Health reimbursement arrangements, or HRAs, are not insurance in and of themselves. These tax-advantaged tools allow employers to reimburse employees for health insurance premiums and qualified medical expenses. Under this arrangement, employees purchase their own health insurance on the open market and then submit claims to their employer to get reimbursed. Here’s what to know about HRA insurance.
HRA insurance types and how they work
While there are several types of HRAs, there are currently only two types that allow employers to reimburse employees tax-free for qualified individual insurance premiums:
- QSEHRA (Qualified Small Employer HRA for companies with less than 50 full-time equivalent employees)
- ICHRA (Individual Coverage HRA for companies of any size with no reimbursement limits)
An employer begins by choosing the HRA that best fits their company (QSEHRA or ICHRA). At a very high level, these two HRAs behave the same, but they are each designed to meet specific needs. Key differences, aside from company size and contribution limits, include ICHRA's ability to reimburse different amounts per type of employee and it's ability to work alongside a group plan, and QSEHRA's ability to reimburse for a spouse's group plan premium and work with sharing ministries IF (and only if!) it's accompanied by a Minimum Essential Coverage plan).
Employees then secure their own individual insurance (either on the marketplace or directly with a carrier) that best fits their needs. If this is the first time an employer is offering benefits, some employees may already have individual insurance that qualifies, and others may even be eligible to get reimbursed for their portion of their spouse’s insurance.
Employees are then allowed to begin submitting claims to their employers to get reimbursed up to the established limits.
What to know about HRA insurance
QSEHRA and MEC
Before an employee can participate in a QSEHRA, one must provide proof of Minimum Essential Coverage (MEC) as defined by the IRS in Section 106(g). MEC is a term that came from the Affordable Care Act.
There are several requirements for a plan to be considered MEC including coverage of the 10 essential health benefits (such as preventative and wellness services, immunizations, mental health, etc.) and limits on cost sharing (copays, deductibles, and out of pocket maximum).
The following types of insurance integrate with a QSEHRA:
- Major medical plans
- Student insurance
- Your spouse’s plan (varies by QSEHRA plan)
- Government plans: Medicare, Medicaid, CHIP (children's health insurance programs), Tricare, and VA Care
- Dental Insurance & Vision Insurance Plans
- Limited Benefit Plans
Looking for more information, including what doesn’t qualify as a QSEHRA plan? We’ve covered that!
ICHRA and Qualified Health Plans
Essentially, ICHRA requires individuals to purchase a qualified medical plan that is MEC compliant. A Qualified Health Plan for ICHRA is a major medical plan that can be purchased on or off the Exchange.
The following plans integrate with ICHRA:
- Major medical plans purchased on the exchange
- Medicare - Part A, B, C, or D
- Catastrophic Plans (limited to those under age 30 or must qualify for hardship exemption)
- Student Health Insurance
Here’s more detailed information about ICHRA insurance, including the plans that don’t work and where to shop!
TCH can help you you decide which HRA insurance is right for you!
With the ability to compare plans based on preferred doctors and prescription coverage, buying a plan has never been easier. Employees covered by an HRA can enroll directly through Take Command Health with the help of our dedicated enrollment team. Employers interested in structuring coverage or comparing options can talk with an expert and get started with a custom design in minutes.