In today’s fast-paced business environment, maintaining a healthy and productive workforce is more important than ever. One tool that can significantly contribute to building such a workforce is the Health Reimbursement Arrangement (HRA).
An HRA is an employer-funded plan that reimburses employees for medical expenses and individual health insurance premiums not covered by their insurance. Employers set the allowance, and employees can use it for various healthcare costs, such as doctor visits and prescriptions. The employer's contributions are tax-deductible, and the employees' reimbursements are tax-free.
Having a healthy workforce is essential for any business as it leads to lower absenteeism, higher productivity, and overall better performance. Employees who are healthy physically and mentally are more engaged, satisfied, and likely to stay with the company long-term. Therefore, by investing in employees' health through HRAs, businesses are, in turn, investing in their own success.
In the following sections, we’ll outline the importance of employee wellness, the types of HRAs offered by Take Command, and how they can be implemented to build a stronger, more productive workforce.
Using HRAs to Boost Employee Wellness and Productivity
A healthy (and happy) workforce is important, as you know. But when we move beyond the phrase, what does it really mean? The wellness of employees is directly correlated with their productivity. A healthy employee is not only physically able to perform their tasks more efficiently, but they are also mentally more alert and engaged.
On the other hand, unhealthy employees often struggle with issues such as frequent illness, fatigue, and stress, which can significantly hinder their performance and, consequently, the overall productivity of the business. In fact, there have been multiple studies that show the link between good employee health and productivity. So how can your company empower employees and use HRAs to boost employee wellness and productivity? Let’s break it down.
Correlation Between Employee Wellness and Productivity
Employees who are physically healthy and mentally well are more likely to be engaged in their work, take fewer sick days, and exhibit higher levels of performance. For instance, a study published in the Journal of Occupational and Environmental Medicine found that employees who eat healthily are 25% more likely to have higher job performance, and those who exercise regularly are 15% more likely to be more productive.
Equally important is mental health. Stress, anxiety, and depression can severely impact someone’s ability to focus, make decisions, and interact with others. According to the World Health Organization, depression and anxiety have a significant economic impact; the estimated cost to the global economy is US$ 1 trillion per year in lost productivity.
While an HRA itself does not directly influence eating and exercising habits, it can indirectly encourage employees to eat healthier and exercise more by providing them with the financial means to afford a healthier lifestyle.
Imagine if your company’s HRA gave your employees the health benefits they needed to cover both physical and mental health costs?
Promoting Employee Wellness Through HRAs
HRAs are an excellent tool for promoting employee wellness. By providing employees with the financial resources to take care of their health, employers can encourage them to seek preventive care, address health issues promptly, and maintain a healthy lifestyle.
Here's how HRAs can promote employee wellness:
- Financial Support: HRAs provide financial support for employees to cover out-of-pocket medical expenses, which may include doctor visits, prescription medications, mental health services, and other qualified medical expenses. This financial support can make it easier for employees to seek the care they need without worrying about the cost. In addition, an HRA can cover a wide range of medical expenses, which can include nutritional counseling, weight loss programs, and gym memberships. By providing the financial means to afford these services, employees are more likely to take advantage of them and adopt healthier habits.
- Flexibility: HRAs offer flexibility in how the funds can be used, allowing employees to use the reimbursement for a wide range of medical expenses that are most relevant to their health needs.
- Encourages Preventive Care: With the financial support provided by an HRA, employees are more likely to seek preventive care essential to good health such as regular check-ups, vaccinations, and screenings —which can lead to the early detection and treatment of health issues before they become more serious and costly — and encourages employees to take a proactive approach to their health.
- Reducing Financial Stress: Financial stress can be a significant barrier to adopting healthier habits. By covering medical expenses, an HRA can reduce financial stress, making it easier for employees to afford healthy food and exercise regularly.
- Customization: HRAs like ICHRA allow employers to customize the arrangement according to the needs of different classes of employees. This flexibility can be used to provide additional incentives for employees to adopt healthier habits, such as increased reimbursement for expenses related to nutrition and exercise.
- Incentives: Employers can structure the HRA to provide incentives for healthy behavior. For example, an employer could offer to reimburse the cost of a nutritionist or a personal trainer, encouraging employees to take advantage of these services.
