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

Employers can offer employees one of two HRA options for individual premium reimbursement: a Qualified Small Employer HRA (QSEHRA) or an Individual Coverage HRA (ICHRA).

While employers of all sizes can offer an ICHRA, the qualifications for an employer 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 reimburse employees for some or all of the monthly costs of health insurance coverage purchased on their own.

• 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 considered unaffordable* for your employees, each HRA has an option.

• QSEHRAs: Employees who qualify for an Advance Premium Tax Credit would deduct the 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.