There are 3 health insurance reimbursement plans to know, and Take Command is here to walk you through them! Health insurance reimbursement is possible through a Health Reimbursement Arrangement, or HRA. An HRA is an arrangement between an employer and their employees to reimburse for medical expenses and/or insurance premiums tax-free. The purpose is for employers to help their employees afford rising healthcare costs. Let’s look at the 3 health insurance reimbursement plans you should know.
Types of health reimbursement arrangement plans
First up, ICHRA. The Individual Coverage HRA hit the ground in 2020 and has steadily grown in popularity ever since.
Our CEO, Jack Hooper, recently told BenefitsPRO that ICHRA represents a “fundamentally new model of how employers can provide benefits to employees.”
ICHRA is available to companies of any size, boasts no annual contribution limits, and can be designed to include or exclude employees based off of customizable class criteria (11 classes total). Employees must enroll in a qualified individual health insurance plan or Medicare Part A and B or Part C. With ICHRA, both premiums and medical expenses can be reimbursed. Plans can be designed to allow for premiums only or premiums plus expenses.
The next type of health reimbursement arrangement we want you to know about is the Qualified Small Employer HRA, a predecessor of ICHRA that's specifically designed with small businesses in mind. It's available to businesses with less than 50 full time employees. It does have an annual contribution limit. For 2021, those limits are $5,300 per single employee and $10,700 per employee with a family. With QSEHRA, an employee must maintain MEC to participate. Both premiums and medical expenses can be reimbursed. Plans can be designed to allow for premiums only or premiums plus expenses.
The third type of HRA to know is the Excepted Benefits HRA. It's available to companies of any size and has an annual contribution limit of $1800. Individual insurance premiums including Medicare parts B and D are excluded, however medical expenses are eligible for reimbursement. Dental, Vision, Long-Term Care, Nursing Home Care, Community-Based Care, Short-term (STLDI), COBRA are all eligible for reimbursement.
How health insurance reimbursement plans work
At a high level, it’s pretty simple: The employer chooses an HRA for her company, sets a budget that works for them, and then lets the employers know they can use it. From there, once an employee pays for a medical expense or premium, they just turn in the receipt and submit for reimbursement.
The important thing to remember is that every company is different. What one company needs vs. another can tell an entirely different story. The same can be said about their employees. Choosing an HRA solution to provide benefits for your staff is a choice best made informed.
Looking for more information?
Check out our FAQ pages for the EBHRA, ICHRA, and QSEHRA. We also have in-depth guides for the ICHRA and QSEHRA. You can bypass the reading and chat with one of our team of HRA experts! We are always standing by to help.