Small Business

Comparing QSEHRA, ICHRA, EBHRA, and the traditional group coverage HRA

by Amy

*Updated November 7, 2019 with QSEHRA rates for 2020*

With two new HRAs joining the party in January 2020, we've been getting a lot of questions about how ICHRA and EBHRA stack up compared to previous models. Here's everything you need to know, all neatly organized into an attractive chart. 

Which HRA is best for my company?

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.

The defined contribution strategy of reimbursing for premiums and medical expenses is revolutionizing the way employers offer benefits to their staff.

While we always advise our clients to speak with their CPA before jumping in, we are ready to chat on our website if you have any specific questions about your business and how HRAs could help. We have also put together really helpful guides, like our QSEHRA Guide, ICHRA Guide and Small Business HRA Tax Strategy Guide as well as our wildly popular ICHRA FAQ post and EBHRA FAQ post.  

QSEHRA vs. ICHRA vs. EBHRA vs. the old HRA model

Being an educational leader and advocate for our clients is inherent to who we are. So is putting together really cool spreadsheets. The below chart combines both of those things to help make your decision easier. 

 

  QSEHRA ICHRA (Available 2020) EBHRA (Available 2020) "Old" traditional group coverage HRA
Does company size matter? Yes. Companies with less than 50 full time employees are eligible to participate. No. Can be used with any size company. No. Can be used with any size company. No. Can be used with any size company.
What problem does it solve?  Allows companies who employ professionals that make too much for PTCs, like young professionals making over $50k or more senior professionals making over $90k. Open to employers of all sizes. ICHRA offers more flexibility in terms of design (who is offered the benefit) and budget. Allows employers to extend their benefit offering by reimbursing for medical expenses.

Allows employers to extend their benefit offering by reimbursing for medical expenses.
What happens to rollover funds? Unused funds carry forward month to month for employees to claim against. Employers keep unused funds at the end of the year. Employers have the option to have unused allowances to carry forward to the following year or reset to zero. Unused funds stay with employer.   Funds can be rolled over year to year and the rollover amount will not count against the annual limits for the year. Funds can be rolled over year to year.
Are there annual or monthly contribution limits? $5,250 per single employee and $10,600 per employee with a family in 2020. There are no minimum or maximum limits. $1,800 annually No limits
Can it trigger a special enrollment period? Yes. There’s a 60-day window that will begin in 2020. For 2019 QSEHRA does not trigger a SEP. Yes. There’s a 60-day window. N/A since EBHRA is offered alongside group coverage from employer. N/A since the employees will be joining the employer group plan.
Does this meet the employer mandate for large employers (ALEs)? No.  ICHRAs can meet the employer mandate for employers with greater than 50 full-time Applicable Large Employers (ALEs) if the offer is “affordable” and meets minimum value (MV) The employer will meet the mandate since they are offering a group plan to employees in addition to the HRA. The employer will meet the mandate since they are offering a group plan to employees in addition to the HRA.
Can it be used with a group plan? No. QSEHRA can’t be offered if there’s a group plan, including dental or vision plans. Employees choose their own individual health plan. No. Cannot offer a traditional group plan and ICHRA to same class (does not preclude group dental and vision like QSEHRA). Group plans can be offered to employees that are not offered ICHRA benefit. Yes. EBHRA is available to those employees covered by the employer’s group health insurance policy. Employees can participate in the EBHRA even if they decline group plan coverage Yes. The employer must offer group coverage.
Can you offer it only to some employees? Yes. All full time staff are eligible, but part-time, seasonal, and 25 years and younger can be excluded. Yes. Plans can be designed to include or exclude employees based off of customizable class criteria  (11 classes total) No. Must be offered to all employees on the same terms. No. Must be offered to all employees on the same terms.
How do they work with premium tax credits (PTC)? QSEHRA contributions offset PTCs dollar for dollar. If employee chooses to participate in ICHRA they cannot claim PTC. Not applicable since employee will be on group plan provided by employer Not applicable since employee will be on group plan provided by employer
How does it work with Minimum Essential Coverage (MEC) Must maintain MEC to participate. Must enroll in a qualified individual health insurance plan or Medicare Part A and B or Part C. Employee can decline group plan offered by employer and still participate in EBHRA. Must maintain MEC to participate.
What is eligible for reimbursement? Both premiums and medical expenses can be reimbursed. Plans can be designed to allow for premiums only or premiums plus expenses. Both premiums and medical expenses can be reimbursed. Plans can be designed to allow for premiums only or premiums plus expenses. Individual insurance premiums including Medicare parts B and D are excluded. Medical expenses are eligible for reimbursement. Individual insurance premiums and Medicare excluded. Medical expenses are eligible for reimbursement.
What types of premiums do they reimburse? Health, vision, and dental are all eligible for reimbursement. Individual health insurance premiums and Medicare premiums (all parts including medi-gap) Dental, Vision, Long-Term Care, Nursing Home Care, Community-Based Care, Short-term (STLDI), COBRA are all eligible for reimbursement. Individual insurance premiums, Group plan premiums, Medicare parts B or D are NOT eligible for reimbursement under EBHRA. Premiums not eligible for reimbursement.
How do they work with employees on spouses’ plans? Employees can participate with restrictions. Expenses are eligible for tax-free reimbursement, but premiums are not. Premiums can be reimbursed post-tax if plan allows. Employees on group plans cannot participate in ICHRA. Employees can participate but cannot claim group premiums for reimbursement. Employees cannot participate.
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Hi, I'm Amy! I wrote this blog because I care about ideas (big and little) that can help fix our healthcare system. I used to work on projects for Kaiser Permanente and the Parkland Health & Hospital System so I've seen the system inside and out. It's so important that consumers keep up with industry shifts and changing health insurance regulations. I'm also Take Command Health's Content Editor and a busy mom. Learn more about me and connect with me on our about us page. Thanks!