Can An HRA Be Used To Pay Health Insurance Premiums?

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   Christopher Lawrence

   Insurance Broker | Financial Consultant, Lawrence Insurance Consulting, Southern New Jersey

   Yes a Health Reimbursement Arrangements can fund health insurance premiums, such a arrangement is usually referred to as a PRA (Premium Reimbursement Arrangement). Although such arrangements have become unfavorable due to healthcare reform legislature due to two main reasons 1. If a employer wants to drop group coverage and have employees purchase individual policies, this can only be offered after-tax (RR 61-146). This means that such arrangements have lost their tax-advantaged status, which in effect takes away much of the benefit to the employer. 2.A group health plan, including an HRA, used to purchase coverage on the individual market is not considered integrated with that individual market coverage for purposes of the annual dollar limit prohibition. Meaning that even if a HRA were to cover 100% of employee premiums for individual coverage the employer would still be viewed as not offering MEC (Minimum Essential Coverage).
   

   Answered on October 30, 2013

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