HRA – WHAT SETS US APART?

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Comparing HRAs, QSEHRAs, ICHRAs and EBHRAs

Providing summary of tax and related compliance issues applicable to HRAs, QSEHRAs, ICHRAs and EBHRAs. Plan Design / Compliance Issue HRAs QSEHRAs ICHRAs EBHRAs

Internal Revenue Code §105, §106 Code §9831(d) Treas. Reg. §54.9802-4 Treas. Reg.   §54.9831-1

Eligible Employer Any employer, but must offer HRA with sponsor group health plan. An employer must not be an ALE and not sponsor group health plan. Any employer, but cannot offer group plan for those eligible for ICHRA. Any employer must sponsor group health plan but cannot offer ICHRA to those eligible

Eligible Employees Group eligible must pass eligibility test under Code §105(h) Any employee of the “eligible employer,” and allows certain employees to be excluded A group of employees defined by the employer participating in individual coverage, but cannot be eligible for group coverage or EBHRA. Deemed to pass nondiscrimination rules under Code §105(h) if meet rules. A group of all similarly situated individuals as defined by the employer, but cannot be offer ICHRA and group must pass nondiscrimination rules under Code
§105(h). When employees are eligible to participate A waiting period cannot exceed 90 days. When employee is no longer considered an excluded employee. A waiting period cannot exceed 90 days. A waiting period can exceed 90 days.

Salary Reduction Funding  Not permitted, but can be offered with Health FSA and POP Not permitted Not permitted, but can be offered with Health FSA and POP. Not permitted, but can be offered with Health FSA and POP.

Eligible for HSA contributions Yes, if reimburses only dental, vision and preventive care or post- deductible expenses Likely yes, if reimburses only individual coverage premiums Likely yes, if reimburses only individual coverage premiums and certain excepted benefits (e.g., dental or vision) Yes, if reimburses only dental or vision expenses

Employees allowed to Opt-out Yes No Yes No

Permitted Amount of Contributions Amount available is determined by employer For 2019, self-only coverage is $5,150 & $10,450 for family coverage Amount available is determined by employer For 2020, $1,800, amount will increase in 2021 and after

Carryover Of Unused Amounts Permitted Permitted Permitted Permitted

Medical Expenses Eligible For Reimbursement Otherwise unreimbursed Code §§213(d) medical expenses incurred while coverage in effect, including premiums for group eligible health insurance and long-term care insurance Reimburse individual major medical health insurance premiums, as well as other Code Section 213(d) expenses incurred during the QSEHRA coverage period, is permitted. Reimburse any Code Section 213(d) medical care expenses or to limit reimbursements to particular expenses (e.g., premiums), but not group health coverage. Reimburse any Code Section 213(d) medical expenses but not premiums for individual health coverage, Medicare, or non-COBRA group coverage (premiums for coverage consisting solely of excepted benefits can be reimbursed).

Cash-Outs Of Unused Amounts (If No Medical Expenses) Not permitted 

12-Month Period Of Coverage & Prohibition Of Mid-Year Changes – Not Applicable 

Health FSA Uniform Coverage Requirement Not Applicable — i.e., coverage level may be prorated by plan design Not Applicable Not Applicable Not Applicable

Expense Substantiation Required Required 

Claims Adjudication Required Required

Plan Design/ Compliance Issue HRAs QSEHRAs ICHRAs EBHRAs

Tax Credit HRA is considered with group health plan coverage to determine minimum value and affordability Not applicable Yes, under Code §4980H(a); possibly, under Code §4980H(b) (coverage must be affordable) Not Applicable

Code §105(h) Nondiscrimination Requirement Applies Not applicable, if meets the eligibility rules Applies, but the maximum reimbursement amount can vary between classes as provided under the ICHRA rules.  ICHRAs must  not be nondiscriminatory in the operation of the plan.  ICHRAs that reimburse insurance premiums will be treated similarly to a fully- insured group insurance plan for nondiscrimination testing. Applies

Funding Requirement Not required—employers can decide to fund (i.e. set aside funds) as potential liability increases, but any such funding can invoke ERISA’s trust requirement if amounts are segregated from general
assets Same Same Same

ERISA Requirements Applies Applies Applies Applies

COBRA Applies –Employer has 20 or more employees Does not apply Applies –Employer has 20 or more employees Applies –Employer has 20 or more employees

Disclosures and notices SPD & SBC SPD & Special Notice SPD & Special Notice SPD

HIPAA:
Portability And Health Status Nondiscrimination
Privacy Applies—Health FSA exception generally not available

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