6 Types of HRAs

Health Reimbursement Arrangements (HRAs) have been on a roller coaster the past five years. Some laws and  regulations  have  limited  the  types  of  HRAs  that  an  employer  can  offer  whereas  other  laws  and regulations have created new HRA options for employers to offer. Below is a summary of the types of  HRAs employers can offer to employees.

As a result of regulations supplementing the Affordable Care Act (ACA), employers were limited to offering 3 types of HRAs.

• (1) Integrated HRAs  –  This  type of HRA requires employees to also be covered by a group major medical plan. It generally reimburses out-of-pocket medical expenses. 
• (2) Retiree HRAs – This type of HRA only provides reimbursements to retirees.
• (3) Dental/Vision  HRAs  –  This  type  of  HRA  limits  reimbursements  to  only  dental  and/or  vision expenses. 

As a result of the 21st Century Cures Act, a fourth type of HRA became available in 2017.

• (4) Qualified Small Employer HRA (QSEHRA) –  This type of HRA is only available to employers who are  not  subject  to  the  Employer  Mandate  (i.e.  less  than  50  employees).  The  maximum reimbursement  is  limited  to  $5,150  for  single  coverage  and  $10,450  for family  coverage.  The primary  intent  of  a  QSEHRA  is  to  allow  for  the  reimbursement  of  individual  health  insurance premiums,  but  other  out-of-pocket  expenses  can  be  reimbursed.  Other  rules  and  restrictions apply.

As a result of recent regulatory guidance issued by the Trump administration, a fifth and sixth HRA option will become available in 2020.

• (5) Individual Coverage HRA (ICHRA)  –  This  HRA is almost like  a hybrid of the Integrated HRA and QSEHRA. It will be available to employers  of all sizes, and it requires employees to be covered by an individual health insurance plan or Medicare to  be eligible for reimbursements.  The primary intent of  the  ICHRA is to allow for the reimbursement of individual health insurance premiums, but  other  out-of-pocket  expenses  can  be  reimbursed.  The  employer  determines  the reimbursement limits, and other rules and restrictions apply.
• (6) Excepted Benefit HRA – This type of HRA will allow for the reimbursement of COBRA premiums, short-term medical plan premiums, dental and vision expenses. Annual reimbursement limits will be capped at $1,800 (adjusted for inflation).