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 Arrangement (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. Each year, you can usually switch between a PTC and an HRA. Some former employers have rules about this, so call us to make sure your employer allows the change.
Scenarios
Spouse on Medicare While You Are Not Eligible
If your spouse is enrolled in Medicare and has an HRA, but you are not Medicare‑eligible, you may submit claims through your spouse’s HRA. However, doing so makes your household ineligible for the PTC, because the IRS considers your spouse’s HRA to be an offer of employer coverage for the entire household.
Using an HRA and a Premium Tax Credit (PTC) at the Same Time
If your household receives both HRA funds and a PTC during the same period, the IRS requires you to repay the PTC when you file your tax return.
Using an HRA While Enrolling in a Qualified Health Plan (QHP)
You can still enroll in a Qualified Health Plan (QHP) through the Health Insurance Marketplace even if you choose to use your HRA. However, you cannot apply a PTC to that Marketplace plan while using the HRA.
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.
Your estimated household income and household size determine how much PTC you may receive.
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. If the PTC is selected and you experience a change in income during the year, call Via Benefits to speak with a Via Benefits licensed benefit advisor*, who can assist in recalculating and applying the new PTC amount immediately.
Advantages of a PTC:
Instant Premium Reduction: You receive a reduced plan premium instantly.
No Waiting for Reimbursements: You don't have to wait for reimbursements.
Cost-Sharing Reduction: In addition to a PTC, you may also be eligible for a Cost‑Sharing Reduction (CSR), based on your household income and size, which can lower your out‑of‑pocket costs when you use your plan.
Choosing Employer Funding Versus PTC
Call us at 1-866-322-2824 (TTY: 711) to speak with a benefit advisor. They 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. They can also help you determine 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.