Individual Coverage Health Reimbursement Arrangement (HRA)

Employers have the option to offer employees an “Individual Coverage HRA” as an alternative to traditional group health plan coverage. 

Please visit www.irs.gov for more information or talk to your employer or tax advisor about whether you can buy a plan through NY State of Health. 

Individual Coverage HRA Frequently Asked Questions (FAQs) 

What is an Individual Coverage HRA? 

Individual Coverage HRAs are a special type of HRA that allows for reimbursement of employees’ individual market health insurance premiums.  

How will I know if my employer offers me an Individual Coverage HRA? 

Employers that choose to offer Individual Coverage HRAs must provide a notice to employees who receive them, including who employees can contact for specific questions about their HRA.  

Can I use my Individual Coverage HRA to purchase individual health insurance coverage through NY State of Health? 

Depending on the terms of your Individual Coverage HRA and other employer-provided health benefits, you may be able to purchase individual health insurance coverage through the NY State of Health, or directly through a health plan.  There may be tax issues related to using your HRA to buy coverage.  Talk to your employer about whether you can buy a plan through NY State of Health. 

If I enroll in an Individual Coverage HRA do I need to be enrolled in other health coverage too? 

Yes.  You (and your dependents, if applicable) must be enrolled in individual health insurance coverage for each month you are covered by the Individual Coverage HRA. 

If I accept the Individual Coverage HRA, can I claim the premium tax credit for my NY State of Health Marketplace coverage? 

No.  You may not claim the premium tax credit for your NY State of Health coverage for any month you are covered by the Individual Coverage HRA.  Also, you may not claim the premium tax credit for dependents NY State of Health coverage for any month they are covered by the Individual Coverage HRA.  

If I opt out of the individual coverage HRA, can I claim the premium tax credit for my NY State of Health Marketplace coverage? 

It depends if your Individual Coverage HRA is considered affordable or unaffordable.  

• If the HRA is considered unaffordable you may claim the premium tax credit for yourself and any dependents covered through NY State of Health if you are otherwise eligible.  You would have to opt out of the Individual Coverage HRA to receive the tax credit. 

• If the HRA is considered affordable, you may not claim the premium tax credit for yourself or any dependents who are eligible for the HRA. 

In general, under IRS rules, the Individual Coverage HRA is considered affordable if the amount you would pay for the lowest cost individual tier silver plan in your county, after applying a monthly amount from your HRA, is less than your required contribution amount.