- Mental Health Support: Mental health is closely linked to physical health. An HRA can cover the costs of mental health support, which can have a positive impact on an employee’s overall well-being and motivation to eat healthily and exercise.
By promoting employee wellness, HRAs contribute to creating a healthier, more engaged, and ultimately, more productive workforce. In the next section, we will discuss the types of HRAs offered by Take Command and how they can be a good fit for different types of businesses.
Take Command Has Tailored Solutions for Modern Workforces
Take Command offers two main types HRAs: Qualified Small Employer HRA (QSEHRA) and Individual Coverage HRA (ICHRA). These HRAs are designed to meet the needs of different types of businesses and are suitable for the modern workforce, including remote workers. By offering such tailored health benefits, businesses can open doors to attract and retain great employees, no matter where they are located.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
QSEHRA is designed for small businesses with fewer than 50 employees who do not offer group health insurance. It allows employers to reimburse employees for individual health insurance premiums and other qualified medical expenses tax-free. Each employee receives a fixed monthly allowance, and after incurring medical expenses, they submit proof to their employer for reimbursement up to their allowance amount.
This arrangement is particularly beneficial for small businesses as it allows them to offer health benefits without the administrative burden and cost of a traditional group health insurance plan. It also provides flexibility for employees to choose the insurance plan and medical services that best fit their needs.
Individual Coverage Health Reimbursement Arrangement (ICHRA)
The ICHRA is available to businesses of all sizes and allows employers to reimburse employees for individual health insurance premiums and other qualified medical expenses tax-free. Unlike the QSEHRA, there is no limit on the amount an employer can contribute, and the employer can vary the allowance amount based on different employee classes. This makes the ICHRA a more flexible option for businesses with a diverse workforce and varying needs.
The ICHRA is suitable for businesses that want to offer personalized health benefits to their employees without the one-size-fits-all approach of traditional group health insurance plans. It’s also an excellent option for businesses with remote workers or employees located in different geographic regions, as it allows employees to choose the insurance plan that works best for them, regardless of their location.
Suitability for Modern Workforce
The modern workforce is increasingly diverse, with employees working in different locations, including remotely. HRAs, especially the ICHRA, are suitable for this modern workforce as they provide flexibility for employees to choose the health insurance plan and medical services that best fit their needs, regardless of their location. This flexibility opens doors for businesses to attract and retain top talent, as they can offer competitive health benefits to employees, no matter where they are located.
Key Ways HRAs Can Help Build a Stronger, More Productive Workforce
From reducing absenteeism to enhancing employee engagement, HRAs offer a range of benefits that can have a positive impact on both employees and the business as a whole. Let's explore each of these key areas.
Impact of Absenteeism on Productivity: Absenteeism, or the frequent absence of an employee from work, can have a significant impact on productivity. When employees are frequently absent, it disrupts the workflow, increases the workload on other employees, and can lead to delays in project completion. It also results in financial losses as businesses have to pay for sick leaves and temporary replacements.
How HRA Can Help: By providing financial support for employees to take care of their health, HRAs can help in reducing absenteeism. When employees can afford to seek preventive care, address health issues promptly, and maintain a healthy lifestyle, they are less likely to fall sick and miss work. This, in turn, helps in maintaining a steady workflow and increasing overall productivity.
Increasing Employee Satisfaction
Relationship Between Employee Satisfaction, Health, and Productivity: Employee satisfaction is closely related to their health and productivity. Satisfied employees are more likely to be engaged in their work, exhibit higher levels of performance, and have lower rates of absenteeism. Providing health benefits is a key factor in increasing employee satisfaction as it shows that the employer cares about the well-being of its employees.
How HRA Can Help: HRAs can help in increasing employee satisfaction by providing personalized health benefits. With the financial support provided by an HRA, employees can choose the health insurance plan and medical services that best fit their needs. This sense of autonomy and being cared for can lead to higher levels of satisfaction, and thus, increased productivity.
Attracting and Retaining Talent
How Offering HRA Makes a Company More Attractive: Offering HRA as a health benefit makes a company more attractive to potential employees. It shows that the employer cares about the health and well-being of its employees and is willing to invest in it. This can give a company a competitive edge in attracting top talent by offering a health benefit that gives the employee a choice in what type of insurance coverage they get.
