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Compliance Overview: Comparing Different Types of HRAs

By Barrow Group Staff / November 18, 2019
Insurance

Comparing different types of hra'S

Health reimbursement arrangements (HRAs) are employer-funded accounts that reimburse employees for their eligible out-of-pocket medical expenses on a tax-favored basis. Although HRAs provide significant tax benefits, they are subject to strict plan design rules. However, a final rule expands the use of HRAs, effective for plan years beginning on or after Jan. 1, 2020. Beginning in 2020, the different types of available HRA plan designs are:

  • - HRAs integrated with group health plans (GHP-HRAs);
  • - Individual coverage HRAs (ICHRAs) – effective for 2020;
  • - Excepted benefit HRAs (EBHRAs) – effective for 2020;
  • - Qualified small employer HRAs (QSEHRAs)
  • - HRAs that only pay excepted benefits; and
  • - Retiree-only HRAs.

The following chart compares key features of the different types of HRAs.

HIGHLIGHTS

Types of HRAs

  • - GHP-HRA – This HRA must be integrated with the employer’s group health plan and meet - certain other requirements.
  • - ICHRA – Employers of all sizes may use this new type of HRA to reimburse individual health insurance premiums (subject to certain requirements).
  • - EBHRA – This new type of HRA can offer a limited benefit of $1,800 per year (as adjusted).
  • - QSEHRA – This type of HRA can be used by small employers to reimburse individual health insurance premiums.
  • - HRA that only pays excepted benefits – This type of HRA only pays for excepted benefits, such as limited-scope dental and vision coverage.
  • - Retiree-only HRA – This type of HRA can only provide benefits to former employees

Chart 1-1Chart 2-1

Chart 3Chart 4

*As a general rule, employers must offer the ICHRA on the same terms to all employees in a class. Permissible employee classes include: full-time employees, part-time employees, salaried employees, non-salaried employees, seasonal employees, collectively bargained employees, employees in a waiting period, temporary employees, employees whose primary employment site is in the same rating area; nonresident aliens without U.S.-based income; and any group of employees formed by combining two or more of these classes. Minimum class size requirements may apply, depending on the classes used.

Topics: temporary staffing, staffing, PEO, benefits, health care, wellness, human resources