Don't know what an HRA is? Well, you soon will. HRAs, which are essentially business expense accounts for healthcare, have been around since 2002. However, most Americans have no idea they exist. Zane Benefits, a technology company based in Park City, UT, is on a mission to change that, touting its "ZaneHRA" as the solution to ObamaCare.
According to Rick Lindquist, President of Zane Benefits, "The solution to ObamaCare for most employers is to get out of the health insurance business, and simply give select employees monthly allowances to spend on their own health insurance policy."
ZaneHRA is an "HRA," or health reimbursement arrangement, that allows employers to get out of the health insurance business. With ZaneHRA, employers set aside a certain sum every month, say $200, that employees spend on their own health insurance policy in a state health insurance exchange. The employer can write off the expense for tax purposes, just like traditional health benefits, and the money doesn't count as taxable income for the employee.
"The primary reason most businesses have not already switched to an HRA is they don't know the option exists," says Lindquist. "We have dedicated substantial resources to change that."
Lindquist isn't kidding. The Zane Benefits website (www.zanebenefits.com) is full of information and educational resources for those wanting to learn more about HRAs and Healthcare Reform. The free resources range from whitepapers (see the HRA 101 Whitepaper) and webinars (see How Healthcare Reform Affects CPAs) to blogs (see the Employee Health Benefits Blog) and guides (see the Employer's Guide to Defined Contribution) dedicated to specific topics.
Some forward-thinking employers have embraced "getting out of the health insurance business" and are already proclaiming the benefits. Sally Morris, Owner of Turner Morris, was faced with rising group health insurance costs. According to Morris, “the transition from a group health plan to a ZaneHRA was a beneficial switch for our overall business.” Through the change, Turner Morris employees saved 25% on healthcare costs in year 1.
Terry Freeser, Operation Manager at TicketPrinting.com, wanted to recruit and retain valuable employees. Terry states, "ZaneHRA [has] been very easy to use from an administrative view... They have even pro-actively called to help us understand what is needed if there is any question an employee might be bring up in regard to a claim."
Huco Consulting, an Environmental Consulting Service in Houston, Texas, had not been able to offer their employees health benefits since 2008. As Sameer Vyas, a Founding Partner, states, ZaneHRA allowed them to provide for their employees. "We researched 7 different HRA vendors... Zane Benefits was the [clear] winner for us due to reputable information on the website, press releases, and excellent service. The software is very easy to use; everything has been a smooth process."
Many others have provided case studies that share a similar message: the ZaneHRA philosophy is the solution to ObamaCare.
Lindquist likens Zane's philosophy to the shift in recent decades to 401(k) plans, where employers provide tax-deferred dollars, and it's up to employees to invest them. "Employers will be relieved of a crushing moral and financial obligation that they should never have had to take on in the first place," he says.
Critics say Zane's HRA doesn't take account of those people who can't get individual coverage because of previous or existing illnesses. Mr. Lindquist says this is no longer an issue due to recent health insurance reforms. "In 2014, individual health insurance companies can no longer reject individuals with pre-existing conditions".
Lindquist is not alone. New studies, including one from McKinsey, predict U.S. businesses are gearing up to abandon traditional health coverage in favor of the "defined contribution" HRA model. That's because employees no longer need employers to purchase quality health insurance, and, starting in 2014, employees earning less than 400% of the FPL (~$92,000 for a family of four) per year who purchase a personal policy will receive a large federal subsidy on their premium if their company doesn't offer a group plan.
About Zane Benefits, Inc.
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform ("ZaneHRA") for Health Reimbursement Arrangements (HRAs). The flagship software allows employers to offer a "business expense account" for healthcare. Zane Benefits does not sell health insurance. For more information about ZaneHRA, see www.zanebenefits.com