As personalized benefits solutions like the Health Reimbursement Arrangement (HRA) grow, so do questions about HRA coordination with existing programs like COBRA.
In this post, we'll go over COBRA requirements for the most popular HRA – the qualified small employer HRA (QSEHRA) – and briefly cover requirements for other types of HRAs.
What is the QSEHRA?
The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a new HRA that allows small businesses to reimburse employees tax-free for their medical expenses, including personal insurance premiums.
The QSEHRA was created through the passage of the Small Business Healthcare Relief Act (SBHRA) in December 2016.
Is the QSEHRA subject to COBRA requirements?
All group health plans are subject to COBRA requirements.
Because the QSEHRA was created as an "excepted benefit" to the Affordable Care Act – and not as a group health plan – the QSEHRA is not subject to COBRA requirements.
That means that small businesses using a QSEHRA are under no obligation to offer continuing coverage options to employees who are terminated, quit, have their hours reduced, or who experience any other event that would entitle them to COBRA benefits.
Which rules do apply to QSEHRAs and former employees?
While the QSEHRA isn’t subject to COBRA requirements, employees who lose QSEHRA eligibility are entitled to some benefits. Specifically, these employees can request reimbursement for any expenses they incurred before losing eligibility.
After an employee loses QSEHRA eligibility, they have up to 90 days to request reimbursement for expenses incurred before eligibility was lost.
For example, an employee who was terminated on June 6 would have until September4 (90 days) to request reimbursement.
Are other HRAs subject to COBRA requirements?
There are a variety of HRAs available outside of the QSEHRA. Whether or not they’re subject to COBRA requirements depends on whether they qualify as a group health plan.
HRAs that are considered a group health plan are subject to COBRA requirements. Those, like the QSEHRA, that aren’t considered a group health plan are not.