Your Small Business Can Save With a Health Reimbursement Arrangement

Whether you want to offer money towards health insurance premiums or other expenses, a health reimbursement arrangement allows you to give money to your employees in a tax-advantaged way.

June 14, 2022

What Is A Health Reimbursement Arrangement

Health Reimbursement Arrangements are flexible structures that allow an employer to contribute directly to an employee’s healthcare spending. Whether you want to offer money towards health insurance premiums or other expenses, a health expense account allows you to give money to your employees in a tax-advantaged way.

Health insurance costs are one of the highest for many small businesses. Offering benefits is important to attracting and retaining your employees, but that has to be balanced with your budget. In certain instances, offering your employees a health reimbursement arrangement to purchase their own health insurance saves you money while also giving your employees freedom of choice.

How Does It Help Small Businesses

Health Reimbursement Arrangements vary and Liferaft can help you select which one would be the best fit for your business’s needs. Small businesses offering health insurance can find potential cost savings by transitioning health insurance to a health expense account. 

  • You decide what you want to cover and your budget
  • Your employees access services directly or purchase the health insurance they prefer, filing their receipts on a digital portal. 
  • When the expense is approved, the employee receives automatic repayment for the expense. 
  • At the end of the year, you receive a report of the total use of the budget you allocated

A Health Reimbursement Arrangement in Action

An employer with 20 employees in New Mexico is offering all of their employees fully paid health insurance. Through the small business marketplace, the employer offers a silver and gold level plan with total annual expenses of $250,000. 

With a Liferaft Health Reimbursement Arrangement, the employer offered every employee the equivalent budget of a gold-level plan that was purchased by each employee individually. The employer was able to save over $150,000 per year on annual expenses and each of the employees selected the plan that was the best fit for their personal needs.

Top 3 Benefits of a Health Reimbursement Arrangement

Employers who choose to optimize their budget for healthcare spending with a health reimbursement arrangement benefit from the flexibility, cost-savings and limited restrictions.

  • Available for all employers: Group health insurance can be complex, restrictive and  unpredictable financially. With a health reimbursement arrangement, simply set a monthly benefit allowance and employees can use their benefits on any qualified medical expense they choose.
  • Cost-effective: Many states offer more affordable insurance plans on the individual market than on the small group market. A health reimbursement arrangement allows employers to fund all or part of their employees' health insurance costs with pre-tax dollars, freeing up budget without sacrificing benefits.
  • Flexibility: With a health reimbursement arrangement, employees choose how to use their benefits, rather than being stuck in a one-size-fits-all group plan. This flexibility allows employees to tailor their coverage to fit their personal health, budget, and family situation.

Think A Health Reimbursement Arrangement Is Right For Your Business?

Email our COO and Co-Founder Nimish Shukla ( and our team can provide you with a personalized quote to see if a Health Reimbursement Arrangement will help your small business.

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