HRA Council
Who we are
The HRA Council is a non-profit, non-partisan advocacy organization comprised of HRA administrators and practitioners working together to create a vibrant HRA market by easing employers’ ability to offer HRAs and employees’ ability to use an HRA to enroll in coverage. While these new HRAs, like the Individual Coverage HRA (ICHRA) and the Qualified Small Employer HRA (QSEHRA) are relatively new, being on the ground level has afforded us unique insights and a good indication of what’s working and what needs to be changed in order to fulfill their initial goal of creating an improved way for hundreds of thousands of employers and millions of workers to get health insurance coverage.
Our mission
To promote education and awareness around the new models of health reimbursement arrangements and build upon them to improve the stability and affordability of individual health coverage.
HRA Council
Who we are
The HRA Council is a non-profit, non-partisan advocacy organization comprised of HRA administrators and practitioners working together to create a vibrant HRA market by easing employers’ ability to offer HRAs and employees’ ability to use an HRA to enroll in coverage. While these new HRAs, like the Individual Coverage HRA (ICHRA) and the Qualified Small Employer HRA (QSEHRA) are relatively new, being on the ground level has afforded us unique insights and a good indication of what’s working and what needs to be changed in order to fulfill their initial goal of creating an improved way for hundreds of thousands of employers and millions of workers to get health insurance coverage.
Our mission
To promote education and awareness around the new models of health reimbursement arrangements and build upon them to improve the stability and affordability of individual health coverage.
ICHRA Benefits
A new way for employees to receive health coverage
A health reimbursement arrangement (HRA) is an account-based group health plan, funded by employers, and used to reimburse health care expenses of employees and dependents. Employers set the terms for what the HRA reimburses, and the employer contributions are an untaxed benefit to employees. A rule that took effect in January 2020 created Individual Coverage HRAs (ICHRA), which permit employers of any size to utilize HRAs to pay all, or a portion of, the cost of coverage for an individual market health insurance plan. If a traditional group health plan (the employer selects the coverage for their employees) is working well, there is nothing about the ICHRA rule that makes any changes to those arrangements.
Fewer uninsured
The Department of the Treasury modeling projects that the ICHRA rule will cut the number of uninsured Americans by about one million people within the next five years. It will significantly expand health insurance options for millions of employees and their families.
Individual Coverage HRAs are a tax-free benefit
HRAs are a tax-free benefit, so employees do not pay income or payroll taxes on the funds. In essence, ICHRAs equalize the tax advantage received by employees regardless of whether their employer pays the premiums for their selection of an individual market plan or their employer provides traditional employer group coverage.
ICHRA Benefits
A new way for employees to receive health coverage
A health reimbursement arrangement (HRA) is an account-based group health plan, funded by employers, and used to reimburse health care expenses of employees and dependents. Employers set the terms for what the HRA reimburses, and the employer contributions are an untaxed benefit to employees. A rule that took effect in January 2020 created Individual Coverage HRAs (ICHRA), which permit employers, of any size, to utilize HRAs to pay all, or a portion of, the cost of coverage for an individual market health insurance plan. If a traditional group health plan (the employer selects the coverage for their employees) is working well, there is nothing about the ICHRA rule that makes any changes to those arrangements.
Fewer uninsured
The Department of the Treasury modeling projects that the ICHRA rule will cut the number of uninsured Americans by about one million people within the next five years. It will significantly expand health insurance options for millions of employees and their families.
Individual Coverage HRAs are a tax-free benefit
HRAs are a tax-free benefit, so employees do not pay income or payroll taxes on the funds. In essence, ICHRAs equalize the tax advantage received by employees regardless of whether their employer pays the premiums for their selection of an individual market plan or their employer provides traditional employer group coverage.
Employer Impact
Hundreds of thousands of employers and millions of workers stand to benefit
Employers will only offer an ICHRA if it provides a better way to attract and retain employees and meets their employees’ needs for health coverage. In the near term, this should be particularly helpful for smaller firms that would not otherwise offer coverage as well as for firms that find it too costly to administer a health plan. The rule contains significant flexibilities that also make it attractive for larger firms to offer ICHRAs to part-time workers, hourly workers, and workers in geographic locations where the individual market contains more affordable options. ICHRAs will make it easier for many employers to offer health benefits to their workers. According to estimates from the Department of the Treasury, within about five years, 800,000 employers will offer ICHRAs, and more than 11 million people will receive individual market coverage using this HRA.
