Individual Coverage HRAs (ICHRA) and the Excepted Benefit HRAs (EBHRA) have a lot of perks, but what if some of your employees would rather stay on the group plan they're accustomed to? Good news. You can offer both (just not to the same group of people). Here's how to do it.
Can you offer an Individual Coverage HRA (ICHRA) and a Group Plan together?
Unlike ICHRA's predecessor, QSEHRA, which prohibits employers from offering a group plan alongside the Qualified Small Employer HRA, Individual Coverage HRAs play well with group plans in certain circumstances.
Employers can offer an ICHRA plan and traditional group plan to employees as long as two conditions are met:
- Employees in each class are only offered one solution. For example, an employer cannot offer employees within a class an ICHRA and a group plan.
- Certain classes being offered reimbursement through an ICHRA must meet class size minimums. This is to avoid adverse risk shifting from employers trying to unload unhealthy risk off of their group plan and onto the individual market.
More on Group Plans and ICHRA
Say you want to continue your group plan with your full-time employees but want to offer an ICHRA for remote or hourly workers. ICHRA allows you do do that.
Other scenarios:
- You could maintain a group plan for existing employees and an ICHRA for new hires
- You could offer a group plan for those at headquarters and an ICHRA for remote workers (added bonus of them being able to choose local carriers with good networks in their area)
- You could offer a group plan to salaried workers and an ICHRA for hourly workers.
The point is, the flexibility inherent to ICHRA's design allows you to tailor it to your workforce.
Can you offer an Excepted Benefit HRAs (EBHRA) and Group Plan together?
Excepted Benefit HRAs (EBHRAs) provide a great opportunity for employers to offer additional benefits to their employees. These HRAs allow employers to contribute towards expenses that are not typically covered by traditional group health plans, such as copays, deductibles, and other out-of-pocket costs. Unlike flexible spending arrangements (FSAs), unused funds in an EBHRA can rollover from year to year. This means that employees can accumulate a significant amount of funds over time, which can be used to pay for healthcare expenses when they need it most. Furthermore, EBHRAs have higher contribution limits than FSAs, making them a more attractive option for employers looking to provide additional benefits to their employees.
Although EBHRAs cannot be used to reimburse traditional insurance premiums, they can be used to cover a wide range of healthcare expenses. For example, they can be used to cover the cost of limited scope dental and vision insurance, COBRA continuation coverage, short-term limited duration insurance (STDLI), and long-term care coverage. Additionally, EBHRAs can be used to reimburse employees for cost-sharing expenses, such as copays and deductibles.
One of the most attractive features of EBHRAs is that employees do not have to accept the employer-sponsored group health plan in order to participate in the HRA. This means that employees who cannot afford the premiums under their group plan can purchase a short-term plan instead and use their EBHRA allowance to reimburse the premium. This can be a valuable option for employees who need healthcare coverage but cannot afford the high premiums associated with traditional group health plans.
In summary, EBHRAs offer a great way for employers to provide additional benefits to their employees. They allow for higher contribution limits than FSAs, and unused funds can rollover from year to year. While they cannot be used to reimburse traditional insurance premiums, they can be used to cover a wide range of healthcare expenses, including cost-sharing expenses and limited scope insurance. With the flexibility that EBHRAs offer, employers can tailor their benefits package to meet the unique needs of their workforce.
While you can't reimburse for traditional insurance premiums, you can reimburse up to $1,800 for the following:
- Limited scope dental and vision insurance;
- COBRA continuation coverage;
- Short-term limited duration insurance (STDLI);
- Cost sharing (copays and deductible); and,
- Long-term care coverage, nursing home care, home healthcare, community-based care, or any combination thereof.
Pro-tip: Employees do not have to accept the employer sponsored group health plan in order to participate in EBHRA.
This is great news for employees who might not be able to afford the premiums under their group plan, as they will be able to purchase a short-term plan instead and use their EBHRA allowance to reimburse the premium.
Still have questions about Group Plans and HRAs?
We are here to answer the questions you might still have about how these HRAs and group plans interact with one another. Click the chat button to talk to someone immediately! You can also check out this post, in which we compare ICHRA, EBHRA and group plans. Or peruse our comprehensive ICHRA guide
This post was oriainlly published in 2019 and has been updated to reflect policy updates in 2023.
