Small Businesses

Generally, employers of any size can offer an individual coverage HRA, as long as they have one employee who isn’t a self-employed owner of the spouse of a self-employed owner. HRAs are only for employees, not self-employed individuals.

IMPORTANT: Employers should consider “affordability” when making an ICHRA offer. An ICHRA offer may impact employees’ eligibility for premium tax credit that helps to lower monthly insurance payments through BeWell. The impact to employees depends on the affordability of your offer, which is based on your contribution, an employee’s household income, and the monthly premium of the self-only lowest cost Silver plan available to the employee through BeWell in their area. Employees who are covered by an ICHRA, or who are offered an affordable ICHRA, can’t qualify for the premium tax credit.

Enrolling in Small Business Health Options Program (SHOP) coverage is generally the only way to qualify for the Small Business Health Care Tax Credit. Currently, there aren’t any SHOP plans offered in New Mexico.

You have the flexibility to decide how much you contribute toward your employees’ individual coverage HRA for each 12-month plan year. There are no annual minimum or maximum contribution requirements. Use our Lowest Silver Cost Plan workbook to see costs from years 2022-2024.

An individual coverage HRA is considered affordable for an employee and their dependents if the monthly premium the employee would pay (after the employer’s reimbursement) for the self-only, lowest cost Silver plan available to them through BeWell in their area is less than 8.39% of 1/12 of the employee’s yearly household income.

• If your offer is considered affordable: The employee won’t be eligible for the premium tax credit for the employee’s BeWell coverage of the coverage of other household members who would be covered by the individual coverage HRA.
• If your offer isn’t considered affordable: If they’re otherwise eligible the employee must decline (“opt out” of) the individual coverage HRA to claim the premium tax credit, if otherwise eligible, for BeWell coverage of the employee and household members with an individual coverage HRA offer. The employee can’t combine the individual coverage HRA with a premium tax credit.

Note: Affordability calculations for employer-sponsored coverage, including an individual coverage HRA offer, aren’t affected by savings and lower costs on BeWell health insurance coverage that the American Rescue Plan Act of 2021 provides.

If applying for coverage through BeWell, employees will provide information about their individual coverage HRA offer when completing an application for BeWell coverage, including the HRA’s start date and their employer’s contribution amount. BeWell will determine if the offer meets requirements for “affordability,” which will help determine an employee’s eligibility for the premium tax credit.

Yes. You may use a salary reduction arrangement under a cafeteria plan to allow your employees to pay on a pre-tax basis the portion of the individual health insurance premiums not covered by your individual coverage HRA. However, your employees can’t use these pre-tax payments to pay for BeWell coverage. They can still use the individual coverage HRA to buy individual health insurance coverage, but they’ll need to purchase coverage outside of BeWell to pay the portion of their health plan premiums not covered by the individual coverage HRA.

You can offer an individual coverage HRA to any eligible employee, or you can offer it only to certain types of your employees. The types or classes of employees can be determined by certain job-based criteria, like:

• Full-time, part-time, or seasonal status
• Employees covered by a collective bargaining agreement
• Salaried or non-salaried (like hourly workers) employees
• Employees who haven’t satisfied a waiting period
• Non-resident aliens with no U.S.-based income
• Employee work locations
• Any combination of 2 or more employee types listed above

The individual coverage HRA rules specify the classes. You can’t make up your own classes. The reimbursement amount you offer can also vary within each employee class based on age (not to exceed a 3:1 ratio) or number of dependents, and you can set a waiting period for new employees. There’s also a special rule for new hires. Otherwise, you must offer the individual coverage HRA on the same terms to all employees in a class.

You can offer certain types of employees a traditional group health plan and other types of employees an individual coverage HRA. But you can’t offer the same type of employees a choice between a traditional group health plan and an individual coverage HRA, and you can’t combine an individual coverage HRA with a traditional group health plan or with SHOP coverage. For example, you can offer full-time employees a traditional group health plan and offer part-time employees an individual coverage HRA.

There are certain requirements if you offer an individual coverage HRA to one type of employee and traditional group health plan coverage to another type of employee. If you offer an individual coverage HRA only to certain employees, in some cases, there are size requirements for certain classes of employees that get an individual coverage HRA offer:

If you don’t offer a traditional group health plan to any of your employees, these class size minimums don’t apply.