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Health Reimbursement Arrangements (HRA)

What is an HRA?

  • The HRA is an employer-sponsored plan that can be used to reimburse a portion of employees’ out-of-pocket medical expenses, such as deductibles, coinsurance and pharmacy expenses.
  • The employer designates and funds contribution amounts that will be credited to each employee’s account based on eligibility requirements for the plan. (Only employers can contribute to an HRA)
  • The employer determines which out-of-pocket qualified medical expenses the plan can be used for
  • If permitted by plan design, unused account balances will be rolled over to the following plan year.

What are the Benefits of an HRA for the Employer?

  • Commonly offered with a high deductible health plan, lower premium costs on the HDHP can reduce the overall healthcare costs for the employer.
  • Employer contributions to an HRA are tax-deductible.
  • Flexible plan design options allow employers to customize the plan to fit the unique healthcare needs and wellness initiates for your employee population.

What is a QSEHRA?

  • The 21st Century Cures Act includes a provision  that allows eligible small employers to help employees purchase individual market major medical coverage and pay for certain other medical expenses using a type of stand-alone HRA called a qualified small employer health reimbursement arrangement (QSEHRA) that is exempt from many of the group health plan requirements under the Code, ERISA, and the PHSA.
  • QSEHRAs are available only to small employers that are not subject to health care reform’s employer shared responsibility provisions- i.e., employers that do not have 50 or more full-time employees, including full-time equivalent employees, during the preceding year and thus are not applicable large employers (ALEs).
  • For more information to see if a QSEHRA would work for your employees, please see the video below and call LD&B Benefits Administrators with questions.