Major Medical Rate Increases & How Liferaft Can Help

With recent rate hikes for group health insurance, LLC business owners are looking for ways to provide their employees with the same level of coverage while saving money on their bottom line.

December 1, 2022

Health Insurance Rates up by 10%

2023 rates are increasing on average by 10% for small group health plans. Business owners are looking for ways to provide their employees with the same level of coverage at a more affordable price point. For owners who operate as an LLC or a pass-through entity, finding ways to save on costs is crucial to ensure the annual return you are accustomed to.

Liferaft has been working with businesses to transition them to Liferaft’s Health Reimbursement Arrangement—giving their employees the flexibility to choose the plan that makes the most sense for them, while also saving businesses thousands in annual cost. 

Here’s a closer look at how this LLC based in Minnesota is is saving $144,000 a year by switching to a Health Reimbursement Arrangement.

A Client Example in Minnesota

A 35-employee digital media LLC based in Minnesota was offering their team major medical coverage through Blue Cross through a group broker. A few of their employees had major expenses last plan year and they were notified that their rates were going up. 

They were already paying $26,500 per month, $318,000 a year to provide quality health coverage for their employees. With a Liferaft Health Reimbursement Arrangement, they are now paying $14,500 per month, $174,000 a year without sacrificing the quality of their coverage. 

That is a savings of $144,000 a year!

Your guide to flexible & affordable benefits — download now.

Group health can be complex, restrictive, and costly. Liferaft offers something different.

Liferaft's 2023 Whitepaper on HRAs is the most comprehensive guide available, giving you what you need to determine if an HRA makes sense for your business.
You will automatically be redirected to your whitepaper download after submission.
What you get in your guide:
• What is an HRA?
• HRA Requirements & Features
• Eligible HRA Expenses
• When an HRA Makes Sense
• Different HRA Types
• States Where HRA Works Best

How it works

With support from the Liferaft team, this business set up Health Reimbursement Arrangement for employees, spouses, and children covered with major medical. Each employee selected a plan from MNSure, the Minnesota state exchange. Our team recommended plans available from the two top-rated insurance companies in Minnesota, and employees were able to select HSA-compatible, high-deductible and traditional co-pay plans—depending on their personal family situation, budget, and preference.  

The company has continued to offer HSA and FSA accounts in conjunction with the health reimbursement arrangement. Employees have been able to choose the plans that work best for them, while saving the business thousands toward their bottom line. 

A Liferaft Health Reimbursement Arrangement is fully customizable based on what makes the most sense for your organization. Our team will handle all the paperwork to properly set up your account—making it easy for you to benefit from all available tax advantages. 

  • Design your benefit: Decide how much tax-free money to offer each month, which expenses should be eligible for reimbursement, or offer various benefits to different employee groups.
  • Employees purchase qualifying expenses: Allowances can be used for qualifying medical expenses and healthcare services, including prescription glasses, healthcare premiums, physical therapy, and more.
  • Employees reimbursed: Our user-friendly 100% digital experience makes it easy for you and your employees to submit a claim and get reimbursed for eligible expenses.

Where Else a Liferaft Health Reimbursement Arrangement Makes Sense

While a Liferaft Health Reimbursement Arrangement has many different use cases, it can be particularly effective in providing major medical insurance in states where the rates for health insurance on the state’s exchange are cheaper than group health insurance rates. 

Through the Health Reimbursement Arrangement, employers can reimburse the individual for their own health insurance premiums rather than paying for a group plan. The chart below shows the states that have the most significant cost differences when comparing individual versus group plans.

When moving to a Health Reimbursement Arrangement for your company’s major medical insurance, the Liferaft team will analyze your employee census and make a unique plan recommendation for each employee. Plan recommendations will consider each employee's specific location, age, family circumstances, and the plan’s provider network quality. This guidance will allow employees to confidently choose the best possible coverage for their needs and budget.

2023 Year-End Report: 
HRA Trends & Insights

Liferaft's 2023 Year-End Report gives brokers and business owners the full breakdown of HRA market challenges, employer concerns, growth opportunities, and more, to help you can stay ahead of the curve.
You will automatically be redirected to your whitepaper download after submission.
This whitepaper includes:
2023 HRA Trends  |  Top Employer Concerns  |  Trends in HRA Account Types  |  Potential Pitfalls & Challenges  |  ICHRA Enrollment Stats & Trends  |  2024 Areas of Opportunity & Growth

Frequently Asked Questions

Are Health Reimbursement Arrangements considered income?

According to the IRS, employer-issued reimbursements are not considered income and are exempt from federal income and payroll taxes. This is one of the significant tax benefits of distributing employee benefits through a Liferaft Health Reimbursement Arrangement. 

What happened to unused funds? Do they roll over?

One of the central values of a Liferaft Health Reimbursement Arrangement is flexibility, and the answer here depends on the employer’s specific policies. Some companies may have a "use it or lose it" policy regarding account funds, meaning that any funds not used by December 31st will be forfeited and cannot be carried over into the new year. Other employers allow employees to roll over a certain amount of money from one year to the next. Put plainly—it’s up to you! 

What are some disadvantages of an HRA?

Because the funds in a Liferaft Health Reimbursement Arrangement are employer-funded, the employer owns the money in the account even though it is for the individual to use. If the person leaves the company or their job is terminated, the account funds stay behind with their former employer.  Employers can offer a retirement account that allows former employees to utilize funds after leaving the company.

Additionally, different employers often have different rules for reimbursement, which can be a problem for employees if they switch companies. Aside from mandatory requirements like COBRA continuation, ERISA and HIPAA, plans can vary widely. 

Which employees are eligible for a Liferaft Health Reimbursement Arrangement?

Liferaft Health Reimbursement Arrangements can be offered to any employee, as long as each job class is treated equally. This means you can easily provide benefits to part-time and seasonal employees. However, depending on what type of expenses you plan on reimbursing, there are specific IRS requirements. After learning about your business and goals, Liferaft will make a plan recommendation for the most tax-advantaged, affordable way to structure your account.

Book your consult with Liferaft

Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.

During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.

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