Major Medical Insurance
PPACA Compliant Plans
Employer and Employees
on Federally Facilitated Marketplace
For Age Below 65
Patient Protection Affordable Care Act [PPACA] compliant plans for Employers Assistance to Employees
Effective as recent as January 01, 2020, there has been big leap forward in PPACA by introducing scheme of Health Reimbursement Arrangements (HRA) to make access to health insurance to employees easier, bearable and simpler for the employers to circumvent complexities of group insurance. Health Reimbursement Arrangements (HRAs), makes obtaining health insurance flexible, efficient, and financially viable for employers and employees.
HRAs are employer-funded individual accounts of its employees who have opted to participate. Employees can spend the money deposited by employer in their HRA accounts for medical expenses. Employees have to purchase major medical insurance policy, inclusive of family, to have HRA account establish by the employer. The HRA funds are tax free, both to the employer and to the employee.
An employer is required to give a notice to its employees minimum 90 days preceding commencement of open enrollment on November 1st of employer’s policy to offer Individual Coverage HRA employees.
Open enrollment period is November 1st to December 15th. Employees who want to sign up out of this annual Open Enrollment period due to specified reason may use Special Enrollment provision to enroll.
Two types of Health Reimbursement Arrangements (HRAs) are discussed here:
- Individual Coverage HRAs, and
- Excepted Benefit HRA
Individual Coverage Health Reimbursement Arrangements (HRA)
Effective January 01, 2020, new rules enable employers to offer a new “Individual Coverage HRA” as an alternative to traditional group health plans. The employer maintains the same tax-favored status of the employer contributions towards a traditional group health plan, the employee gets tax free contribution to his/her Individual Coverage HRA account.
Here are outlines of features of Individual Coverage HRA:
- The employers make determination of Individual Coverage HRA offerings at their discretion based on the classification of employees. This offering cannot be made to enrollees of group plan if offered by the employer. The classification of employees may range from hourly workers to full time employees preferably in the same regional geographic area, including non-resident aliens with no U.S. based income. Certain restrictions apply for class size.
- This is tax-favored benefit given to employees to buy major health insurance (ACA compliant) or Medicare Part A, B or Part C (Medicare Advantage) to offset Out-of-Pocket medical expenses. Use of HRA to reimburse individual market premiums is prohibited.
- The employers are freed up from complexities of arranging health insurance coverage to their employee as ‘Employee Benefit’ and its attendant administrative overheads.
- The employer does not have to have a captive group health insurance plan for employees from a company on annual basis and maintain fluctuations of employee enrollments.
- Employer has to announce the policy at least 90 days before it is to be put into action.
- When an employee, below age 65, accepts Individual Coverage HRA, he/she must be enrolled in any PPACA Individual Health Insurance plan, through Exchange of Federally or State Facilitated Marketplace or Off-Exchange; and if above age 65, be enrolled in Medicare Part A, B or Part C (Medicare Advantage).
- Employer sets up an exclusive accounts for each employee to offset or reduce copays, deductibles, or other incidental expenses of medical costs for the employee, and maybe for his/her family up to a maximum of dollar amount for the year.
- Employer can allow unused amount in any year to roll over from year to year.
- The employees make their own decision in buying their own insurance of their own choice. The plan and account are portable and go with the employee.
- Employee and member(s) of his/her family cannot have Advance Premium Tax Credit (APTC) while enrolling in a plan on Marketplace (Exchange) when taking Individual Cover HRA from the employer. It is either Individual HRA or APTC through Exchange if available to you.
Excepted Benefit Health Reimbursement Arrangements (Excepted Benefit HRA)
There may be scenarios when some employers may wish to offer tax-free reimbursement without regard to whether or not employees have qualified ACA compliant insurance coverage. The Excepted Benefit HRA offers reimbursement opportunities to employees who may or may not participate in the group health plan, and who do not go along well with Individual major medical plan and Individual Coverage HRA. Employer may offer this tax advantaged benefit to employees. The qualifying conditions are as follows:
- The annual Excepted HRA contribution must be limited to $1,800 per year.
