HRAs in 2020 and beyond…
Individual Coverage HRAs
Health reimbursement arrangements (HRAs) are tax-advantaged accounts that are funded with employer dollars to pay employee expenses not covered by their health plan. The employer outlines what expenses will be covered in the HRA summary plan document within the limitations outlined by the Internal Revenue Service Publication 969. For example, an HRA could pay all eligible medical expenses, or the HRA could be limited to cover only dental or vision expenses. Although an HRA can have an option to carry forward unused funds to the future or for retirement, an employee cannot take their HRA funds to a new employer. HRAs can vary greatly in design, but are developed basically for the same purpose; to reimburse employees tax-free for expenses not covered by the employer’s health plan.
On October 12, 2017, the Trump Administration issued Executive Order 13813, promoting Healthcare Choice and Competition across the United States. The administration was going to focus on improving the usability of Health Reimbursement Arrangements (HRAs), to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with non group coverage. Through this Executive Order, beginning January 1st, 2020 employers may not offer two new (QSEHRA began 1/1/17) HRA options.
The ICHRA allows employers of all sizes to reimburse their employees (tax-free) for medical expenses. Employees may use ICHRA funds to pay for individual healthcare premiums and eligible out-of-pocket medical expenses they or their dependents may incur during the plan year.
2. Excepted HRA Benefit
The Extended Benefit HRA can be offered in addition to a traditional group health plan to permit employers to reimburse up to $1,800 (pre-tax) of additional medical care (such as copays, deductibles, premiums for vision, dental, COBRA and short-term insurance coverage).
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) allows employers with fewer than 50 full-time-equivalent (FTE) employees to reimburse their workers for premiums for health insurance purchased on the individual market as well as qualified medical expenses.
Individual Coverage HRA Coming 2020
The ICHRA allows employers of all sizes that do not offer a group coverage plan to fund an HRA for employees to buy individual-market insurance, including insurance purchased on the public exchanges formed under the Affordable Care Act (ACA). Currently, qualified small-employer HRAs (QSHRAs) that were created by Congress in December 2016, allow small business with less than 50 full-time employees (FTEs) to use pretax dollars to reimburse employees who buy non-group health coverage. This ICHRA rule goes even further and doesn’t cap employer contributions. As a result, employers with less than 50 FTEs will have two choices – a QSEHRA or an ICHRA – with some regulatory differences between the two. Please click here to read OCA’s white paper on the proposed HRA regulations. This article was written by our legal counsel, Alston & Bird, LLP earlier this year.
What We Can Do
Full Service Administration
- Automate Employee Reimbursement (ClaimsExpress)
- Provide Plan Document and SPD
- Conduct 105(h) Non- Discrimination Testing
- PCORI Fee Reporting
- Online/Mobile Access
Integrated Debit Card
- Single-Source Card for HRA/FSA/Commuter/HSA
- Separate cards (if requested) for each benefit
- Pay a set copay for Office Visits/Prescriptions
- Pay a percentage for Prescriptions
- Auto-resolve card transactions
Complex HRA Plan Design
- Non-Embedded/Embedded Deductibles
- Differentiated Co-pays Reimbursement
- Defined Copay Reimbursement
- Doughnut hole Reimbursement
- Percentage Payouts
- Variable Employee/Employer Responsibility
Are your employee’s tired of submitting claims for reimbursement?
OCA’s ClaimsExpress™ automates the employee claim filing experience by linking to your insurance carrier portal! Once the accounts are linked, ClaimsExpress™ will automatically retrieve any new EOBs issued by the insurance company. This can significantly reduce or even eliminate the need to file paperwork to get reimbursed from your HRA benefit.
Frequently Asked Questions
HRAs can vary greatly in design, dollar amount, and services. Employers should be fully aware of all the complexities that the HRA has to offer. Should your questions not be answered here, please contact OCA directly.
I am an employer. To whom can I offer an Individual Coverage HRA (ICHRA)?
Is there a minimum "Class Size" that applies when offering an ICHRA?
Can owners or partners participate in an HRA?
What is the tax benefit for me as an employer?
What are the different classes based off of in an ICHRA?
How do my employer contributions work?
Is there a tax benefit for my employees?
Do employers have to contribute the same amount to every employee’s HRA?
Still have questions?
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