Individual Coverage Health Reimbursement Account (ICHRA)

An ICHRA is a new type of reimbursement model that offers substantial flexibility to employers of all sizes. Like a standard HRA, this account is fully funded by employers with tax-free contributions to reimburse their employees for eligible medical expenses. What makes an ICHRA unique is that the money can also be used by employees to pay for individual health insurance premiums. It’s a way for employers to reimburse their employees for insurance rather than buying it for them.

Employer advantages:

• No minimum participation requirements
• No minimum or maximum contribution limits
• Choose the eligibility requirements
• Ability to offer different allowance amounts to different classes of employees

There are certain requirements that must be met for an HRA to qualify as an ICHRA. Check out ICHRA for Employers or contact us to learn more.

Health Reimbursement Account (HRA)

A standard HRA is funded by employers with tax-free contributions to help employees pay for out-of-pocket medical expenses such as deductibles, coinsurance and copays. The account is fully funded and designed by the employer — contributions cannot be paid through a reduction in an employee’s salary. The employer decides how much employees receive, what’s considered an eligible expense and other customizations such as whether a debit card will be offered.

Employer advantages:

• Control what’s reimbursable and retain unused funds

• Reduced premium and payroll costs

Flexible Spending Account (FSA)

This account is fully funded by employees with pre-tax contributions from their paycheck. Employees can use their FSA to pay for eligible medical expenses — saving money on items they would already be paying for such as doctors’ visits, prescription drugs and more.

• Limited-Purpose FSAs can be offered with an HSA to pay for eligible vision and dental expenses only. It allows employees to save money on vision and dental expenses while harnessing the long-term savings power of an HSA.
• Dependent Care FSAs let employees use pretax dollars to pay for eligible expenses related to care for a child, disabled spouse, elderly parent or any other dependent requiring assisted care.

Employer advantage:

• Reduced payroll costs

Health Savings Account (HSA)

Coupled with a high-deductible health plan, employees can use this tax-sheltered savings account to pay for qualified medical expenses. An HSA can be funded by pre-tax contributions from both the employee and their employer. The money in an HSA belongs to the employee — it grows with interest and offers investment options after reaching a minimum balance. Note that employees cannot have this type of account with an FSA, unless it is a limited purpose FSA.

Employer advantages:

• Potential savings in Federal Insurance Contributions Act (FICA) and unemployment contribution
• Reduced premium costs