Below is important information agents should know when working with Health Reimbursement Arrangements (HRAs) like Individual Coverage HRA (ICHRA) & Qualified Small Employer HRA (QSEHRA).

In this article, we will cover the following:

ICHRA stands for Individual Coverage Health Reimbursement Arrangement. It is an alternative to offering a traditional group health plan to employees. An ICHRA allows employers to reimburse their employees for individual coverage insurance premiums (and, if the plan is designed to do so, other qualified medical expenses) in place of offering them a traditional group health plan.

ACA agents should know that an employer cannot offer group coverage and an ICHRA to the same employee. When you work with an employer client in setting up an ICHRA for their employees, your client can offer group coverage to some and ICHRA to others by separating their headcount into classes of employees (e.g. full-time employees, part-time employees, salaried employees, employees covered by a collective bargaining agreement, seasonal employees etc).

QSEHRA stands for Qualified Small Employer Health Reimbursement Arrangement. It is a tax-advantaged benefit for small businesses (fewer than 50 full-time equivalent employees) that don't offer group health insurance. QSEHRAs allow the employer to reimburse employees tax-free for individual health premiums and other medical costs, like co-pays, if employees have qualifying minimum essential coverage

With either HRA, the employer gives the employee a set allowance of money each month to help pay for their health insurance premiums and certain medical expenses.

The employee then chooses and enrolls in a Marketplace plan or other individual coverage that meets HRA requirements. After the employee makes payments for their coverage, the employer reimburses the consumer up to the allowance amount.

Neither ICHRA or QSEHRA amounts are paid directly to the insurance company. Consumers pay for their insurance plan themselves each month and the employer reimburses them up to the amount determined by their employer.

When consumers are offered an ICHRA or QSEHRA, it may affect whether they qualify for Marketplace subsidies.

In short, the main differences between ICHRAs & QSEHRAs are:

Through an HRA, an employer gives tax-free dollars to eligible employees who then choose their own individual plans through the Marketplace. This new and giant market provides a unique sales opportunity to grow and expand your book of business.

HRAs are quickly gaining in momentum because they can be a win-win for your employer clients and their employees: your employer client gets to control their health spending costs by moving away from traditional group coverage, while their employees get to choose the health insurance coverage that best fits their needs.

Additional benefits for your employer clients include:

As an agent, your role in an ICHRA implementation is to assist in the establishment of an ICHRA for your employer clients and facilitating the enrollment for their employees.

This may include: assisting your employer client in determining the employee contribution amounts, providing your employer client with your direct agent marketing link & direct contact information, in addition to any ICHRA educational materials that may be helpful to your employer clients and their employees.

With HealthSherpa, your employer clients will be able to provide a seamless enrollment experience for their employees through your branded website, as well as tools to help them make payments, upload documents, and use their insurance after enrolling.

You’ll also have ICHRA details in your agent dashboard that will give you visibility to the ICHRA business you are writing along with any follow-ups necessary for that client.

An HRA application follows the same process as any other Marketplace application, except you will have to include additional information about the HRA. All necessary HRA-specific questions will automatically populate during the HealthSherpa application when applicable.

The answer depends on the HRA being offered.

Yes. HRA dollars can be used for individual health insurance purchased on the Marketplace, off the Marketplace, or through a state-based exchange, as long as the coverage meets HRA requirements. HRA dollars may also be used for other eligible medical expenses if the plan is designed to allow them, and the employee has qualifying minimum essential coverage.

Generally, yes - if the HRA is designed to allow it. Depending on the type of HRA and the employer’s plan design, HRA funds may be used to reimburse insurance premiums only or both premiums and qualified medical expenses under IRC §213(d).

Eligible expenses can include medical, dental, and vision costs, as well as certain ancillary insurance premiums. Those and other eligible expenses are outlined in IRS Publication 502 (IRC Section 213(d). Link: 2019 Publication 502 (irs.gov). Please see page 9 for eligible insurance plans. Many types of indemnity plans are excluded.

Generally, yes, but it depends on the type of HRA offered. ICHRA eligibility (including gaining access, losing access, or a change in eligibility or affordability, such as a class change) triggers an SEP. QSEHRA eligibility by itself does not trigger an SEP; employees generally must enroll during Open Enrollment or qualify for a separate SEP, even though the QSEHRA may affect their subsidy amount.

Generally, yes, but it depends on the type of HRA being lost. Losing access to an ICHRA (including loss due to termination, class change, or the employer ending the benefit) triggers an SEP. Losing a QSEHRA by itself does not automatically trigger an SEP; employees typically must rely on Open Enrollment or qualify for a separate SEP based on another life event.

Generally consumers may change their individual health insurance coverage during the regular, annual open enrollment period. The Annual Open Enrollment Period (OEP) typically runs from November 1st through December 15th; although State-Based Marketplaces (SBM) can have different Open Enrollment dates.

Receiving an HRA letter means the employer is offering money to help pay for individual health coverage the consumer will purchase on their own. The letter includes important details, such as the benefit amount, which the consumer will need when applying for Marketplace coverage.

Consumers who receive an ICHRA letter should use the letter to determine whether the ICHRA is considered affordable. If it is affordable or the consumer opts in, they will not be eligible for Marketplace subsidies. If it is unaffordable, the consumer may opt out and, if otherwise eligible, receive a subsidy.

Consumers who receive a QSEHRA letter should report the QSEHRA amount on their Marketplace application. If eligible for a subsidy, the APTC will be reduced dollar-for-dollar by the QSEHRA benefit, and the consumer may choose how much APTC to apply.

A QSEHRA is considered affordable if the monthly premium for the lowest-cost Silver plan (LCSP), after applying the employer’s QSEHRA permitted benefit, does not exceed the ACA affordability threshold for the year.

For plan year 2025, the affordability threshold is 8.39% of household income, as published by the IRS. The applicable percentage is updated annually and announced prior to Open Enrollment..

An ICHRA is considered affordable if the monthly premium for the employee-only lowest-cost Silver plan (LCSP), minus the ICHRA contribution, does not exceed the ACA affordability threshold for the year.

For plan year 2025, the affordability threshold is 8.39% of household income. If the ICHRA is unaffordable, the employee may opt out of the ICHRA and, if otherwise eligible, qualify for Marketplace subsidies..