- The Excepted HRA must be offered in conjunction with a traditional group plan, although the employee is not required to enroll in traditional plan.
- Excepted Benefit HRA may be used to reimburse expenses of limited dental, limited vision, and reimburse premiums for COBRA and Short Term Limited Duration Insurance, and/or cost sharing. [Short Term Medical is available in market from 30 days to as long as 36 months depending upon state and Zip Code.]
- Excepted Benefit HRA must be uniformly available to all similarly situated class of employees.
- Excepted Benefit HRA maybe alternative to employee’s share of premiums of ACA compliant plan.
Optimum Employer’s Assisted Health Insurance for Employees
With combination of Individual Coverage HRA and Excepted Benefit HRA, it is time for employers to make use of these new rules to replace group health insurance for employees. Employees can shop for insurance and buy the best that goes with them without overseen by the employer. New employees can buy this insurance on day one, and they can carry insurance with them as they quit or leave. Individual Coverage HRA and Excepted Benefit HRA are tax-free financial assistance that the employer offers.
Despite the freedom for employees to purchase health insurance what they choose to, it is significant that employer establishes guidelines on which employer’s assistance through Individual Coverage HRA will be extended by benchmarking plan(s) for employees to choose from the array of available plans.
Terminology and Common Conditions of Enrollment
It is significant for a buyer to understand certain common terms and conditions of ACA plans and make assessment of suitable plans for yourself by opening Healthcare.gov . Follow links below for guidance:
- Browse here for Common Conditions of Enrollment in Major Medical ACA Plans.
- You may download its copy here.
Help Yourself for Pricing and Enrollment
ACA plans are designed to reach out to middle and lower income level segments of society with mission that health insurance gets affordable by governmental subsidies of premiums. These subsidies are related to age and income levels for individual and families. It is significant to work out financials of these medical insurance plans for coverage. To get assessment of pricing, and even self-enrollment, follow these steps:
- Click here to open customized link. You will be interacting with Heathcare.gov in the background through this interface to get quotes and may enroll yourself if you choose to.
- Enter basic information.
- See price quotes developing on the screen.
- Scroll down and apply filters for your choices.
- Decide on the plan that you want to purchase.
- Select the plan and help yourself to follow the screens to sign up. Or else, contact us, and we will be happy to help you enroll for the plan.
- Save link of your account that you establish to access later. If your situation changes, you can help yourself to update your account page.
- Remember while looking at the quotes that you cannot take (Advance Premium Tax Credit) APTC subsidy when you accept Individual Coverage HRA from your employer.
- While configuring your health insurance cost, you may like to add supplemental Hospital Insurance to offset deductible and out-of-pocket costs.
Our Help and Assistance to Employers and Employees
Classifying groups of employees to extend Individual Coverage HRA and Extended Benefit HRA will help the employer in setting up policies for extending direct deposit benefits in HRA accounts. We can set up a Private Groups for the employees based on classification of employees to enroll, update, and modify to keep continuity of insurance. In the event that employee leaves or quits, the insurance continues. The employer may extend HRA benefits as substitute for COBRA, and the employee does not have to worry about health insurance coverage since the employer does not control the coverage.
We can help employers and employees in keeping continuity of insurance without any direct cost to either of them, since we are paid commission for our brokerage services by the insurance company/companies to place business with them.
Alternatives to Individual ACA Plans
Here are some other options available to you as alternatives to ACA major medical plans to consider:
- If you are in a situation that ACA compliant major medical plan is too expensive, look for alternatives of Short Term Medical plan(s) and TriTerm Medical Plans. There is an array of these plans available from 1 to 36 months with range of deductibles and Out-of-Pocket Maximums. Browse over these plans under menu items.
- A typical Short Term Medical or TriTerm Medical plan when combined with supplemental plan of Hospital Insurance (for below age 65) can offset out-of-pocket costs due to hospitalization. See an illustrative example here.
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