To be eligible for an ICHRA, an employee must be enrolled in individual health insurance coverage or Medicare. This includes plans purchased on the health insurance marketplace, Medicare Part A and B, or Medicare Part C. Employees covered by a spouse’s group plan or through another group health plan are…
HRAs
How do ICHRAs differ from traditional HRAs?
ICHRAs differ from traditional HRAs in several key ways. Traditional HRAs are typically offered in conjunction with a group health insurance plan, while ICHRAs are used exclusively with individual health insurance plans. ICHRAs offer more flexibility, allowing employees to select a health insurance plan that best suits their needs from…
Can an employer offer an HRA to all employees or are there eligibility restrictions?
Employers have the flexibility to offer HRAs to select groups of employees, but they must follow certain non-discrimination rules. This means that HRAs should not favor highly compensated employees in terms of eligibility or benefits. However, employers can restrict HRAs to certain categories of employees, such as full-time employees, or…
What types of expenses can be covered by a traditional HRA?
Traditional HRAs can be used to reimburse a wide range of medical expenses that are considered qualified by the IRS. This includes expenses like deductibles, copayments, prescription medications, and some over-the-counter medications with a doctor’s prescription. Employers can choose to restrict the list of reimbursable expenses in their HRA plan,…
How do HRAs differ from Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs)?
HRAs differ from Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) primarily in terms of funding and ownership. HSAs are employee-owned accounts that can be funded by both the employer and the employee and are available only to those enrolled in a high-deductible health plan. FSAs are typically employee-funded…
What is a Health Reimbursement Arrangement (HRA)?
A Health Reimbursement Arrangement (HRA) is an employer-funded plan that reimburses employees for qualified medical expenses, including deductibles, copayments, and other health-related expenses. These arrangements are solely funded by the employer, and the funds contributed do not count as taxable income to the employee. HRAs are often used in conjunction…