Helping small employers offer health coverage
Between 2010 and 2020, the percentage of employees covered by their firm’s health benefits declined from 44% to 34% at firms with 3 to 24 employees, from 59% to 41% at firms with 25 to 49 employees, and from 60% to 58% at firms with 50 to 199 employees. ICHRAs should reverse the decline in the percentage of employees at smaller firms covered with employer health benefits.
Greater predictability of health costs for employers
The ICHRA provides employers with predictability about health benefits costs. Using an ICHRA, employers can better establish an annual health care budget, without worrying about the annual renewal notice and accompanying premium increase.
Free employers to concentrate on their core business purpose
Managing an employee health plan is often a costly and time-consuming administrative activity for many employers. The ICHRA can significantly reduce that cost. The employer needs to establish the budget, decide which employees to cover, and then hire a vendor to handle the rest.
Flexibilities help employers offer the most valuable coverage to employees
The ICHRA rule permits employers the flexibility to create classes of employees around certain employment distinctions, such as full-time employees versus part-time employees, and employees in different geographic areas. These flexibilities will lead some employers to newly offer coverage to part-time employees through an ICHRA. These flexibilities also permit employers to offer the ICHRA to employees in areas where the individual market is stronger and maintain employees in a traditional group health plan in areas where the individual market is weaker.
Employer Impact
Hundreds of thousands of employers and millions of workers stand to benefit
Employers will only offer an ICHRA if it provides a better way to attract and retain employees and meets their employees’ needs for health coverage. In the near term, this should be particularly helpful for smaller firms that would not otherwise offer coverage as well as for firms that find it too costly to administer a health plan. The rule contains significant flexibilities that also make it attractive for larger firms to offer ICHRAs to part-time workers, hourly workers, and workers in geographic locations where the individual market contains more affordable options. ICHRAs will make it easier for many employers to offer health benefits to their workers. According to estimates from the Department of the Treasury, within about five years, 800,000 employers will offer ICHRAs, and more than 11 million people will receive individual market coverage using this HRA.
Helping small employers offer health coverage
Between 2010 and 2020, the percentage of employees covered by their firm’s health benefits declined from 44% to 34% at firms with 3 to 24 employees, from 59% to 41% at firms with 25 to 49 employees, and from 60% to 58% at firms with 50 to 199 employees. ICHRAs should reverse the decline in the percentage of employees at smaller firms covered with employer health benefits.
Greater predictability of health costs for employers
The ICHRA provides employers with predictability about health benefits costs. Using an ICHRA, employers can better establish an annual health care budget, without worrying about the annual renewal notice and accompanying premium increase.
Free employers to concentrate on their core business purpose
Managing an employee health plan is often a costly and time-consuming administrative activity for many employers. The ICHRA can significantly reduce that cost. The employer needs to establish the budget, decide which employees to cover, and then hire a vendor to handle the rest.
Flexibilities help employers offer the most valuable coverage to employees
The ICHRA rule permits employers the flexibility to create classes of employees around certain employment distinctions, such as full-time employees versus part-time employees, and employees in different geographic areas. These flexibilities will lead some employers to newly offer coverage to part-time employees through an ICHRA. These flexibilities also permit employers to offer the ICHRA to employees in areas where the individual market is stronger and maintain employees in a traditional group health plan in areas where the individual market is weaker.
Recent News
December 2021 Update from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
September 2021 Update from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
A note from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
Recent News
December 2021 Update from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
September 2021 Update from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
A note from HRA Advisor Brian Blase
As part of our mission to promote education and [...]
Employee Impact
More choices of coverage for employees
People have a variety of preferences about their health care and health coverage. With a traditional group health plan, the employer selects a limited number of coverage options for their employees to choose from. In 2020, 74% of firms offering health insurance only provided employees with one type of health plan. The HRA rule has the potential to significantly increase worker choice and control over their health insurance. By offering an ICHRA, employers permit their employees to select a plan that better aligns with their preferences.
Employees value choice of health insurance
Economic research shows that employees value health coverage choice. A 2013 study in the American Economic Journal estimated that the median welfare gain of additional insurance options for employees equaled 13% of premiums.
Individual Coverage HRAs are similar to 401(k) or 403(b) plans
A defined contribution structure for health insurance is like popular 401(k) and 403(b) plans for retirement savings where employers provide a set amount of funds with employees having more control over their investment selection.
