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Group coverage HRA vs. excepted benefit HRA

Written by: Gabrielle Smith
July 16, 2021 at 8:18 AM

For organizations across the country, group health insurance is by far the most popular choice for employer-sponsored healthcare. In fact, the Kaiser Family Foundation (KFF) finds that nearly half of covered Americans have health insurance through their employer’s group health plan.

While popular, KFF also finds that the cost of group health plans is on the rise, worrying many employers. Luckily, there are two health reimbursement arrangements (HRAs) that are specifically made to help employees cover the costs that aren’t fully paid for by their group plan: the group coverage HRA (GCHRA) and the excepted benefit HRA (EBHRA).

In this article, we’ll discuss how both GCHRAs and EBHRAs work and offer a side-by-side comparison so you know which is best for your organization.

What is an excepted benefit HRA (EBHRA)?

On June 13, 2019, the final rule from the federal government regarding HRAs was released. The ruling helped to clarify existing HRA rules as well as provide confirmation about what to expect in the future. Along with the new policy came the creation of the EBHRA.

Under the Affordable Care Act, “excepted benefits” are benefits that aren’t included in traditional health insurance plans.

Excepted benefits include things like:

  • Non-health coverage
    • Accident-only coverage
    • Disability insurance
    • Workers compensation insurance
  • Limited health benefits
    • Dental care
    • Vision care
    • Long-term care benefits
  • Specific disease or illness coverage
    • Coverage for a specific disease or illness (e.g., cancer insurance)
    • Hospital indemnity
  • Other supplemental health benefits

Through an EBHRA, employers offering a group health insurance plan can reimburse their employees up to the annual limit of $1,800 in 2021 for premiums paid toward the excepted benefits listed above, as well as other eligible out-of-pocket medical expenses set by the employer.

An EBHRA can be offered by organizations of any size, so long as they are also offering a group health plan. However, employees don’t have to be enrolled in your group plan in order to participate in the EBHRA—they must simply be offered the coverage.

What is a group coverage HRA (GCHRA)?

GCHRAs allow employers of all sizes to reimburse employees for their healthcare expenses, not including the premium paid towards the group health insurance.

Unlike an EBHRA, a GCHRA can only be offered to your employees that are enrolled in your group health insurance plan. This is because a GCHRA is designed to supplement your group plan to help employees with their deductible costs and other qualifying medical expenses that aren’t fully paid for by the group plan.

Also unlike an EBHRA, a GCHRA has no annual contribution limit, so employers can offer their employees as much or as little of an allowance as they choose. Any unused funds at the end of the year go back to the employer.

Download our comprehensive guide for everything you need to know about GCHRAs

EBHRA vs. GCHRA comparison chart

Type of HRA

EBHRA

GCHRA

Allowance

Up to $1,800 annually for 2021

No maximum allowance

Employee eligibility

All employees that were offered the group insurance plan

Only available to employees enrolled in the group health insurance plan

Covered expenses

Excepted benefits and out-of-pocket expenses, as set by the employer

All qualifying out-of-pocket expenses, not including the group insurance premium

Employer eligibility

Can be offered by organizations of all sizes that also offer a group health plan

Can be offered by organizations of all sizes that also offer a group health plan

Conclusion

The excepted benefit HRA and the group coverage HRA are both great options for employers that want to offer an HRA in addition to a group insurance plan. Identifying the HRA that is best for you depends on the size of allowance you want to offer, the employees you want to cover, and the types of expenses you want to cover. Once you’ve determined these priorities and reviewed the differences outlined in this article, you’ll be ready to make a choice that will work best for you and your employees.

This article was originally published on February 5, 2020. It was last updated July 16, 2021.

Topics: Group Health Insurance, Group Coverage HRA

Additional Resources

Group health insurance or HRAs? Compare them with our chart.
Group health insurance or HSAs? Compare them with our chart.

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