the 4 hras · o hsa you have to be on a high deductible plan, hra you are not as restricted o hsas...
TRANSCRIPT
The 4 HRAsJeff Strong, Vice President of Sales
The 4 HRAs
In the world we live in now, the land of HRAs has grown! There is now the 4 HRAs;
• Group HRA
• QSEHRA ( Qualified small employer HRA)
• Individual Coverage HRA
• Excepted Benefit HRA
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Group HRA – Quick history (1960-1990)
• With medical plans changing and plans implemented deductibles and created more exclusions, in the self funded and guaranteed cost fully insured plans, employers started creating reimbursement arrangements for qualified medical expenses that were not covered by their health benefits plan. In 1974 ERISA was implemented to cover these arrangements then in 1996 HIPAA was installed as a part to make sure fair practices.
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Group HRA – Quick history continued
• June 26, 2002 the IRS notice 2002-45 formally defined the HRA. The notice defined;
➢ HRAs must be funded by employer only
➢ Reimbursement for Section 213 qualified expenses
➢ Unused funds may roll over (different from the prior product MERP
➢ Owners of C corp can participate, all other ownership structures owners can not participate.
➢ An HRA & FSA can be in play
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Group HRA – Now
HRA plans now;
• You can’t be self employed
• Must have a medical plan in place • Can be rich or lean
• Employer owns all the funds. (why FSA usually are along side)
• Employer defines the HRA and what they will reimburse;❖ When employees will pay, first or after a defined amount
❖ Employer will pay % of claims
❖ Etc….
▪ Must have a TPA in play, so employer does not see claims. DOL & HIPAA issues
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HRA vs HSA
The question often comes up, HRA vs HSA a couple of main differences and what we see as well;
o HRA employer owns the money, employees own the money with HSA
o HSA you have to be on a high deductible plan, HRA you are not as restricted
o HSAs are great for a populous that have long tenures at the company. HRAs are great for companies that have employees coming and going.
o You can have an HRA & HSA plan together, this is called stacking and certain rules do apply. Employer can not force HSA to fund first.
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HRA & COBRA
You must offer COBRA with an HRA. Some points to note;
• The employer can charge up to 102% of the “Applicable premium”
– Past- Cost method. • Utilization plus administration fees
– Actuarial method• Done for first time plans. An actuarial determines the plan
Employer reimburses 50% of a $2k/$4k plan from first dollar. Industry standard to apply is between 30-40% for HRA contribution needed per year.
Ex. $1k X 40%= $400 yearly premium rate.
$400 yearly premium rates X 102%= $408 or $34 per month plus
Administration fees.
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HRA & COBRA
If the employee elects COBRA under an HRA and have unused funds, they need to have access to those funds.
Can you use HRA funds to pay the COBRA premium?
• Yes, if the plan is designed to accommodate it. Please see the company SPD or plan document.
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HRA & COVID, CARES ACT
With COVID 19 & CARES ACT there has been one big change;
• OTC medical and menstrual pads may be available through the HRA.
– Why Maybe? It all depends on how the HRA is setup and designed but may be allowed where in the past it was absolutely not.
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HRA what brokers are doing
HRAs for years have been quoted in the 4th quarter, kicking the tires on it but did not go with it.
We have seen a big shift over the last two years to clients going with the HRA design. The most popular design is;
• Lean medical plan, high deductibles, thus lower premiums
• Rich HRA platform, first dollar funding to an established point
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Questions on Group HRA?
Does anyone have any questions? Feel free to type your question into the chat box
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Poll Question Time
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Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
This plan came into play in 1/1/2017. It is for groups 50 or less that do not offer a group health plan.
– All employees go get individual health plans and provide them to the employer as evidence.
– The employer set the monthly amount they will provide to the employees.
– They can provide one amount for single and a different one for family
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(QSEHRA) – Eligibility
No group plan in place. If there is one and the employer is doing to the QSEHRA, they have to inform their employees with a 90 days grace period before the switch.
You must adhere to the maximums - $5,250 per employee only, $10,600 for family.
Employer must pay for the administration of the QSEHRA costs are not passed along.
