Employer Funding (HRA) Versus Premium Tax Credit
If you're retiring but aren't yet eligible for Medicare, you may still have options to cover your healthcare costs. Employer funding, commonly known as a Health Reimbursement Account (HRA), could be provided to you by your former employer or benefits provider. This funding might be referred to by various names, such as Retiree Reimbursement Account (RRA), Retiree Medical Account (RMA), Account-Based Reimbursement Arrangement (ARA), or Retiree Medical Credit (RMC).
Additionally, the government offers the Premium Tax Credit (PTC) to those who qualify. This credit is available exclusively through the Health Insurance Marketplaces and can help reduce your health insurance premiums.
When you enroll, you must decide whether to opt into your HRA or use a PTC. You can’t use employer funding and a PTC together.
Scenarios:
Spouse on Medicare and You Aren't Eligible: If your spouse is on Medicare and has an HRA, but you aren't Medicare eligible. you can submit claims on your spouse’s HRA, However, this prevents you from taking the PTC since the IRS considers your spouse’s HRA to be employer coverage.
HRA and PTC Simultaneously: If your household takes both the HRA and a PTC, you're required to repay the PTC you received on your tax return.
Using HRA and Enrolling in a Qualified Health Plan (QHP): If you elect to use your HRA, you can still enroll in a QHP on the Health Insurance Marketplace. However, you can’t apply a PTC to your chosen plan.
Employer Funding (HRA) Benefits
If your former employer or benefits provider offers you an HRA, they determine which expenses may be reimbursed. Most former employers allow reimbursement of your insurance premiums. Some may also allow for some or all of the Eligible Medical Expenses as determined by the IRS. The HRA reimburses you up to the maximum dollar amount made available by your former employer each year. You must pay for an expense before you can be reimbursed for it.
If you receive funding from your former employer or benefits provider, you need to inform us if you want to use that funding. You can do this by signing in to your account and choosing your employer funding or by calling Via Benefits at 1-866-322-2824 (TTY: 711) for assistance.
Advantages of taking employer funding:
Stable Funding: Your income doesn't affect the amount of funding you get from your former employer.
No PTC Application Needed: You don't need to apply for the PTC when enrolling in a Marketplace plan.
Privacy Protection: You don’t have to provide personal financial details, such as income, when enrolling in a Marketplace plan.
Premium Tax Credit
If you qualify, you can receive a PTC on a Health Insurance Marketplace plan premium, which automatically lowers the premium amount. The amount of the PTC you receive depends on your estimated household income and household size.
If you choose a PTC, you must reconcile the PTC when you file taxes. If you earned more than estimated, you may have to repay some of the tax credit. If you earned less than estimated, you may receive additional tax credits or a refund on your tax return.
Advantages of a PTC:
Instant Premium Reduction: You receive a reduced plan premium instantly.
No Waitng for Reimbursements: You don't have to wait for reimbursements.
Cost-Sharing Reduction: In addition to a PTC, you may qualify for a Cost-Sharing Reduction, based on household income and size, which could lower your out-of-pocket costs when using the plan.
Choosing Employer Funding Versus PTC
Call us at 1-866-322-2824 (TTY: 711) to speak with a Via Benefits licensed benefit advisor*. We can discuss the funding amount your employer may have provided, assist in determining whether you qualify for a PTC, and help you complete your PTC application if needed. We can also assist you with determining whether employer funding or a PTC is a better option for you.
Using Employer Funding with PTC
You can’t use employer funding and a PTC together. However, you may reevaluate your options during a valid enrollment period. You can't choose a PTC if anyone in your household is using employer funding.