There are multiple different types of HRAs, and it's important to know the requirements and limitations of each. This list provides must-know information about each HRA type, and will help you make informed decisions about your own HRA offerings.
HRA TYPES
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Traditional HRA Health Reimbursement Account |
- Most HRAs we administer fall into this category - Are only offered to participants of clients that offer Group Healthcare Plans - No IRS Max |
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HRP Health Reimbursement Plan |
- A form of HRA in which funds are deposited on a monthly or quarterly basis - No IRS max |
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QSEHRA Qualified Small Employer Health Reimbursement Account |
- For small employers with 50 or less employees - NO group healthcare plans offered to employees - IRS max applied - Offered to all full time employees at same amount - Group cannot offer any other type of coverage |
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ICHRA Independent Coverage |
- For any size employer - Offered to employees with individual healthcare plans - Can be offered based on class in lieu of Traditional HRA - No IRS max - Cannot be used to reimburse premiums for an employer-sponsored group health plan. |
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PRM Premium Reimbursement |
- Employee-funded - Funds designated to pay for health coverage not sponsored by an employer - No IRS max - Can be used for: Dental, Vision, and/or Medical premiums, Medicare Supplement and/or Supplemental Voluntary Insurance |
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EBHRA Excepted Benefit Health Reimbursement Account |
- For any size employer - Covers many services but excludes Healthcare Plans - IRS max applied |
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EPR Employer Paid Reimbursement Account |
- Wage Parity or Living Wage Accounts: serves to increase employee total compensation to an acceptable living wage - Funding determined by amount of hours an employee works - Can cover: Transit expenses, Parking expenses, Vision, Dental, Dependent Care, Cell Phone Reimbursement, 213d Items |
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VEBA Voluntary Employees' |
- Funds are held in a tax exempt beneficiary association trust authorized under the Internal Revenue Code - The trust is managed by a board of trustees elected by the participants - Acts as an HRA but the funds are held by the group in a special trust - We advise that you consult a tax attorney if you’re wanting to set up a VEBA. This attorney will help determine if the interest earned from the Trust needs to be distributed amongst the active employees. |
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LSA Lifestyle Spending Account |
- Not a tax-advantaged plan - Employer-funded for lifestyle expenses - Can include: fitness services and equipment, alternative health & wellness, personal development, sports equipment, pet care, child and/or elder care |
| HRA & COBRA |
- HRAs are treated as group health plans and must be offered on COBRA - Rule of Thumb for Calculating HRA COBRA Premiums: The IRS recommends taking 75%-80% of the annual HRA amount and then dividing it by 12 to get the monthly premium amount. Example: The member has a $1,200 yearly HRA allowance. Divide $1,200 by 75% or .75 to equal $900. Then divide $900 by 12 months to get the $75 per month premium amount. |
