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reimbursement health insurance

What Is Reimbursement Health Insurance? Here's the deal.

Reimbursement health insurance is an arrangement where employers reimburse employees for their health insurance rather than buying it for them. Reimbursement health insurance is available through Health Reimbursement Arrangements (HRAs).    

As an effective and affordable alternative to traditional employer-provided insurance, HRAs are excellent health insurance coverage plans for businesses. Allowing your employees the opportunity to choose their own health insurance plan gives them independence and puts them in the driver’s seat for their healthcare coverage. 

If your company is looking into health insurance options, you should consider offering health insurance reimbursement plans or HRAs. 

What is reimbursement in insurance?

Reimbursement for health insurance is exactly how it sounds when using an HRA. What is an HRA plan, or insurance reimbursement plan? HRAs are tax-advantaged reimbursement arrangements to help employees pay for their health insurance benefits tax-free. Specifically, it allows employers to reimburse employees for medical premiums and qualified medical expenses.

If your company has a reimbursement benefits model, your employees will choose their own healthcare coverage, then submit any medical expenses or insurance payments to the HRA plan. The HRA that the employer has set up then reimburses the patient for costs they’ve already paid. 

HRA plans are an easy and cost-effective way for companies to offer competitive benefits packages. And employees love it because they have the independence to choose exactly what health insurance plan works best for them and their families. 

Check out our current HRA overview guide for more information on insurance reimbursement plans. 

How does a health reimbursement plan work?

Health reimbursement plans can be easy for your company to implement, especially with an effective health reimbursement arrangement administrator. The employer first decides which health reimbursement plan works best for the size and scale of the company. 

The two most common health reimbursement arrangements are: 

  • Qualified small employer health reimbursement arrangements (QSEHRA)
  • Individual coverage health reimbursement arrangements (ICHRA) 

Let’s take a quick look at how these two HRAs compare so you can decide which one is best to offer your employees. 

Qualified small employer health reimbursement arrangement 

A qualified small employer health reimbursement arrangement (QSEHRA) is designed for businesses with 50 employees or fewer. 

QSEHRA health benefits plans let small businesses offer non-taxed reimbursement for healthcare including health insurance premiums and coinsurance. 

  • QSHERAs do have annual contribution limits
  • You cannot combine a QSEHRA with a group plan
  • QSEHRA reimbursements must be the same size for all employees

You can customize your QSEHRA with an HRA administrator like ours. QSEHRAs are a great option for your company if you’re a small business looking to offer an affordable yet competitive benefits package. 

If you need more information to decide if a QSEHRA is the right health reimbursement plan for you, check out our QSEHRA guide. 

Individual coverage health reimbursement arrangement 

An individual coverage health reimbursement arrangement (ICHRA) can be used for any business of any size. 

ICHRA health benefits plans allow your company flexibility in offering different tax-free employee health insurance reimbursement. 

  • There are no annual contribution limits and no employee maximums for coverage 
  • You can combine ICHRAs with a group plan 
  • An ICHRA allows you to customize reimbursements for different classes of employees

HRA administrators specific to ICHRA plans make it easier to implement for your business. An ICHRA is the most adjustable option for companies offering insurance reimbursement. 

If you think an ICHRA is the right health reimbursement plan for your company, get more information through our ICHRA guide. 

Ask our experts which HRA is best for your business

Is a health reimbursement arrangement worth it?

HRA plans are an excellent route for employee health coverage. There are many advantages to health reimbursement arrangements for both the employer and the employee. 

Here are some advantages for the employer when considering an HRA: 

  • Health reimbursement arrangements are competitive employee benefits offerings  desirable for employees when being hired 
  • HRAs are an effective retention strategy for employees because of the flexibility they offer for insurance coverage
  • There are no participation requirements for offering coverage 
  • There are no annual premium raises with an HRA 
  • HRAs can be used to reimburse dental premiums

Alternatively, here are some advantages of HRAs for your employees: 

  • HRAs allow the employee to choose from multiple insurances plans 
  • Employees get reimbursements for health insurance premiums and cost tax-free 
  • Health insurance is portable because it’s only reimbursed by the employer, not completely paid for by the employer 
  • HRAs improve employee retention and provide competitive benefits that are flexible for each of your employees. 

Connect with our team of experts to discuss why offering an HRA is worth it for your company. 

What are reimbursement benefits?

Businesses offering reimbursement plans will reimburse employees for the health insurance premiums, and often they’ll allow qualified medical expenses to be reimbursed as well. 

Medical expenses like these often include:

  • Doctor visits
  • Copays 
  • Routine dental cleanings 
  • Eye-glasses
  • Prescriptions 

Employers can decide if they want to reimburse for insurance premiums only, or if they want to reimburse for premiums and medical expenses.

Insurance premium reimbursement can also include eligible dental or vision premiums depending on the qualified health plan. 

Here’s a deeper look into more qualified medical expenses that are reimbursable through your HRA. 

How do I claim reimbursement?

HRA administrators like ours make it easy for employees to submit for health insurance reimbursement. 

Once the employer chooses which HRA plan works best for them, they’ll set a budget and then let employees know they can use their HRA. The employees can then pay for their own health insurance premiums and medical expenses. After payments, employees submit their receipts for reimbursement from the plan.

Employees simply can take a photo of their receipts, and then send it to their HRA plan for reimbursement. Our HRA administrators at Take Command provide a customized portal for the employer and employees to make submitting and reviewing reimbursements seamless. 

Getting started with an HRA 

If your business is ready to start offering health reimbursement arrangements to your employees, you’ve come to the right place! Contact us to move forward with administering an HRA. The best and safest way to start is to use an HRA administrator like ours–Take Command. 

Health reimbursement arrangements can be tricky to manage, but with a good HRA administrator, offering reimbursement health insurance will be a breeze. HRA administrators take the work off your hands while keeping you compliant with HIPAA and company privacy policies. 

We’ll deal with all the paperwork, the legal side of things, tax season, and more so you can ensure your health reimbursement arrangement is being administered properly for your company. 

Whether you decide on offering an ICHRA or a QSEHRA, HRA administrators are with you throughout the entire process, and we work alongside your employees to answer any questions they may have. We make it easy for you to get started with an HRA, and we can’t wait for you to experience the benefits health reimbursement arrangements will have in all aspects of your business. 

Connect with us! Schedule a call with our experts to discuss setting up a health insurance reimbursement plan for your business. 

Ask our experts how to get started today (it's easy!)