HRA Types Reference Guide

A guide to the different types of HRAs and what you need to know about them.
Written by Taylor Byas
Updated 1 month ago

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.


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


Health Reimbursement Plan

- A form of HRA in which funds are deposited on a monthly or quarterly basis

- No IRS max


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


Independent Coverage
Health Reimbursement Account

- 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.


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


Excepted Benefit Health Reimbursement Account

- For any size employer

- Covers many services but excludes Healthcare Plans

- IRS max applied


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


Voluntary Employees'
Beneficiary Association

- 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.


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


- 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.

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