Health Reimbursement Arrangements (HRA)

Corporate Office: 250 South Executive Drive, Suite 300Brookfield, WI 53005 800.627.3660

www.NISBenefits.com

Overview• The Crisis of Rising Healthcare

Costs • The Solution – Tax-Free HRA • A Strategy for a Winning HRA

Solution• Why HRAs Work Better than HSAs

for Public Sector Employers

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The Crisis of Rising

Healthcare Costs

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Healthcare costs are rising at unsustainable levels, especially for seniors.

Costs Spiraling Out of Control

• Seniors spend 3 times more• 65 year olds need $250,000 to pay for

medical expenses

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Between 1999 and 2011, Costs Rose 160 Percent!

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011

Something Has to Give

Employee•Rising out-of-pocket health care expenses that are no longer covered by employer

Employer•Reduced revenues •Unsustainable increases in healthcare costs•Employers forced to reduce benefits, pre- and post-employment

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The Solution:

Tax-Free HRA

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HRA Solves Problems for Both Employer and Employee

• Employer deposits funds tax-free• Employees take control of their own funds• Account earns interest tax-free

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• Insurance premiums, deductibles and co-payments

• Prescription drugs, eyeglasses• Hospital and doctor procedures• Other unreimbursed medical

expenses, IRS section 213(d)

for employees, their spouses and eligible dependents

The HRA Pays for Medical Expenses no Longer Covered by the Employer Plan….

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FICA Tax-Free

Federal Income Tax-Free

State Income Tax-Free

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Strategy for a Winning HRA Solution

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Employer Win Participant Win

Save FICA Matching Saves ALL taxes

Provides needed cash for out-of-pocket medical expenses

Win/Win HRA Scenario:Exchange an HRA for Special Payments Made to Retirees

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Without an HRA:

With an HRA:

Which would you rather have?$15,750 without an HRA or $25,000 with an HRA?

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Why HRAs Work Better

than HSAs for

Public Sector Employers

Why an HRA Works Better than the HSA for Public Sector Organizations

1. Can be used for Health Insurance Premiums

2. Less restrictive3. Open to all employees and

retirees 4. More carry-over flexibility5. No conflict of interest6. Local plan control7. No employee contributions

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More Key Wins

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More “Wins” for Participants• HRA can be used by the employee, spouse and eligible dependents• Funds are invested and professionally managed • Individual accounts are established with 24-hour online access and

800# customer support

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More “Wins” for Employers

• Enhanced recruiting and retention• Flexible funding options• No admin headache - all servicing

done by Third-Party Administrator (TPA)

• Turnkey TPA system provides all necessary documents and forms

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Things to Remember:• Public employers and employees are

facing financial challenges of unprecedented proportions

• An HRA can provide creative solutions where both employer and participant win

• HRA solutions work better than an HSA for public sector employers and participants

• Administering your HRA is a breeze with our TPA

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Important Notice

The general information contained in this presentation is provided to assist entities that are considering a Health Reimbursement Arrangement (HRA) as an option for their employee and/or retiree’s health coverage. It is not intended as legal or tax advice from Retirement Plan Services of America, Inc. or any other company. Entities considering an HRA should seek the advice of their independent legal counsel to determine the application of this information to their specific circumstances. To ensure compliance with requirements imposed by the IRS, we inform you that any discussion of U.S. federal or state tax consequences contained in this communication (including any hand outs) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.

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For More Information, Contact:

National Insurance Services, Inc.Aaron A. Casper AIF©aacasper@NISBenefits.com800.627.3660

Retirement Plan Services of America, Inc.Larry Steintsa2@bellsouth.net404-664-6644

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