Do HRA funds roll over from month to month?

Yes. Most HRA plans allow unused monthly allowances to accumulate throughout the plan year. However, whether those funds roll over annually depends on your employer's plan design and your HRA administrator.

Does HRA money expire at the end of the year?

Whether your unused HRA funds expire depends on your employer's plan design and your HRA administrator. Some employers allow unused funds to roll over into the next plan year, while others follow a use-it-or-lose-it approach, like flexible spending accounts (FSAs). Additionally, some HRA administrators’ platforms only allow funds to roll over monthly. If your plan or administrator doesn't allow annual rollovers, remaining funds generally expire at the end of the plan year or after any claim run-out period. You can’t receive unused funds as cash because HRAs are employer-funded benefits, not personal savings accounts.

Can I use HRA funds to pay for health insurance premiums?

Yes, depending on your HRA type. ICHRAs (now CHOICE Arrangements) and QSEHRAs can reimburse eligible individual health insurance premiums. However, GCHRAs can’t reimburse health insurance premiums. Check your plan documents to confirm which expenses your specific HRA covers.

Can I stock up on eligible expenses before my HRA funds expire?

Yes. You can use your remaining HRA allowance to purchase eligible products you'll need in the future, such as first aid supplies and other qualifying medical items. However, the IRS requires you to incur medical expenses during the plan year to qualify for reimbursement. This means you can purchase an eligible item before year-end and submit it for reimbursement. Additionally, you can't prepay for medical services you won't receive until the following plan year. For example, paying for a doctor's appointment scheduled for January doesn't make it a current-year expense.

Can I use my HRA for over-the-counter medications?

Yes. Many over-the-counter medications, including pain relievers, allergy medicine, cold and flu treatments, and first aid supplies, qualify for HRA reimbursement. Some expenses may require extra claim documentation, such as a prescription or doctor's note.

Can I get unused HRA money paid to me in cash?

No. HRA funds are employer contributions reserved for eligible healthcare expenses. You can't withdraw unused funds as cash or transfer them into a personal bank account or another savings account.

Is a CHOICE Arrangement better than a group health plan?

It depends on your organization's budget, workforce, and employees' needs. CHOICE Arrangements, formerly known as ICHRAs, can provide more flexibility and cost control, while group plans may be a better fit for employers who prefer traditional, employer-sponsored coverage.

Can an employer offer both a CHOICE Arrangement and a group health plan?

Yes. Employers can use employee classes to offer a group health plan to one class of employees and a CHOICE Arrangement to another, as long as they meet applicable eligibility and class requirements.

Can employees use premium tax credits with a CHOICE Arrangement?

Generally, no. Employees who participate in a CHOICE Arrangement can't receive premium tax credits for the same months. Depending on whether the CHOICE Arrangement is considered affordable, employees may have different options if they decline the arrangement.

Can health insurance premiums increase because of claims?

Yes, for certain types of group health plans. An insurance company can consider a group’s claims experience when setting rates for some fully-insured large-group plans, while claims directly affect costs for self-funded plans. However, ACA-compliant individual and SHOP plans can’t use employer claims history to determine premiums.

Can an employer’s health insurance premium go up at renewal?

Yes. Group health insurance premiums can change at renewal based on factors such as healthcare costs, utilization, the group’s risk profile, and, for plans subject to experience rating, the group’s claims history. Employers commonly review these changes during their annual renewal period.

Does an employee with high medical claims increase everyone’s health insurance premiums?

Potentially. For a fully-insured group plan subject to experience rating, high-cost claims can result in premium increases for the whole group. In a self-funded plan, high claims can directly increase the employer’s claims expenses and may affect future stop-loss costs. Insurers can’t charge an individual employee a higher premium because of their personal medical history.

How can employers reduce health insurance costs after a high-claims year?

Employers can compare alternative plan designs, evaluate level-funded or self-funded options where appropriate, review stop-loss coverage, or consider an HRA such as a QSEHRA or CHOICE Arrangement (formerly ICHRA). An HRA can give employers more predictable costs because the employer sets a defined contribution amount, known as an allowance, rather than assuming the claims risk of a traditional group plan.

