6 types of Health Reimbursement Arrangements (HRAs) you should know about?
March 6, 2020
A Health Reimbursement Arrangement (HRA) is an employer funded health benefit account that reimburses employees for out-of-pocket medical expenses, and in some cases for certain insurance premiums.
All HRA dollars are tax deductible to the employer, and income tax free to the employee.
Qualified Small Employer HRA, aka QSEHRA. Allows small employers under 50 employees to reimburse tax-free for health insurance, Medicare, and dental and vision insurance. It also includes participation in a spouse’s or parent’s group plan. Limited benefit plans, that do not pay a cash benefit, are also included such as short-term plans, fixed indemnity plans and accident plans.
Individual Coverage HRA, aka ICHRA. Allows employers of any size to make a tax free contribution of any size for individual health insurance and for other qualified medical expenses. ICHRA will satisfy the ACA employer mandate.
The Excepted Benefit HRA, aka EBHRA. Must be offered in conjunction with a traditional group health insurance plan, although employees are not required to be enrolled in the group health insurance to participate in the EBHRA. Employers in 2020 can contribute a maximum of $1,800 per year. An EBHRA can reimburse for dental and vision coverage, short term coverage and short term disability income coverage. It can also reimburse for other medical expenses
The Group Coverage HRA. Also called an Integrated HRA. Must be offered in conjunction with a traditional group health insurance plan – usually a high-deductible plan. It reimburses for employees tax-free to help cover their deductibles, co-insurance amounts, and other approved medical expenses. Can roll over year to year.
The Retiree HRA. Designed to help retired employees pay for plan-eligible medical expenses during retirement. Retirement expenses can include COBRA premiums, and premiums for Medicare Part A, B, and D, and a Medicare Advantage Plan or Medicare Supplement plan.
Dental/Vision HRA. Designed exclusively for employers who want to reimburse for Dental and Vision expenses. Can roll over year to year.
If you think an HRA might be right for your business contact Benafica today.