HEALTH REIMBURSEMENT ARRANGEMENTS

Health Reimbursement Arrangements

A Health Reimbursement Arrangement (HRA) is an alternative to traditional group health insurance. This benefit allows employees to receive tax-free reimbursement for qualified medical expenses when they enroll in an individual health insurance plan, such as those purchased through Your Health Idaho.

There are two HRA options employers can offer: a Qualified Small Employer HRA (QSEHRA) or an Individual Coverage HRA (ICHRA).

While employers of all sizes can offer ICHRA, the qualifications to offer a QSEHRA are much stricter.

Qualified Small Employer HRA (QSEHRA)

Small employers who cannot offer a group health plan can use a QSEHRA to reimburse employees for medical expenses, including monthly premiums, co-pays, deductibles, and other out-of-pocket costs. Employees must maintain minimum essential coverage to receive these reimbursements.

To qualify for a QSEHRA, a small employer generally must:

      • Have fewer than 50 full-time employees
      • Provide the arrangement on the same terms to all full-time employees (reimbursement amounts may only vary based on age and the number of individuals covered)
      • Not offer a group health plan, like SHOP coverage or a flexible spending account (FSA)

For additional information and to learn how to get started, click here.

Individual Coverage HRA (ICHRA)

An ICHRA allows employers of any size to provide non-taxed reimbursements to their employees for qualified medical expenses, including monthly premiums and copayments.

      • There are no limits to the benefit amount
      • Employers have the flexibility to determine their contribution and the option to give a higher contribution to employees with dependents.
      • Employees must be enrolled in individual health coverage to use the ICHRA funds.
      • There must be one employee who isn’t a self-employed owner or the spouse of a self-employed owner.

For additional information and to learn how to get started, click here.

Affordability for Your Employees

If the HRA offered is deemed unaffordable* for your employees, there are options for each type of HRA:

  • QSEHRAs: Employees who qualify for an Advance Premium Tax Credit can deduct their monthly QSEHRA amount received from their tax credit.
  • ICHRAs: Employees can decline the HRA benefit and may qualify for an Advance Premium Tax Credit.

Before declining or reducing the amount of the HRA, we recommend that the employee check their eligibility for a tax credit.

* Affordability is determined yearly by the IRS based on a percentage of the employee’s total household income.