LIG Solutions

When you think of employer benefits, what comes to mind? For many of us, our minds wander to benefits such as paid time off and retirement funds. Another stand-out benefit is health insurance. Employer-sponsored health insurance is a health plan selected and purchased by an employer and offered to eligible employees and their dependents. Many employers think that traditional group plans are the only option when offering health insurance benefits to their employees – but this isn't necessarily true. The History of Employer-Sponsored Health Insurance Believe it or not – employer-sponsored health plans date back to WWII. In response to inflation, the Stabilization Act of 1942 was passed and limited an employer's ability to raise wages. With the goal of attracting talent in a time where the labor pool was scare due to the ongoing war, rather than use wages as a draw, employ- ers turned to additional incentives, such as healthcare coverage. These healthcare benefits can be considered as part of compensa- tion without employees having to pay income tax or payroll tax. Now, more than 80 years later, the employer-sponsored health insurance plans are still a major part of employer benefits. Why the Shift Away From Traditional Group Health Plans? The traditional group health insurance plan is something that the majority of us are familiar with. In fact, more than 156 million Americans are covered through employer- sponsored health insurance. Under this benefit, employees are given paperwork from the employer with the insurance plan that is chosen for them to fill out. The employer pays for a percentage of the cost of the plan, and employees re- ceive the same health insurance benefits as fellow coworkers. While the traditional group health insurance plan is familiar, it isn't the only opportunity for employees to receive health benefits partially paid for by their employer. As the times change, more and more employers are recognizing that the traditional group health insurance plans don't necessarily work for their company. The workforce is highly mobile, remote BY: MORGAN REAPE Moving Away From TRADITIONAL GROUP PLANS Employee Sponsored Health Plans Aren't Your Only Option positions are increasing, technology advancements make it easier to personalize plans, and consumer expectations have evolved. Due to this shift in mindset, employers are recog- n i z i n g t h e b e n e f i t o f m a k i n g t h e s w i t c h t o H R A s . Don't Worry… There's a Solution: HRAs HRAs, or Health Reimbursement Arrangements, are similar to a group plan – but done a little differently. This is still an employer-funded health benefit, but rather than paying for a group health plan, employers reimburse a monthly benefit allowance to employees for health insurance premiums and out-of-pocket medical expenses. HRAs are available that can work for any employer, regard- less of the organization's size, group insurance status, or budget. HRAs have a look and feel similar to employer-spon- sored health plans, but with added flexibility and cus- t o m i z a t i o n f o r b o t h e m p l o y e r s a n d e m p l o y e e s . Benefits of HRAs include: • Healthcare choice for employees. With HRAs, employ- ees have a choice in their health insurance plan. Now, they are able to find a plan that works for them and their family's needs with the knowledge that their employer will cover a specific monetary amount to go towards this coverage. • Cost control for employers. Employers have the choice in how much they contribute to each employee's HRA ac- count and don't need to worry about rising premium costs. • Tax-free funds. Employer contributions to a health- c a r e i n s u r a n c e p l a n a r e 1 0 0 % t a x d e d u c t i b l e . • Separation between organization and health in- surance. While employers contribute a specific monetary amount to an individual's health plan, there is a clear distinc- tion between the plan itself and the employer. Employees now own their specific health plan and are able to make all decisions surrounding the kind of insurance they receive. If you would like to receive more information around HRAs visit www.LIGsolutions.com/HRA 10 LIG ASSOCIATION SOLUTIONS - FALL 2021

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