Is Defined Contribution Dead? Can you still use an HRA to pre-tax Health Insurance Premiums? Are POP plans Dead?

By Ric Joyner, MBA, CEBS, GBA, CFCI–CEO, eflexgroup.com

I will be answering these questions in more detail in another post that can be used as a white paper.

No, defined contribution is not dead and in fact, will be used extensively by small groups to off-load the burden of their health insurance to employees thus capping their costs for the future. “Well Ric, that is nice but how do we make it pre-tax?” This question has come to me a lot this week and leaves me scratching my head on why it is EVEN a question. Until, I realized that the questioners are confused. HRAs are a great tool and product for employer funds to purchase medical insurance or reimburse medical expenses. But was never my first choice for a solution to tax free either or both. We always used these a PRA and Health FSA accounts  for defined contribution.

PRA-Premium Reimbursement Account under a section 125 plan. This can still be used even with the regulation change. If you are not familiar with this tool it is under a section 125 document and is an account that can reimburse insurance premiums that qualify for section 213d deductions. See https://www.eflexgroup.com/forms/FSA/index.aspx for an eflex worksheet that shows how this account works. Also the neat thing about this account is that BOTH the employer and employee can put money into the account. “Ric, this account doesn’t rollover from year to year.” Right, it has the use it or lose it rule but the employers we installed it in say that actually works better because they don’t want unused premiums being rolled over.

Yes, an HRA can still be used as a tool to pre-tax health premiums. It can’t be used to replace qualified coverage under ACA. That makes perfect sense to me.

And no, POP plans are not dead.

We are going to go into more depth next week so stay tuned. Here is something to noodle about. With this regulation added, group health brokers should be ecstatic. Why? Because it may help prevent your group from being lost to another broker selling individual.

Coming soon. eflex fully  integrated exchange for brokers.

Ric

 

 

 

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About rjoyner

Ric Joyner, CEBS, GBA, CFCI Customer Experience Officer Ric is a founder of eflexgroup.com a national web based TPA for Cafeteria, HRA, HSA, Transit, VEBA and COBRA plans. eflexgroup is a leader in self-service employee benefit systems. eflexgroup was the first TPA in the industry to go “online” in 1999 allowing employees to self-serve 24 hours per day. He has lead the industry with eflex by placing provable customer service statistics, live, on eflexgroup.com Ric is celebrating his 32nd year employee benefits. He helped create TPAs such as TASC and Employee Benefits Corporation in Madison WI. He was a licensed insurance agent for 29 years. The designations Mr. Joyner holds are; Certified Employee Benefits Specialist, Group Benefit Associate, Certified Flexible Compensation Instructor, board approved by ASPA to teach Cafeteria Plan regulations. Ric also has a bachelors of science in Information Technology and MBA (emphasis is project management) and graduated summa cum laude from Capella University with a 4.0. Ric helped found the National Association of Professional Benefit Administrators (NAPBA.org). NAPBA is dedicated to training administrators in best practices and grass roots lobbying. Ric has served in the past as the Wisconsin Association of Health Underwriters State President in 2003. Ric is a frequent speaker and article writer for prestigious associations such as NAHU.org, NAPBA.org, Wisconsin SHRM, Austin SHRM, PACE.org, International Foundation of Employee Benefits, Tampa Bay AHU, WI AHU, Florida AHU, Florida NAIFA and participates on the List Serves (compliance programs for Consumer Driven Products of NAHU and International Foundation of Employee Benefits)

2 thoughts on “Is Defined Contribution Dead? Can you still use an HRA to pre-tax Health Insurance Premiums? Are POP plans Dead?

  1. Eric Golle

    Never heard of a PRA. Are employers contributions to a PRA "tax deductible" post reform?? Is this specifically spelled out somewhere in recent regs? Great blog and clarification much appreciated.

    Thanks,

    Reply
    • rjoyner Post author

      Eric give our office a call at 608-243-8277 ext 222 and one of us can get some information to you. And yes through section 125 but there are considitons.

      Reply

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