Funding is done completely by the employer, there is no
employee contributions or salary reduction
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(QSEHRA) – Non- Eligibility
❑Part time employees
❑Seasonal employees
❑Employees under age 25
❑Within the 90 days of service with the employer
❑Part of a collective bargaining agreement
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(QSEHRA) – What we see the most
With the QSEHRA, the employer can pay towards the employees medical plan premium or claims or both.
The most popular over the years is QSEHRA plans paying for premiums only. This just requires a plan document then it is a normal financial traction between the employer and employees.
The other avenue is reimbursement of claims, the employer will need to get an administrator to handle the claims, as the employer should not see what the claims are for, then they reimburse for the claims.
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Premium Claims
Individual HRA (ICHRA)
This product was put into place starting 1/1/2020. It is designed for all size companies.• Can be offered alongside a group plan
• Employee can be on the ICHRA or group plan but can’t be offered both.
• Employer can offer traditional HRA for one class and ICHRA to other classes
• ICHRA has to be defined out by class can’t be defined by Medicare or not Medicare.
• Is defined as a group health plan so subject to ERISA and reporting
• Can be run through a POP if portion of the payment is done by employees, is not allowed to pay for Exchange coverage.
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ICHRA Eligibility alongside side group
• The minimum size vary by employer size;
❖10 employees for employers with fewer than 100
❖10% of total number of employees for companies with 100 and 200 employees
❖20 employee for companies less than 200 employees
If companies don’t meet the above size the employer can’t use them to determine ICHRA eligibility.
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Classifications
• Employer can defined classes by below;– full time
– Part time
– Employee working in the same geographic location
– Seasonal employees
– Employee covered by a defined collective bargaining agreement
– Employees who have not satisfied their waiting period
– Non salaried employees (hourly workers)
– Salaried employees
– Non resident aliens with no US- based income
– Temporary employee staffing firms
– Any group of employees formed by combining two or more of these classes
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ICHRA Guideline for Age (within Classification)
• New ICHRA contribution guidelines based on age
• The ICHRA allows for different amounts based on age. The amount must be the same for all individuals of that age
• The maximum amount available to the oldest individual is no more than 3 times the maximum dollar amount allowed to the youngest.
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ICHRA Guideline for Family (Within Classification)
• New ICHRA contribution guidelines based family and dependents
• The ICHRA allows for different amounts based on the number of dependents. The maximum amount increases as number of dependents increase.
• The maximum amount available must be the same to all employees in that class with the same amount of dependents.
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Poll Question Time
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Medicare and ICHRA
• The final rule clarifies that Medicare Parts A and B and Medicare Part C all qualify as individual health insurance coverage, and employees enrolled in this coverage can participate in the ICHRA. But must be defined by class
• Employees enrolled in other health care programs, including health care sharing ministries like Medi-Share, are not eligible to participate in the ICHRA.
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Excepted Benefit HRA
This plan came into play in 2020 and is the 4th
HRA now available. • Limited amount that can be reimbursed
• $1800 a year for 2020, so $150 a month and it is tied to inflation.
• Under this HRA it is designed to cover non primary health plans.
– Dental
– Vision
– COBRA premium
• Must have a group plan in place, must be eligible for the group plan but do not have to be on it.
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Excepted Benefit
Group medical premium, Medicare A, B are not eligible.
It can not be along side a ICHRA, QSEHRA, and it is not clear is 105 plan is allowed side it.
Funds do rollover
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ICHRA QSEHRA Group Medical HRA Excepted Benefit
Business size restrictions None 50 or less None None
Employee eligibility
Employer can set eligibility based on employee classes, but the same terms must apply to all employees in each class. Must have an individual health plan. Can not be on a group plan or covered on a spouse's plan.
Full time employee are eligibility
Must be on company's group medical plan
Must be on company's group medical plan
Allowance amount restrictions
no caps on annual allowances, the employer can set the amount by employee classification, age & family size
Capped out each year to a certain amount for single & family can not be class defined
No caps on annual allowances and is set by employer
Annual cap by employee for the year. Same amount for single and family
Group policy required
May have a group policy in play, but the employer can not offer a group plan and ICHRA to an employee
No group policy allowed Group policy required
Group policy required
Questions?
What questions do you have or what else would you like to know?
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Thank you!
Sterling Administration Jeff Strong, Vice President of Sales
714-944-3259
Peter Cabot, New Business Director
310-920-4428
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