HSA Bank, a division of Webster Bank, has expanded access to a new solution designed to support employees into retirement—the retiree reimbursement arrangement (RRA).
An RRA is a solution for employers looking to help their retirees offset health care costs in retirement even if they do not offer a group retiree health plan.
The 2021 HSA Bank Health & Wealth Index found 93% of consumers older than 55 said they are worried about current or future medical bills and, of those consumers, more than one-third reported they rarely save money for future health care expenses. According to a recent study by HealthView Services, it is estimated that a healthy, average couple age 65 who retired in 2020 will spend $662,156 on retirement health care expenses.
Compared to defined benefit (DB) retiree health care plans, RRAs can be a more predictable and cost-effective option for employers to continue to provide for their employees into retirement, HSA Bank says. By contributing funds, employers can provide employees with tax-free money to help them pay for Medicare premiums and other qualified medical expenses incurred during retirement. If all funds follow guidelines from the IRS, the contributions are also tax-deductible for the employer.
“We are thrilled to offer this retirement solution for more employers,” says Jason Kessler, senior vice president, director of product management at HSA Bank. “RRAs are a great way for employers who offer HSAs [health savings accounts] to their active populations to continue to play a part in the well-being of their employees into retirement.”
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