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Group Health Reimbursement Arrangements - HRAs


Person deciding about HRA group coverage.


Most employers that currently offer a health plan to their employees wish to continue doing so.  Quality group health plans are often the very thing that attracts and keeps high quality employees on the team.  However, in this current pandemic environment, maintaining an employee health plan is becoming increasingly difficult.

The effect of the pandemic on health care coverage in America


The pandemic has and will continue to substantially alter the entire health insurance industry.  The method of health care delivery that Americans have become accustomed to, is proving to be woefully inadequate in the face of this pandemic.  Our current system is breaking.  Something has to give.  A lot needs to change.

In this struggling economy, employers are under more pressure than ever to reduce costs.  While there are several issues concerning health plan coverage in the U.S. that need to be addressed, the most pressing issue for employers is affordability.  The rising cost of health insurance impacts both the employer and employee in the form of unaffordable monthly health insurance premiums.

Good to know:  Just because your doctor writes you a prescription doesn't mean you can fill it.  Expensive medications for treatment of certain cancers, diabetes, liver disease, and a host of other maladies can cost patients tens to hundreds of thousands of dollars if the insurer does not cover the drugs.  But even if the drugs are covered, insurers have been known to try to stall, just to see if the patient will come up with the money to pay for the drugs rather than wait on the insurer's approval.  What can we say?  It happens.

HRA's could be an important part of the solution.


Guidelines concerning Health Reimbursement Arrangements, or HRAs have been recently changed.  HRA's usage was formally restricted to only pay for medical expenses - not insurance plan premiums.  This is no longer the case.  HRA funds can now be used to pay for individual insurance premiums on the exchange or off the exchanges to satisfy the employer mandate - provided the HRA is deemed affordable.  Another very recent change now allows faith-based-health care sharing ministry plans to be included in health plans eligible for HRA funding.

The basic workings of employer HRA programs.


Individual Coverage Health Reimbursement Arrangements.

Within a business group ICHRA program (Individual Coverage Health Reimbursement Arrangements), employees can use funds allocated by their employer to buy health insurance on the individual market, subject to certain conditions.  ICHRAs may be especially appealing to small employers that wish to provide health plan coverage for their employees, but are unable to do so because of the high cost of traditional employer group plans.  The U.S. Departments of Health and Human Services, Labor, and the Treasury, which issued the new rules in June 2019, estimate that approximately 800,000 small businesses will offer ICHRAs to their employees.

Excepted Benefit Health Reimbursement Arrangements (EBHRA)

This type of HRA must be offered in conjunction with a traditional health plan.  It allows employers to set aside a limited amount of funds ($1,800 per employee in 2020) to help pay for qualified medical expenses, including premiums for vision and dental insurance, COBRA coverage, and short-term, limited-duration insurance (not offered in all states).  It is available even if the employee declines to participate in the primary plan.  Employees cannot be offered both an ICHRA and an EBHRA.  Certain rules (including nondiscrimination rules), requirements, and conditions apply.

Good to know:  Keep an eye out for health plan discounts for using fitness technology like Fitness Trackers.  As technology makes data about the state of our health easily available, many insurers are starting to look at using tools like fitness trackers to minimize risk.  Some insurance providers currently offer discounts or incentive plans that will save you money, or provide financial rewards.
Ask a broker about plans that give discounts using new fitness technologies, or plans with health incentives.  One example is "UnitedHealthcare Motion" which offers financial reimbursement incentives of up $1,500 per year.  These types of plans provide good opportunities for savings.  Also, make sure to inquire about the possibilities every year, since these types of programs will become more common over time.
A large swath of employers are not familiar with the workings and benefits of an HRA employer group plan.  Because of this, many employers fail to take advantage of the benefits and savings HRA plans have to offer.  By utilizing HRA plans, most employers will not only trim their health plan costs, they will also trim the monthly premium costs for their employees.  In addition, the employees will have more quality health plan options than ever before.  HRA plans can be a smart choice and a win-win for everyone. 



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