Federal regulations prohibit employers from paying directly for employee's medical expenses, including health insurance premiums, outside of an HRA or other ERISA-qualified group health benefits plan (e.g. Section 125). ZaneHRA automatically makes employers HIPAA and ERISA compliant with these regulations. For example, to comply with ERISA, ZaneHRA assures that all employees in a given class receive the same level of benefits and that benefits are disclosed to employees. To comply with HIPAA, ZaneHRA protects employee privacy by assuring that employers are not aware of which specific medical items, including personal health insurance policies, are purchased by employees.

Furthermore, if an employer were able to technically comply with HIPAA and ERISA in paying for medical expenses, such payments would be taxable income to employees unless they were paid through an HRA or other IRS-qualified tax-free vehicle (e.g. Section 125 plan). Using an HRA an employer can give employees effectively up to twice as much in health benefits through tax savings than if the employee were to pay for such expenses themselves.

See Can employers reimburse employees for the cost of personal policy premiums?

NOTE: The HRA itself is the "Plan", not the healthcare items purchased with the HRA.

HRA's are qualified ERISA- and HIPAA-compliant group health benefits plans--employees in the same class must receive the same HRA allowances. However, the medical items (including personal health policy premiums) on which each employee chooses to spend their HRA allowances, are not part of a qualified group health benefits plan. That's why HRAs are allowed in every state to reimburse employees tax-free for their personal policy premiums or prescriptions, even though employees typically pay different amounts for personal policy premiums or pharmacy purchases.

This document has been prepared solely for the purpose of providing information based on legal and tax advice provided to Zane Benefits, Inc. However, it is not meant to provide legal or tax advice for entities other than Zane Benefits. No representation is made as to the completeness or accuracy of the information herein. As such, it should not be used as a substitute for consultation with professional employment law specialists, tax accountants, attorneys, or other advisors. To comply with U.S. Treasury Regulations, we inform you that, unless expressly stated otherwise, any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.

Username	Password (Forgot password?)