Health Reimbursement Arrangements

The individual coverage health reimbursement arrangement (ICHRA) is a program that enables employers to set up a company-funded benefit to reimburse consumers for personal health care expenses, including individual market coverage. ICHRAs are available to employers of any size, there are no benefit caps, and employers may vary eligibility and benefit amount by employee class. 

• To qualify for an ICHRA, consumers must purchase individual health coverage or be enrolled in Medicare. 
• Consumers offered "affordable" ICHRAs, or who accept their ICHRA, are not eligible for advanced premium tax credits (APTC). 
• For employees who are offered an "unaffordable" ICHRA and are eligible for APTC, the tax credit is generally larger.

MNsure has not yet incorporated the ICHRA rules into its application architecture. As a result, individuals offered these HRAs should use the ICHRA affordability worksheet to get information about their APTC eligibility and coverage options.

The qualified small employer health reimbursement arrangement (QSEHRA) allows small employers to establish a company-funded benefit to reimburse consumers for personal health care expenses, including individual market coverage. QSEHRAs are available to employers with 50 or fewer employees and caps benefit amounts at $6,150 for employee-only coverage and $12,450 for consumers with dependents (2024 amounts).

• To qualify for a QSEHRA, consumers must enroll in minimum essential coverage. 
• Employees offered QSEHRAs considered “affordable” are not eligible for advanced premium tax credits (APTC). 
• Employees offered “unaffordable” QSEHRAs should reduce their premium tax credit amount (if eligible) by the amount of the QSEHRA to avoid having to pay back money when filing taxes.

MNsure has not yet incorporated the QSEHRA rules into its application architecture. As a result, individuals offered these HRAs should use the QSEHRA worksheet to get information about their APTC eligibility and coverage options.

If your HRA is not large enough to make health insurance “affordable” based on federal standards, you may qualify for a tax credit to help you buy health coverage through MNsure based on your income and other factors. (Use the appropriate HRA worksheet to see if your HRA is affordable.)

Your options are different depending on whether your HRA is an ICHRA or a QSEHRA. 

If you have an ICHRA

To find out if you are eligible for a tax credit through MNsure, complete the application with financial help. When completing the application:

• Answer "no" when asked if you're offered health insurance by an employer (unless you are separately offered health insurance by another employer).

If you qualify for a tax credit:

• The tax credit amount will generally be larger than the ICHRA amount.
• If you enroll with a tax credit, notify your employer that you are opting out of the HRA. You cannot receive both an ICHRA and a tax credit from MNsure. If you receive both, you may owe money back at tax time.

If you don't qualify for a tax credit:

• Your ICHRA can help pay for a plan on MNsure or similar coverage off MNsure. You can also use it if you're enrolled in Medicare. If you enroll in one of these types of coverage, inform your employer that you are accepting the ICHRA.
• If you enroll in any other coverage, including more limited coverage such as a short-term plan, or you decide not to purchase health insurance, you cannot use your ICHRA and must notify your employer that you are opting out.
• If your employer has offered you a "salary reduction agreement" to pay the share of health insurance premium not covered by the ICHRA, you may be better off using your ICHRA to buy an ACA-compliant plan outside of MNsure. Ask your employer about your options.

If you have a QSEHRA

To find out if you are eligible for a tax credit through MNsure, complete the application with financial help. When completing the application:

• Answer 'no' when asked if you're offered health insurance by an employer (unless you are separately offered health insurance by another employer).

If you qualify for a tax credit:

• You may use the tax credit along with your QSEHRA to help make coverage more affordable. But, to avoid having to pay back money when filing your federal taxes, reduce what you accept for a tax credit by your monthly QSEHRA amount.

If you do not qualify for a tax credit:

• You may still purchase health coverage through MNsure and use the QSEHRA to help pay for it.

Using your QSEHRA

• If you enroll in health coverage through MNsure or in other minimum essential coverage, inform your employer so you can use the QSEHRA.
• If you decide not to enroll in health coverage or you purchase more limited coverage, such as a short-term plan, you cannot use the QSEHRA.

If your HRA is large enough to make health insurance “affordable” based on federal standards, you will not qualify for a tax credit through MNsure for yourself or any family member who is eligible to benefit from the HRA. But, you can use your HRA to help make purchasing coverage more affordable.

If your HRA is large enough to make health insurance “affordable”, and you wish to buy a plan through MNsure, do not accept a tax credit, or you may owe money back at tax time. You can fill out a MNsure application without financial help.

Note: If your employer has offered you a “salary reduction agreement” to pay the share of the health insurance premium not covered by the HRA, you may be better off using your HRA to buy an ACA-compliant plan outside of MNsure. Ask your employer about your options.