HRA (health reimbursement account) ~ guidance

Jessica Durphy

100+ Post Club
Hey guys.. I've been in the insurance industry for almost 16 years, and recently purchased the agency that I have worked with all these years. The principal retired and the perpetuation was for me to buy! If you know anything about the Personal Side, then you'll understand why I've taken STOCK in Clairol and my new favorite drink is a STRONG Virgin Strawberry Daiquiri (I've never touched alcohol~ but the market is begging me to take a 'drank')

I have 7 employees (including myself) ~ 3 are on Medicaid due to circumstances such as DACA and lifetime Medicaid, 1 is Medicare eligible & very part time. I personally have Christian Healthcare Ministries, My commercial producer has insurance through his spouse, and my Life producer has health insurance through the marketplace.

I structured the agency as a S-Corp! Even though the average age of folks willing to take advantage of health insurance, is still fairly young, the premiums are upwards $2500/$3000 a month. Currently I offer a Simple IRA with 3% match, Group Life, Aflac Hospital Indemnity, (all of which I pay for as a benefit to the employees) However, I simply can't afford the cost of Health insurance. I've read a lot about the HRA's (NOT HSA) and I'm intrigued with how I think they work.

Can anyone point me in the right direction with how this could work as another benefit to the employees, help to the agency and bottom line tax benefits.. Where do I set the account up? How do the employees get the benefit? Are they allowed to put $$ towards the HRA as their own personal contributions? If they don't use it by years end, does the money roll over? And are these accounts interest bearing?

Thank you in advance for your advice! :) Jessica
Can I ask what premiums are over $2000/mth? Is that employee only or for families?

You could set up an ICHRA in a way that will not be a huge cost to the agency, be "unaffordable" to the Medicaid eligible employees so they don't lose that benefit, contribute to Medicare premiums and, offer affordable individual coverage for the rest. Even if you make it affordable for everyone, you wont necessarily have to spend all of the funds if the employees choose plans that cost less than the contribution.

If the Medicaid eligibles are close to income threshold to go on the marketplace, you could offer a post tax stipend specifically for health care that would bump their salaries enough to get them a large subsidy and a CSR. This would also allow flexibility with funds offered to the other employees.
Ahhh- yes, I didn't clarify... The premium for group health notated above was for the 3 employees .... If the families were to join, the premiums would be higher yet! And the employees would pay that additional cost.

My idea was to pay for employees that wanted to take advantage.

Most of what you said makes perfect sense - who would you suggest reaching out to in order to help accommodate & facilitate the ICHRA?

About the folks with Medicaid - that was a worry of mine- I was concerned that it would negatively affect the employees who are taking advantage of the circumstantial Medicaid benefits.

Thank you for responding - so helpful!!