Reimbursement Arrangements (HRAs) are tax-free accounts that help employees pay for eligible health care expenses.  With an HRA, the employer funds the account, and employers are finding it’s a great benefit option for retirees to use the funds to get reimbursed for qualified health care costs.

BASE® has been administering Health Reimbursement Arrangements for over 25 years and with each passing year, has seen more employers looking to provide an HRA to their retiree employees as part of their health care benefit strategy. 

A Retiree-Only HRA can be used to reimburse qualified health care expenses, including premiums for individual coverage and Medicare, incurred after retirement.  Employers may further restrict the types of qualified health care expenses that are eligible for reimbursement.  

The Inflation Reduction Act (IRA) of 2022 introduced significant changes to Medicare Part D, which improved coverage for retirees but presented financial challenges for employers sponsoring group Medicare Part D plans.  To mitigate potential cost increases, employers might consider directing retirees to individual Medicare Part D plans through the marketplace exchanges and leverage Health Reimbursement Arrangements (HRAs) for funding. 

With this approach, retirees gain all the benefits of Medicare Part D while employers can enjoy a reduction in their administrative effort and potentially in their coverage costs.  Many employers have done exactly this over the years as individual market insurance coverage has become more attractive compared to group plan coverage. 

If you are an employer looking for retiree benefit options or work with employers looking for options and want to learn more about how a Retiree-Only HRA might benefit them, contact BASE® at 1.888.386.9680 for more information. 

Is DCAP Worth it?

Of the parents surveyed in a Care.com Care Report, 67% are spending 20% OR MORE of their annual household income on childcare.  No matter the qualifying expense, it can be a significant expense. 

BASE® is here to help lessen the burden.  So many know about being able to pay for their eligible health care expenses on a pre-tax basis with the Flexible Spending Account (FSA), but there is another tax-advantaged account that can help save money on childcare. 

Dependent Care Assistance Plan (DCAP) is an employee benefit that helps employees pay for the care of their qualifying dependent(s) so that the employee can work, look for work, or attend school full time. 

The BASE® DCAP is a pre-tax benefit that provides some additional financial assistance to allow employees to take care of their family.  Employees can contribute up to the annual maximum limit, $5,000, to pay for their qualified DCAP expenses.   

Childcare is one of the biggest expenses for most parents, and bottom line, if your employees are paying for daycare, the BASE® DCAP is already worth it.  The DCAP can help…

  • Employees save $240 in federal taxes for every $1,000 spent on dependent care with DCAP.
  • Employees facing the increased daycare costs because according to a Zippia.com, 72% of families say that childcare is more expensive now compared to before the pandemic.
  • Any employee that has dependents that live with them that go to daycare.

The Dependent Care Assistance Plan (DCAP) helps employees have peace of mind knowing that they are establishing funds to help pay for the costs of dependent care and increase their take-home pay due to funds being transferred on a pre-tax basis.  The DCAP provides employers with an enhanced benefits package that will help to recruit new and retain current employees. 

To learn more about the BASE® Dependent Care Assistance Plan (DCAP) available, contact BASE® at 888.386.9680 or visit www.BASEonline.com.