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How to Maximize Your Individual Coverage HRA Benefit

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Many employers, especially those with fewer than 50 employees, are moving from traditional health plans to Individual Coverage HRAs, also known as ICHRAs. An ICHRA allows your employer to reimburse you for all or a portion of the cost of an Affordable Care Act (ACA or Obamacare) plan that you purchase. You can use your employer’s contribution to help pay for your medical coverage but if that allowance doesn’t cover your full premium you will have to pay the remaining portion out of your own pocket.

Shopping for an individual medical plan can seem overwhelming, especially if you have never done it before, however, there are several things you can do to make it easier and to make sure you get the best value.

How Does An ICHRA Help Me

IHCRAs may be a better fit for you than a group plan because you control what plan you enroll in, not your employer. If you have a particular provider, like a doctor’s group or hospital, you can elect a plan with them in-network. If you are generally healthy you can lower your cost by choosing a Bronze plan, which costs less than a Silver plan but generally has higher out-of-pocket limits. If you are looking to maximize your retirement savings you may want to consider a Health Savings Account, or HSA, which allows you to put tax-free money away in a special savings account to use at any time for qualified health care expenses.

Five Steps To Maximizing Your ICHRA Plan

Step 1: Do preliminary work to see if the amount of money your employer is providing makes your plan affordable. It is best to use an Affordability Calculator so you can make sure your plan meets the guidelines, if it does not you may be eligible for a government subsidy to lower the cost of your health insurance coverage.

  • If your plan is considered affordable by IRS guidelines you are not eligible for a subsidy, you will use the money your employer provides you to help pay for insurance.
  • If your plan is not affordable by IRS guidelines you can use a Subsidy Calculator to see if you qualify for a subsidy and how much that will be.

Step 2:  It is generally best to work with an insurance agent to help you select your plan. Your rate is the same whether you work with an agent or choose a plan yourself, so getting expert guidance won’t cost you a dime. Your employer will probably have an agent that understands your ICHRA so working with them may be your best option but you are free to choose any agent (or no agent at all).

Step 3: Have a list of your doctors and the prescription drugs you take (including the dosage). Shopping sites like MyHealthInsurance.com will point you to the plans that cover your doctors and prescriptions, or provide the list to your agent and ask them to help you.

Step 4:  Balance any additional premium (after your employer contribution or subsidy) against how much more you will have to pay for medical care. Most healthy people elect higher out-of-pocket plans to save on their premium but if you have a known medical condition, prescription drug or if you are planning on a big health expense like having a child or a surgery you may want to opt for a higher premium plan that a lower out of pocket.

Step 5: Enroll in your medical plan. If you are taking your employer’s contribution you will probably need to alert them as to which plan you are taking so you are both in compliance with IRS rules. If you are using a subsidy provided by the government you may need to sign a waiver with your employer saying you don’t want their contribution to make sure you stay eligible for your subsidy.

Many people will find switching from a traditional group plan to an ICHRA is in their best interest because they are empowered to select the health plan that is right for them and their families. The best way to make sure an ICHRA works for you is to consult with an insurance agent, but if you elect to shop on your own use all the tools and calculators available to you so you make the right choices.

Summary + Next Steps

You have options when securing health insurance coverage. If you work for an employer with under 50 employees, you may want to consider an ICHRA plan.

For assistance reviewing your options or applying for an ACA plan, call (888) 855-6837 to speak with a health insurance agent.

Find out if you qualify for ACA subsidies and compare plans.

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