Employee Impact
More choices of coverage for employees
People have a variety of preferences about their health care and health coverage. With a traditional group health plan, the employer selects a limited number of coverage options for their employees to choose from. In 2020, 74% of firms offering health insurance only provided employees with one type of health plan. The HRA rule has the potential to significantly increase worker choice and control over their health insurance. By offering an ICHRA, employers permit their employees to select a plan that better aligns with their preferences.
Employees value choice of health insurance
Economic research shows that employees value health coverage choice. A 2013 study in the American Economic Journal estimated that the median welfare gain of additional insurance options for employees equaled 13% of premiums.
Individual Coverage HRAs are similar to 401(k) or 403(b) plans
A defined contribution structure for health insurance is like popular 401(k) and 403(b) plans for retirement savings where employers provide a set amount of funds with employees having more control over their investment selection.
Community Impact
Individual Coverage HRAs are bipartisan
For Democrats, the HRA rule can be viewed as expanding the Affordable Care Act (ACA), where tax-preferred employer contributions are leveraged by employees to boost individual market enrollment. For Republicans, a long-standing policy aim has been moving from defined benefit health arrangements to defined contribution arrangements where the worker has greater choice and control over their coverage. Both parties would like health insurance to be more portable in order to reduce job lock and give families greater control over their coverage. Employees can take their individual coverage with them should they leave their employer.
Individual Coverage HRAs will improve the individual market
The HRA rule should improve the individual market and lead to more insurer participation. Early data from the initial adopters of ICHRAs suggests that the rule is encouraging enrollees who are much younger than traditional ACA enrollees to sign up for coverage, improving the overall individual market. The ICHRA rule strikes the right balance between employer flexibility and guardrails to protect the individual market from adverse selection. In order to prevent employers from steering unhealthy employees into the individual market, the rule provides that employers may offer either an ICHRA or a traditional group health plan within an employee class but may not offer employees a choice between the two. Moreover, employers that offer an ICHRA must do so on the same terms for all employees in a class of employees, except that they may increase the HRA amount for older employees and employees with more dependents.
Overall health system improvements
Over time, the new ICHRAs should produce more engaged and cost-conscious consumers. By increasing choice and empowering more people to shop for health plans in the individual market, ICHRAs should spur a more competitive individual market that drives health insurers to deliver better coverage options to consumers.
Boost the overall economy
Health insurance is complicated. ICHRAs are a new option that will increase the number of people with health coverage and boost the economy by making work more attractive for many people.
Community Impact
Individual Coverage HRAs are bipartisan
For Democrats, the HRA rule can be viewed as expanding the Affordable Care Act (ACA), where tax-preferred employer contributions are leveraged by employees to boost individual market enrollment. For Republicans, a long-standing policy aim has been moving from defined benefit health arrangements to defined contribution arrangements where the worker has greater choice and control over their coverage. Both parties would like health insurance to be more portable in order to reduce job lock and give families greater control over their coverage. Employees can take their individual coverage with them should they leave their employer.
Individual Coverage HRAs will improve the individual market
The HRA rule should improve the individual market and lead to more insurer participation. Early data from the initial adopters of ICHRAs suggests that the rule is encouraging enrollees who are much younger than traditional ACA enrollees to sign up for coverage, improving the overall individual market. The ICHRA rule strikes the right balance between employer flexibility and guardrails to protect the individual market from adverse selection. In order to prevent employers from steering unhealthy employees into the individual market, the rule provides that employers may offer either an ICHRA or a traditional group health plan within an employee class but may not offer employees a choice between the two. Moreover, employers that offer an ICHRA must do so on the same terms for all employees in a class of employees, except that they may increase the HRA amount for older employees and employees with more dependents.
Overall health system improvements
Over time, the new ICHRAs should produce more engaged and cost-conscious consumers. By increasing choice and empowering more people to shop for health plans in the individual market, ICHRAs should spur a more competitive individual market that drives health insurers to deliver better coverage options to consumers.
Boost the overall economy
Health insurance is complicated. ICHRAs are a new option that will increase the number of people with health coverage and boost the economy by making work more attractive for many people.
HRA Council
PO Box 1056
Leander, TX 78646
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HRA Council
P.O. Box 431125
Houston, Texas 77243
©Copyright 2021 | HRA Council | All Rights Reserved | Info@HRAcouncil.org
Privacy Policy, Refund Policy, Terms & Conditions