How HRA Helps in Retaining Top Talent: Providing personalized health benefits through an HRA can also help in retaining top talent. When employees feel valued and cared for, they are more likely to stay with the company long-term. This reduces turnover costs and helps in maintaining a strong and experienced workforce.
Improving Mental Health for Employees
Importance of Mental Health for Workforce Productivity: Mental health is crucial for workforce productivity. Stress, anxiety, and depression can severely impact an employee's ability to focus, make decisions, and interact with others. Poor mental health can lead to burnout, increased absenteeism, and reduced productivity.
How HRA Can Help: HRAs can help in improving the mental health of employees by providing financial support for mental health services. With the financial support provided by an HRA, employees can afford to seek therapy, counseling, or other mental health services that they may need. This, in turn, can help in reducing stress, anxiety, and depression, and ultimately, increasing productivity.
Enhancing Employee Engagement
Importance of Employee Engagement for Workforce Productivity: Employee engagement is essential for workforce productivity. Engaged employees are more likely to be committed to their work, exhibit higher levels of performance, and contribute to the success of the business.
How HRA Can Help: HRAs can help in enhancing employee engagement by promoting employee wellness. When employees are healthy, both physically and mentally, they are more likely to be engaged in their work.
Providing personalized health benefits through an HRA can also increase the sense of being valued and cared for, which can, in turn, increase engagement and productivity.
Simplifying HRA Implementation with Take Command
Implementing an HRA in your business is a strategic move that requires careful planning and management. When you partner with Take Command for your HRA administration, you're not just getting a service; you're gaining a partner dedicated to your success. You'll free up time to invest in your team, knowing that the management of health benefits is in expert hands. Here’s how you can simplify your HRA administration with Take Command.
- Determine Your Budget: We start by helping you analyze your business finances to decide on a monthly allowance for each employee or employee class. This crucial first step sets the foundation for a successful HRA.
- Choose the Type of HRA: With Take Command, you have access to two main types of HRAs - QSEHRA and ICHRA, each designed to suit different business needs. We'll guide you through the decision-making process to ensure you choose the HRA that's right for your business and employees.
- Communicate with Employees: Clear communication is key. We provide you with educational materials and guidance on how to hold informational meetings to ensure your employees fully understand the new HRA, how it works, and what it means for them.
- Set Up the HRA: Setting up the HRA involves several key decisions. With Take Command, you'll have access to state-of-the-art software and knowledgeable HRA administrators who will assist you in deciding on the monthly allowance, determining the start date, defining eligible expenses, and setting up the HRA for success.
- Manage the HRA: Regular management of the HRA is crucial for success. This includes reviewing and approving employees' expense claims, making reimbursements, and ensuring compliance with all legal and tax requirements. With Take Command, you can rest easy knowing that all these tasks are managed efficiently and accurately.
By entrusting Take Command with your HRA administration, you can focus on what matters most – your team. Together, we can build a healthier, happier, and more productive workforce.
Empowering Your Workforce with HRA: A Smart Move for Success
We've journeyed through the extensive benefits of HRAs for creating a robust, productive workforce. From enhancing wellness and curtailing absenteeism to boosting satisfaction, securing top talent, bolstering mental health, and fostering employee engagement, the advantages of HRAs are vast and significant. We've also touched on the distinct HRAs provided by Take Command, how to put them into action, and potential hurdles you might encounter.
Essentially, HRAs are a smart move for your employees' wellbeing and your business's enduring success. They lead to a healthier, happier, and more engaged team, culminating in heightened productivity.
Ready to empower your workforce with HRA? Reach out to Take Command for expert guidance and support in rolling out HRA in your business. Our seasoned team is committed to ensuring a seamless and successful transition. Embark on the path to a healthier, more productive team today.
Susanne is a copywriter specializing in the health and wellness industry. Before starting her own business, she spent nearly a decade at a marketing agency doing all of the things – advisor, copywriter, SEO strategist, social media specialist, and project manager. That experience gives her a unique understanding of how the consumer-focused content she writes flows into each marketing piece. Susanne lives in Oklahoma City with her husband and two daughters. She loves being outdoors, exercising and reading.