HRA Plan Types: A Breakdown (Infographic)

Breaking Down HRA Plan Types

A Health Reimbursement Arrangement (HRA) is a tax-advantaged health benefit funded and owned by employers. Depending on the type of HRA, employees can use money from the account to pay for IRS-approved healthcare expenses and health insurance premiums and it does not count toward their taxable income.

Learn more about HRA plan types:

Breaking down HRA plan types infographic

HRA Plan Types

Standard HRA

  • Usually linked to a group health insurance plan
  • Employees must be enrolled in the group health insurance plan to have the HRA
  • Unused funds can’t be rolled over to the following year
  • Standard HRAs cannot be sued to pay insurance premiums; only IRS-approved qualified medical expenses

Individual Coverage HRA (ICHRA)

  • Can be offered as a stand-alone benefit or as part of the overall company health benefits plan
  • Funds can be used for health insurance premiums and IRS-approved medical expenses not covered by insurance
  • Employers can offer an ICHRA alongside a traditional group plan as long as both options aren’t offered to the same class of employees
  • Some employees may be excluded, based on job status or geographic location

Excepted Benefits HRA (EBHRA)

  • An “excepted benefit” is a type of coverage (dental, vision, etc.) not integral to a major medical health plan
  • Enrollment in a group or individual health plan is not required to qualify for enrollment in an EBHRA
  • Employers sponsoring an EBHRA must offer employees the option to enroll in a non-excepted major medical plan at the same time
  • The funds can only be used for medical care expenses, COBRA insurance premiums, or healthcare premiums for an excepted benefit

Qualified Small Employer HRA (QSEHRA)

  • For companies with fewer than 50 full-time employees
  • Funds can be used for approved medical expenses and healthcare insurance premiums
  • Tax-free only for employees covered by a major medical policy providing minimum essential coverage (MEC)
  • Employers can contribute different amounts to single employees versus those with a family, and some employees may be excluded (such as part-time and seasonal workers)

Retiree HRA

  • Funds are used to pay for qualified medical expenses and health insurance premiums during retirement
  • Account holders must be of normal retirement age and fully retired
  • The account grows through ongoing employer contributions and investment earnings
  • Allows some employees to retire before reaching Medicare age (65) by helping pay for insurance premiums during retirement

DataPath creates cloud-based solutions for flexible HRA administration. Our Summit platform empowers TPAs to offer HRA plan types such as HRAs, ICHRAs, EBHRAs, and QSEHRAs.

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