Employee Health Insurance: Enrollment, Tax Credits & Exchanges
Explore employee health insurance enrollment, tax credits for HRAs, and the world of health insurance exchanges in this comprehensive guide.
August 25, 2023
With the help of Liferaft and our broker partners, the enrollment process for employees is quick and straightforward. A member of the Liferaft team will meet with each of your employees individually, virtually, or in person. After providing their age, zip code, household income, smoking status, and spouse/dependent’s ages, the Liferaft expert will walk them through their top three plan recommendations, helping them find the best plan for them and their lifestyle. The employee will then enroll in health insurance online either on healthcare.gov for the federal exchange or on a state-based website for the state exchange.
A main factor employers must consider is that the Individual Coverage Health Reimbursement Arrangement (ICHRA) is not a group plan, so employees will be subject to group banding. However, since the ICHRA is customizable, you can set age bands. For example, your older employees' health insurance premiums will be more expensive, and you can offer them a higher reimbursement limit than younger employees. Although there is no age banding on traditional group health insurance, your employee’s age impacts the group health premiums.
Your HRA contribution is 100% tax deductible. Also, the money you put in your employees’ HRA is not reported as income, so they get tax-free money for their medical needs.
Standard HRA - Those offered a Standard HRA may still qualify for premium tax credits for Marketplace coverage under the ACA. Tax credit eligibility will be determined based on whether the significant medical plan integrated with the HRA is “affordable” under ACA rules.
ICHRA - An individual coverage HRA offer may impact your eligibility for the premium tax credit for Marketplace coverage. The only way you’ll qualify for the premium tax credit to help pay for Marketplace coverage is if you don’t accept the individual coverage HRA and the individual coverage HRA isn’t considered affordable.
If the HRA is considered “affordable,” and you accept the HRA, you aren’t eligible for the premium tax credit for your Marketplace coverage. If the HRA includes payments to cover the expenses of your household members, you can’t get a premium tax credit for your household members.
QSEHRA - Tax credits differ for each HRA type, but for a QSEHRA, you may be eligible for some or no tax credit, depending on whether the QSEHRA is affordable.
EBHRA - The eligibility for the ACA premium tax credit remains unaffected by participation in EBHRA. This applies even to EBHRAs that reimburse eligible medical expenses and cost-sharing, which are not covered by individual health insurance.
A health insurance exchange, often called a health insurance marketplace, is a hub for comparing and selecting health insurance options. Here, private health insurance companies showcase their plans, allowing individuals to make informed comparisons among available offerings.
The term "health insurance exchange" commonly denotes government-created public health insurance exchanges, a response to the Affordable Care Act (ACA). These public exchanges are instrumental in facilitating the purchase of individual and family health insurance plans that align with ACA regulations. The phrase "individual and family" refers to health insurance that individuals obtain independently, separate from the coverage offered by employers or government programs like Medicare or Medicaid.
Employees can choose from dozens (sometimes hundreds, depending on zip code) of plans. These plans are often less expensive compared to group plans. In short, employees get exponentially more options for less money.
It will depend on the state that you’re in. For the federal exchange, you will look at healthcare.gov. Some states also host their own state-based exchanges. Liferaft will meet with each employee to help them navigate their local marketplace and recommend the best health insurance for their unique situation.
Your HRA contributions are entirely tax deductible. This financial advantage adds to the appeal of utilizing HRAs for healthcare coverage. Additionally, the funds directed to employees' HRAs do not need to be reported as income, effectively offering them tax-free financial support for their medical expenses.
HRA contributions offer a significant tax advantage, as they are 100% tax deductible. Moreover, the funds allocated to employees' HRAs do not count as taxable income, providing them with tax-free resources designated for their medical necessities.
The term "health insurance exchange" predominantly signifies government-created public exchanges, a response to the Affordable Care Act. These platforms streamline the acquisition of individual and family health insurance plans that align with ACA stipulations.
Our team knows the ins and outs of the health insurance marketplace and will guide you towards the solution that make the most sense for your business and your team. Come with questions! Our experts are happy to dig into the details to get you the clarity you need.
During the call, Liferaft will run a cost-benefit analysis on your company's current healthcare spending and show you different ways you can save—without sacrificing plan quality. After your consult, Liferaft will design a unique plan for your employee's health insurance, including suggested plans and accounts, plan policy documents, and the annual budget.
