Financial

This Business Expanded Coverage to Specialty Care, Covering Fertility and Mental Health Treatments

This business chose to supplement its current health insurance plan with expanded coverage for IVF, abortion care, mental health treatment, and birth control.

September 14, 2022

The Problem

Fertility and reproductive care are a significant concern for many employees, with over 20% of couples where the woman is aged 30-39 having problems conceiving their first child.

Traditional insurance plans often don’t cover family planning or mental health care costs, and  employees at this business had requested expanded coverage for these necessary forms of care. After looking into the specifics of their group plan, this business wanted to provide additional coverage for IVF, abortion care, mental health treatment, and birth control.

By doing so, the company hoped to attract and retain a larger pool of top talent while building a more supportive and productive work environment for all employees.

How a Liferaft Health Expense Account Can Help

Through a Liferaft Health Expense Account, employers can reimburse employees for out-of-pocket costs associated with family planning care, including IVF, prescriptions, doctor visits, travel expenses, birth control, abortion care, and other medical expenses.

While recent court decisions have influenced some employers to expand their family planning coverage, the flexible nature of a Health Expense Account allows employers to choose to cover various out-of-pocket healthcare expenses. Employees can be reimbursed tax-free for costs like deductibles, co-pays, co-insurance, dental and vision premiums, and other qualified expenses not covered by their group health plan. 

Employers contribute a set amount of money to each employee's account each year, helping alleviate some of the financial burden of accessing these essential healthcare services. This sends a strong message that their employees' health and well-being are a top priority.

The Plan

The employer wanted to ensure employees could afford expensive fertility treatments, including IVF. The employer is in California, where the average cost of IVF is $10,500. Therefore, the employer set its monthly available reimbursement amount at $875 per year with an annual cap of $10,500. Eligible reimbursable expenses included IVF treatment, prescription drugs, abortion care, and birth control.

Choosing Your Expense Categories

This employer chose a very limited number of eligible expenses. You can include or exclude any health-related expense that the IRS defines as a qualified health expense in Publication 502

Below are some examples of qualified health expenses. Based on your intent in setting up your Health Expense Account, Liiferaft will recommend what to include and exclude in your plan documents.

How it works

A Liferaft Health Expense Account 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.

Frequently Asked Questions

Are Health Expense Accounts 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 Expense Account. 

What happened to unused funds? Do they roll over?

One of the central values of a Liferaft Health Expense Account 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 Expense Account 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 Expense Account?

Liferaft Health Expense Accounts 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. 

Interested in Getting Coverage?

If you're interested in learning more about how to save money on your business' healthcare expenses, sign up for a free 15-minute consultation with our team at Liferaft. Many of our clients have also found Liferaft's free Guide to Health Reimbursement Arrangements a comprehensive overview of how health expense accounts work and why companies are using them.

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