Benefits and Compensation

Paying for Health Costs: Basics of the Reimbursement Alphabet Soup

As healthcare costs continue to rise, financial pressure does, too. Your employees are feeling it, especially if you’ve had to shift an increasing share of healthcare costs to them. Higher copays and coinsurance may help control premiums, but they do nothing to rein in employee out-of-pocket costs. To the contrary, in fact.

True, the Affordable Care Act set limits on how much employees have to pay out of their own pockets for health care, but even with the limits, they remain unaffordable for many people. The maximums for 2016 are set at more than $6,000 for an individual and $10,000 for a family. When added to the premiums, many employees worry about their ability to afford medical care.

Because of these shared concerns, many employers are trying out accounts that can help employees pay their out-of-pocket costs. There are several types available, although each share one critical feature—the ability for employees to pay their eligible medical expenses pretax.

There are also some key differences. Here is information you can use to decide which reimbursement account best fits your company and your employees.

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