There are several medical reimbursement plans available for employers - HRPS, HRA, HSA, ASF, and POP. Acronyms can be confusing, and so can the new reforms of health care.
So what repayment plans can be used for health insurance premiums?
This article summarizes the various medical reimbursement plans including whether and how they can be used for health insurance premiums.
reimbursement healthcare plans (HRPS)
HRP is a Section 105 medical reimbursement plan funded by the employer designed for repayment of health insurance. To comply with the Act on the Affordable Care HRPS are designed to reimburse eligible health insurance premiums and basic prevention services. Any unused funds remain with the employer, and there is no working capital year to year
Bottom line -. HRPS allow reimbursement policies of different insurance premiums, including purchased Health Insurance Marketplace. Companies of any size can use a HRP, although the tax benefits vary for business owners.
health reimbursement arrangements (HRA)
CRH are employer plans financed by the EU health benefits used to reimburse employees for qualified medical expenses, including insurance premiums. With an HRA, the employer determines the working parameters, medical expenses categories are refundable, and employee eligibility criteria. As with HRP, unused funds remain with the employer.
In the past, CRH were fired on the tax-refund of vehicle health insurance. The Affordable Care Act, however, has limited how HRAs can be used. Currently, CRH may reimburse individual health insurance in the following limited circumstances:
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The HRA is a participant, for example, a C-Corp or owner a nonprofit person (a "one-person stand-alone HRA")
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The HRA is only offered to retirees (a "retiree HRA" )
Bottom line -. CRH can be used for individual reimbursement of health insurance in limited situations
health savings accounts (HSA)
SAH is a financial account maintained by an individual to pay for qualified medical expenses. Once in place, everyone can contribute to an HSA (employer, employee, or a third party), although there is a maximum annual contribution of $ 3,350 for an individual and $ 6,650 for a family (2015) . To qualify for an HSA, an individual must have a high deductible health plan that meets certain criteria. HSA funds roll over from year to year
An unknown fact about HSA is that they can be used for insurance premiums, but only in those limited situations :.
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insurance long term care
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coverage following health care (eg COBRA)
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coverage of health care while receiving unemployment benefit under federal law or state
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Medicare and other coverage of health care for 65 years or more (other than premiums for a Medicare supplemental policy, such as Medigap)
Bottom line - HSA can be used to pay (or pay) individual health insurance in limited situations.
flexible spending accounts (FSAs)
RTA are sponsored by employers, and are (usually) 100% employee-funded. FSAs are a way for employees to use pre-tax dollars to pay for medical expenses, but not for health insurance premiums.
The maximum annual election for ASF is $ 2,550 (2015) and rollover funds is limited to $ 500 / year - if permitted by the employer
Bottom line - .. RTA can not be used to pay (or pay) individual health insurance
premium only plan (POP)
POPs Section 125 "cafeteria plan" sponsored by employers that are 100% employee-funded. POPs are a way for employees to use pre-tax dollars to pay for health insurance premiums.
POP can still be used for health insurance premiums, but they can not be used on subsidized market health plans. As such, POPs are less common today
Bottom line -. POP can be used by employees to pay for individual health insurance purchased on the private market. An employer can not contribute to the POP.
Conclusion
Small businesses are looking for alternative health benefits to help employees in their individually purchased health insurance. One way to help is the establishment of a medical expense reimbursement plan as a scheme for reimbursement of health care or HRP.
Have a question about how the medical and health insurance reimbursement plans work? Download this free graphic or leave a comment below.
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