A retiree health care plan designed around FHRAs allows you to partially or totally pre-fund your account, reducing or eliminating the need to report retiree health care liabilities.

This is a particular concern for public-sector employers who need to address Government Accounting Standards Board Statement 45 (GASB 45), although FHRAs may also be an option for some private-sector businesses, particularly those with organized labor contracts.

Benefits for employers

• Tax advantages — Your contributions grow tax-free as long as they are used to reimburse retirees’ eligible health care expenses.
• GASB 45 administration — An FHRA can reduce or eliminate the need to report future retiree health care liabilities.
• Claims and payments handled by us — Our full range of administrative services allow you to focus on your business.
• Flexible plan design — We work with you to build the appropriate solution so that you purchase only the services you need.
• Medical inflation management — Your financial exposure to unpredictable increases in future medical expenses is decreased.

Benefits for retirees

• Secure contributions — Funds are placed in a trust, protecting the assets from creditors, income tax, plan termination and estate taxes.
• Tax savings — FHRA contributions and interest are not added to taxable wages and distributions are tax-free when used for qualified medical expenses.
• Investment options — Active employees and retirees can choose how the contributions are invested.
• Survivor protection — If a participant dies, the funds may be transferred to the surviving spouse or dependents to pay for their medical expenses.
• No age restrictions — Distributions for qualified medical expenses in retirement can be taken at any time following retirement, regardless of age.
• Premium payments — Funds can be used to pay for health plan premiums.