HRA’s – Health Reimbursement Accounts Section 105 Plans
MERP
ICHRA Individual HRA

What is HRA’s – Health Reimbursement Accounts

• HRA’s – Health Reimbursement Accounts  allow an  employer to pay or  Self Fund say by using a Ben E Lect Program  and possibly save thousands of $$$, for his and the employees uninsured medical care  for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. and deduct them.  ^{TASC * (§IRC §213 (d), IRS Publication 502 Allowable Medical Expenses   Internal Revenue Code (IRC) §105   * Publication 969)} 
• There are also NEW  provisions to allow reimbursement for Individual Policies purchased by employees.

What is Section 105 MRP Medical Expense Reimbursement 

• Under ACA/Obamacare  only reimbursement of medical insurance premiums and qualified “preventative care” are allowed.    This puts a huge kibosh on the otherwise huge tax savings for small business entrepreneurs. … The co-pays, deductibles, and other non-covered medical is still allowed by the section 105 MRP plan. The bottom line is the math, and for some, the HSA’s Health Savings Accounts (HSA) may be a better route going forward. ^{Legal Wiz.com}
  • covered ca.com/hra
  • covered ca.com/hra-affordability-calculator

“#Individual Coverage ICHRA”
and the EBHRA “Excepted Benefit HRA ” (can’t pay premiums)

Advantages of the Individual Coverage HRA ICHRA  include, but are not limited to:

• Funds can be used to reimburse the employee’s premiums for an individual health insurance policy.   Get a quote. 
  • Employer Contribution will affect tax credits – Learn more here
• Reimbursements made to employees do not count towards the employee’s taxable wages.
• The employer can choose to roll-over unused amounts into the following year.
• Coverage can be offered to different classes of employees (e.g.; full-time, part-time, seasonal, salaried, hourly)
  • Contrast to Management Carve Outs §2716 Salary Discrimination
• An offer of the Individual Coverage HRA represents an “offer of coverage” under the employer mandate, however, contributions must meet affordability guidelines. (affordability Health Care.gov) The IRS will release further guidelines regarding this later.
• ICHRA will allow businesses the alternative to offer employees a monthly allowance of tax-free money. It allows them to buy individual health coverage tailored to fit their unique needs, control costs, and address ACA compliance for applicable large employers.  ^ICHRA.com *

The  ICHRA  Individual Coverage HRA also comes with restrictions and regulations including but not limited to:

• An offer of an Individual Coverage HRA cannot be made to any employee that is offered a traditional group health plan.
• If an offer of coverage is made to a class of employees, there is a minimum class size that is required. Size is typically 10% of that specific class of employees. For example, if an employer has 200 employees, a minimum of 20 employees would have to be in a specified class.
• Contributions can be in any amount that the employer chooses, but contributions must be consistent for all employees in a specified class.
• The employer must provide notice of the Individual Coverage HRA to employees.
• The employer must be able to substantiate that the employee is enrolled in an individual plan or Medicare (model notices are available).
• The employer must notify employees on an annual basis that the individual health insurance is NOT subject to ERISA.
• The final rule also created the “Excepted Benefit HRA“ which, starting in January of 2020, will permit employers to finance additional medical care. Employees can use the HRA without having to be enrolled in the group’s traditional health plan.
  • The requirements associated with the “Excepted Benefit HRA” include, but are not limited to:

• • • The annual contribution is capped at $1,800.
    • It must be offered in conjunction with a group health plan, but there is no requirement for the employee to enroll in that plan.
    • The “Excepted Benefit HRA” cannot be used to fund group health or Medicare premiums.
    • It can fund premiums for dental, vision, or short-term limited duration insurance.
• Employers who want to offer the “Individual Coverage HRA”  can do so but employees will need to enroll in an individual plan during the open enrollment period.  ^{benefitmall.com} * ^{TASO FAQ’s} * ^{Take Command Heatlh FAQ’s} * ^{Health Care.gov} *    ^SHRM.org *^FAQ’s

FAQ’s, Links & Resources

• Complete ICHRA Guide
  • Complete ICHRA & QSEHRA comparison Guide ichra.com

  • General ICHRA Questions

  • Designing an ICHRA

  • Employer Requirements

  • Employee Coverage Requirements

  • Affordability and Tax Credits

  • Interactions between ICHRA and other plans

• Section 105 Non Discrimination requirements
• CMS.Gov FAQ’s
• SHRM’s  New Final Rule Lets Employees Use HRAs to Buy Health Insurance
  • final rules concerning Health Reimbursement Arrangements (HRAs).
• people keep.com//what-to-expect-from-the-individual-coverage-hra-ichra-in-2020
• Commission Opinion Letter: Individual Coverage Health Reimbursement Arrangements (ICHRA) under the ADEA  EEOC.gov *

MERP’s – Medical Expense Reimbursement Plans – Section 105 

• HOW SECTION 105 MEDICAL REIMBURSEMENT PLANS SAVE ON TAXES  Difference Card.com 
• Some companies allow and some don’t IRS Section §105 MERPs   ^Wikipedia 
  • Blue Cross requires a signed statement that you won’t do it).  Qualified claims must be described in the HRA plan document at inception, i.e., before reimbursing employees for those medical expenses.
• The employee does not have to report income as long as the plan complies with §106,   105 (b) and  Rev Ruling 2-41 The funding for medical expenses can be pay as you go.
• Companies that allow HRA’s &   HSA’s (Health Savings Accounts).
  • Aetna,
  • Kaiser
  • UHC and
  • Health Net
• Please email [email protected] or call us 310.519.1335 to discuss further.
• Instant Quotes

Consumer Links & Resources

• Aetna FAQ’s & Explanation non discrimination executive medical
• IRS More Info on Health Care Arrangements to not have a group plan but pay for employee individual plans Make sure your plan is ACA compliant or face HUGE penalties Wikipedia Other Insurance Clause – Dual Coverage?
• Can the 105 plan pay lower benefits depending on the amount the employee receives from other insurance, like Medicare?
• Section 105- Amounts Received Under Accident and Health Plans (Also Section 106-Contributions by Employers to Accident and Health Plans) Rev. Rul. 2005-24

Self Funded, Level Funding  & #MEC plans

opti med health.com

• Key Resources & Level Funding to get ahead – Trustmark February 2023
• 

Resources & Links

• CA Law restricting stop loss HR Daily Advisor
• lbl group.com/sb-161-effect-stop-loss-california-self-funded-health-insurance
• S.B. 161  prohibits stop-loss insurers in California from issuing policies with specific deductibles below $35,000 for self-funded employer plans. After Jan. 1, 2016, the law increases the minimum specific attachment point to $40,000.
• Also under the law, starting Jan. 1, aggregate attachment points cannot be less than $5,000 times the total number of group members, 120 percent of expected claims, or $35,000 ($40,000 after Jan. 1, 2016).   ^{HR Daily} *
• leginfo.legislature.ca.gov/ 
• leavitt.com/sb-161-limits-stop-loss-for-self-funded-small-employer-health-plans/
• Self-Funding – Life After SB-161: Is Self Funding Still Viable In California?
  • Trustmark
  • Trustmark D Paull Representative
  • 10 reasons for brokers to use Trustmark
    • Simplified Underwriting Groups over 25 lives