Is a CHOICE Arrangement a good alternative to group health insurance?

A CHOICE Arrangement, formerly known as ICHRA, can be a useful alternative for employers that want more predictable healthcare costs and less exposure to group claims. Instead of sponsoring traditional group coverage, the employer provides their employees with a fixed monthly allowance that they can use to purchase individual health coverage and qualified expenses. This allows employers to control their budget and gives employees the freedom to choose their own health plan.

What is an ICHRA provider?

An ICHRA provider helps employers set up and manage a CHOICE Arrangement, previously called an individual coverage health reimbursement arrangement. Depending on the provider, services may include plan design, compliance support, employee enrollment, reimbursement administration, and ongoing benefits support.

What’s the difference between Remodel Health and PeopleKeep?

Remodel Health is the largest ICHRA/CHOICE Arrangement partner by revenue and team size. It offers end-to-end ICHRA administration. Remodel Health is a great option for employers seeking a full-service ICHRA partner for hands-on benefits strategy, implementation, employee support, and ongoing administration. PeopleKeep is a product line of Remodel Health primarily for small businesses looking for straightforward, software-driven HRA administration.

How much does an ICHRA administrator cost?

ICHRA administration costs vary by provider and typically depend on factors such as the number of employees, services included, and level of support. When comparing providers, look beyond the upfront price and consider what’s included in the overall cost.

Why did CMS and the SBA rename ICHRA to the CHOICE Arrangement?

CMS and the SBA didn’t provide an official reason for the change during the announcement. However, many in the industry have long asked for a change due to how the ICHRA acronym is pronounced (it sounds like “ick”). The long, jargon-filled name didn’t clearly explain the value the benefit brings to employers and employees. CHOICE Arrangement does.

Does this change anything about my current ICHRA plan, budget, or strategy?

No. The renaming of ICHRA to the CHOICE Arrangement doesn’t impact current ICHRA benefits or the underlying regulatory framework. We’ll be communicating with customers and their employees about the name change for the sake of clarity, but there are no changes needed at this time.

As an employer offering an ICHRA, do I need to do anything right now?

No, there’s nothing that you need to do right now. PeopleKeep by Remodel Health will be sending out communications to customers about the name change, but CMS and the SBA haven’t made any changes to how the benefit functions.

Does this affect QSEHRA?

No, the rebrand of ICHRA to the CHOICE Arrangement doesn’t impact the qualified small employer HRA (QSEHRA). Congress created the QSEHRA, whereas federal regulations created ICHRA. The CMS and SBA announcement only impacts ICHRA.

Should a small business choose the CHOICE Arrangement or QSEHRA?

Both the CHOICE Arrangement and the QSEHRA are excellent fits for small businesses. The best option for your organization comes down to your business needs and employee demographics. A QSEHRA is a simple way to offer health benefits for those with fewer than 50 FTEs, but it lacks the customization options the CHOICE Arrangements provides, such as employee classes. You can learn more about the difference in our ICHRA vs. QSEHRA page.

Can an HRA help employees pay for health insurance premiums?

Yes. Depending on the type of HRA, employers can let employees use their tax-free allowance to pay for individual health insurance premiums. ICHRAs and QSEHRAs can reimburse eligible individual health insurance premiums, while GCHRAs generally don't cover insurance premiums.

Do employees pay taxes on HRA contributions?

Generally, no. Employees don't pay taxes on reimbursements for eligible medical expenses when they meet the HRA's requirements.

What's the difference between an ICHRA, QSEHRA, and GCHRA?

The right HRA depends on your organization's size, existing benefits, and goals. An ICHRA works for employers of any size and lets them vary allowances based on employee class. A QSEHRA works for employers with fewer than 50 full-time equivalent employees and comes with annual contribution limits. A GCHRA supplements an existing group health plan by helping employees pay for eligible out-of-pocket medical expenses.