What Is HRA
HRA stands for Health Reimbursement Arrangement. It's an employer-funded account that reimburses employees for qualified medical expenses, including health insurance premiums, deductibles, and out-of-pocket costs. The employer sets aside pre-tax dollars, and employees submit claims for reimbursement up to the annual limit.
If you receive government benefits like SNAP, Medicaid, TANF, or WIC, understanding how an HRA affects your household income is critical. The reimbursements you receive from an HRA may count as employer-provided health coverage, which can impact your eligibility for certain assistance programs and subsidies.
HRA and Government Benefits
HRA contributions don't count as taxable income to you, but they do affect how government agencies calculate your household income for benefit eligibility. When applying for Medicaid, CHIP, or SNAP, you'll need to report the full value of your employer's HRA contribution, even though it doesn't appear on your paycheck.
For example, if your employer contributes $2,400 annually to your HRA, that amount counts toward your Modified Adjusted Gross Income (MAGI) for Medicaid eligibility purposes. This can push your household above certain income thresholds. Current Medicaid expansion states use income limits ranging from 138% to 208% of the Federal Poverty Level, depending on the state. An HRA contribution could move you from eligible to ineligible.
Similarly, if you're receiving TANF or WIC benefits, the HRA value may be counted in your income calculation, affecting your continued eligibility or benefit amount. Always disclose HRA contributions when filling out benefit applications.
Types of HRAs Relevant to Benefits
- Traditional HRA: Limited to employees of companies with at least 2 employees. Reimburses medical expenses for you and your dependents.
- QSEHRA (Qualified Small Employer Health Reimbursement Arrangement): Available to employers with fewer than 50 employees. Limits in 2024 are $5,800 for individual coverage and $11,700 for family coverage.
- ICHRA (Individual Coverage HRA): Allows employers to give employees a fixed amount to purchase individual health insurance on the ACA marketplace. Can be combined with marketplace subsidies.
Reporting HRA on Government Benefit Applications
When you apply for benefits or recertify, you'll typically provide employer information and documentation of your benefits package. The benefit agency may contact your employer directly to verify HRA contributions. Keep payroll stubs, benefits summaries, or HR letters showing your HRA amount.
If your employer increased your HRA contribution mid-year, report the change to your benefits caseworker immediately. Unreported changes can result in overpayment recovery or benefit termination.
Common Questions
- Does an HRA count as health insurance for Medicaid? An HRA is not health insurance itself. It's a reimbursement account that helps pay health costs. You still need actual coverage. However, the HRA contribution counts toward your income for Medicaid eligibility.
- Can I keep my SNAP or Medicaid if I get an HRA? It depends on your total household income. The HRA contribution increases your counted income. If the addition pushes you above your state's threshold, you may lose eligibility. Contact your caseworker for a recalculation.
- What happens to unused HRA funds? Most HRAs operate on a "use it or lose it" basis. You can't roll unused funds to the next year. Some employers allow a 2.5-month carryover period. Check your plan documents.