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 provisionthat 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.