health reimbursement Accounts

HRAs are tax-preferred, so workers who buy an individual market plan with an HRA will receive the same tax advantages as workers with traditional employer-sponsored coverage. Further, by increasing employee options and empowering more people to shop for health plans in the individual market it will now theoretically lower costs for coverage in 2020.If you would like more information  on the HRA, HSA & other employer plans & employee benefits options call or email us below to learn about the many options you have towards benefits and retirement planning with us here at The 401k Man. 

The Health and Human Services Dept, is expanding the use of health reimbursement arrangements (HRAs) starting in January 2020, employers will be able to use what are referred to as individual coverage HRAs to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage that workers purchase in the individual market instead of employer supplied. Besides allowing individual coverage HRAs, the HRA rule creates an excepted benefit HRA. In general, this aspect of the rule lets employers that offer traditional group health plans provide an excepted benefit HRA of up to $1,800 per year Employers may also reimburse an employee for certain qualified medical expenses, including premiums for vision, dental, and short-term, limited-duration insurance. According to the departments, this provision will also benefit employees who have been opting out of their employer’s group health plan because the employee share of premiums is too expensive. ​

Newly expanded HRA rules allow employers to offer an HRA that reimburses an employee for individual health insurance premiums or a standalone HRA that reimburses medical expenses of up to $1800 a year.The regulations will take effect for plans which start after January 1, 2020.

  1. Individual Coverage HRA – May reimburse employees for the cost of individual insurance plans.

    1. Who is eligible: Any employee and their qualified dependents who is not offered a traditional group health plan.

    2. Contribution Amount: No cap on the HRA benefit, but the employer must offer the same terms to classes of employees with some exceptions allowed for things like age, geography, and family size.

    3. Reimbursable Expenses: Individual health insurance plans that do not consist solely of excepted benefits (e.g. dental or vision) and qualified medical expenses. 

    4. Employee Contributions: Employees may use cafeteria plan salary reductions to pay the difference in individual insurance premiums purchased off the Exchange.

    5. Substantiation Requirement: Employer can require documentation of coverage or an employee attestation

    6. Employer Mandate: Will meet the employer mandate requirements if employer contribution amount is considered affordable.

    7. COBRA/ERISA: Not subject to ERISA if certain conditions are met, but COBRA will generally need to be offered.

 

  1. Excepted Benefit HRA – A standalone HRA not required to be integrated with group coverage.

    1. Who is eligible: Any employee and their qualified dependents who is offered a traditional group health plan. The employee is not obligated to enroll in the coverage to be eligible for this HRA.

    2. Contribution Amount: $1800 annual contribution limit that can be carried over to the next year. Employer must give the same benefit to similarly situated employees. 

    3. Reimbursable Expenses: Section 213(d) medical expenses and certain premiums for excepted benefits, such as dental or vision coverage.

    4. Substantiation Requirement: Standard HRA substantiation rules.

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