Employer Funding (HRA) Versus Premium Tax Credit
Are you retiring, but not yet eligible for Medicare? Good news, employer funding, also known as a Health Reimbursement Account (HRA), may be provided to you by your former employer or benefits provider. Your HRA may have a different name, such as RRA, RMA, ARA, or RMC. The Premium Tax Credit (PTC) is offered by the government to those who qualify and is only available through the Health Insurance Marketplaces.
When you enroll, you have to decide whether to opt in to your HRA or to use a Premium Tax Credit (PTC).
Scenarios:
Your spouse is on Medicare and has an HRA, and you aren't Medicare eligible. Because you're able to submit claims on your spouse’s HRA, you're unable to take the PTC. The IRS considers your spouse’s HRA to be employer coverage, and that prevents you from taking a PTC.
If your household takes both the HRA and a PTC, you're required to pay back the PTC you received on your tax return.
If you elect to use your HRA, you can still enroll in a qualified health plan (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 what expenses may be reimbursed. Most former employers allow reimbursement of your insurance premiums. Some former employers also allow for some or all of the Eligible Medical Expenses determined by the IRS. The HRA reimburses you up to a maximum dollar amount that your former employer makes available 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 let us know 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:
Your income doesn't affect the amount of funding you get from your former employer.
You don't need to apply for the PTC when enrolling in a Marketplace plan.
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 was estimated, you may have to pay back some of the tax credit. If you earned less than was estimated, you may receive additional tax credits or a refund on your tax return.
Advantages of a PTC:
You receive a reduced plan premium instantly.
You don't have to wait for reimbursements.
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* to discuss the funding amount your employer may have provided. We can assist you with determining whether you qualify for a PTC and in completing 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.
*Our licensed benefit advisors specialize in health insurance for retirees. They go through annual training and certification to ensure they can help you make an informed and confident decision.
*Our licensed benefit advisors specialize in health insurance for retirees. They go through annual training and certification to ensure they can help you make an informed and confident decision.