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Health reimbursement arrangements (HRAs) had long been an account option for employers when looking to control health care costs with tax benefits for both the employer and employee. However, the implementation of the Affordable Care Act (ACA) restricted the ability of most employers to adopt stand-alone HRAs (those not integrated with a group health plan) to cover active employees.  

In an effort to provide employers similar options and yet to remain compliant with health care reform rules, several new HRA options for employers have been created. Although adoption of these accounts was limited in the past, a study conducted by the HRA Council shows an increase in the number of employers offering these types of accounts, especially by applicable large employers (ALEs).   

Qualified small employer health reimbursement accounts (QSEHRAs) were created to allow non-ALEs (employers with fewer than 50 full-time employees) the option of a stand-alone HRA to help employees pay for coverage on the exchange without being in violation of health care reform rules. According to the HRA Council, the number of employees offered QSEHRAs grew by 97% from 2022 to 2023. During the same period, the number of employers offering the accounts increased by 8%. 

Individual coverage health reimbursement arrangements (ICHRAs) were approved for use beginning in 2020 and are an account option for employers of all sizes to help employees purchase coverage on the marketplace. The HRA Council found the most significant amount of growth with this type of account, stating an increase of 171% of workers being offered an ICHRA from 2022 to 2023 and a 64% increase of employers offering the account during the same period.  

Most notably, growth in ALEs offering an ICHRA to cover workers rose by 144%, suggesting large employers are looking for different options to support employees’ health and maintain costs, all while staying compliant with ACA rules and regulations.  

With awareness of these different types of accounts going up and a more mature market in place for administration, we are likely to see the use of QSEHRAs and ICHRAs continue to gain in popularity based on the results of this study. It also signifies that employers are willing to forgo what has been considered traditional offerings in creating a robust total-rewards program for employees. For more information on different HRA options, please see this Employers Council whitepaper, and contact us if you have any questions.