As of January 1, 2020, employers can offer employees an individual coverage Health Reimbursement Arrangement (HRA) instead of offering a traditional group health plan. This type of HRA is an alternative to traditional group health plan coverage to reimburse medical expenses, like monthly premiums and out-of-pocket costs such as copayments and deductibles.
If your employer offers you an individual coverage HRA and you accept it, you (and your household members, if applicable) must enroll in individual health insurance coverage, or Medicare Parts A (Hospital Insurance) and B (Medical Insurance) or Part C (Medicare Advantage) that starts by the time your individual coverage HRA begins. You can enroll in individual health insurance coverage through the Marketplace or through a private plan outside the Marketplace.
Your employer will ask you to confirm that you (and your household members, if applicable) will be enrolled in individual health insurance coverage or Medicare the whole time you’ll be covered by the individual coverage HRA and each time reimbursement is requested from the individual coverage HRA. They’ll tell you how to confirm this.
Important: Short-term plans and other limited benefits coverage, such as dental or vision-only plans, don’t meet this requirement.
Generally, your employer must provide a written notice at least 90 days before the start of the individual coverage HRA’s plan year. But if you become eligible during the individual coverage HRA plan year or during the 90 days before the plan year, like if you’re a new employee, you’ll get your notice no later than the first day your individual coverage HRA coverage can start.
When you get this notice, be sure to keep it with other important documents. It includes information you might need for individual coverage enrollment.
It depends. If you have an individual coverage HRA offer from an employer, the only way you’ll qualify for a premium tax credit to help pay for Marketplace coverage (and possibly your household members’ coverage, if applicable) is if your employer’s individual coverage HRA isn’t considered affordable, and you opt out of it.
Use this worksheet (PDF) to help determine if the individual coverage HRA is or isn’t considered affordable.
Note: If you don’t opt out of your individual coverage HRA, you won’t be eligible for a premium tax credit for your Marketplace coverage, regardless of whether the individual coverage HRA is affordable. Also, if the individual coverage HRA offer covers your household members and you don’t opt out, you won’t be eligible for a premium tax credit for their Marketplace coverage, no matter if it’s affordable.
If you’re not eligible for the premium tax credit because you’re covered by an individual coverage HRA or have an affordable individual coverage HRA offer, you should return to your application and update the amount of advance payments of the premium tax credit (APTC) you apply to your monthly premiums to $0.
If your employer allows you to pay on a pre-tax basis the portion of the individual health insurance premiums not covered by an individual coverage HRA using a salary reduction arrangement under a cafeteria plan, you can’t use it to pay for Marketplace coverage.
You can still use the individual coverage HRA to buy individual health insurance coverage, but you’ll need to purchase coverage off the Marketplace to use your individual coverage HRA and make salary reduction contributions to a cafeteria plan. If your individual coverage HRA isn’t considered affordable and you want to apply for APTCs with Marketplace coverage instead, then you’ll need to opt out of your individual coverage HRA and decline to use a salary reduction arrangement to pay for health insurance premiums in order to qualify.
If you already have individual health insurance coverage, you don’t need to change that coverage to meet the HRA’s health coverage requirement.
If you don’t already have individual health insurance coverage, you can enroll in coverage through the Marketplace or outside of it, like directly through an insurance company or a licensed health insurance agent or broker.
Note: In most states, people use HealthCare.gov to enroll in Marketplace coverage, but some states run their own Marketplace. See a list of states with their own Marketplaces.
If you are enrolled in Medicare Part A and B or Medicare Part C, your enrollment in Medicare will meet the HRA’s health coverage requirement. Find out how to enroll in Medicare.
If your individual coverage HRA starts January 1, you (and any household members, if applicable) can enroll in Marketplace insurance or a private plan outside the Marketplace during the yearly Open Enrollment Period from November 1 through December 15.
If you newly gain access to an individual coverage HRA at another time of year, you (and any household members, if applicable) may qualify for a Special Enrollment Period to enroll in or change Marketplace health insurance coverage outside of Open Enrollment. You may need to use this Special Enrollment Period if your individual coverage HRA starts later than January 1, or if you got hired or became eligible for the individual coverage HRA mid-plan year. If you qualify, you’ll need to enroll during the required timeframe:
If you already have Marketplace coverage, you don’t need to change it. However, you should use this worksheet (PDF) to determine whether your individual coverage HRA is affordable. If it is, you should use it instead of the tax credit that's shown in your Marketplace eligibility notice. To do this, return to your application and update the amount of APTC you apply to your monthly premiums to $0.
If you want to change coverage based on your individual coverage HRA offer, you may be able to do so through a Special Enrollment Period. But if you change plans outside of Open Enrollment, the amount you’ve paid toward your out-of-pocket expenses (deductible and maximum out-of-pocket costs) for your old plan may not carry over to your new one. You can ask your insurance company to carry over your out-of-pocket expenses, but it’s ultimately up to them based on company policy and state law.