Health Reimbursement Arrangements (HRAs) and Your ACA Tax Credits After Retirement
What is a Health Reimbursement Arrangement (HRA)?
An HRA is a tax-advantaged account that can be used to reimburse employees for qualified medical expenses. HRAs are typically offered by employers to their employees, but can also be offered to retirees.
How Do HRAs Affect ACA Tax Credits?
If you are eligible for an employer-provided HRA, you are not eligible for ACA tax credits. This is because the HRA is considered to be “affordable” health insurance under the ACA.
What are my Options if I have an HRA?
If you have an HRA, you have two options:
1. Use the HRA to pay for your health insurance premiums. This will make you ineligible for ACA tax credits, but you may still be able to get some financial assistance from your employer.
2. Decline the HRA and enroll in a Marketplace plan. This will make you eligible for ACA tax credits, but you will have to pay for your health insurance premiums out of pocket.
Decision Making
The best option for you will depend on your individual circumstances. If you have a low income, you may want to decline the HRA and enroll in a Marketplace plan to get the maximum amount of financial assistance. If you have a higher income, you may want to use the HRA to pay for your health insurance premiums and get the tax break.
Get Professional Help
If you are not sure how an HRA will affect your ACA tax credits, it is important to speak with a licensed agent to get personalized guidance. A licensed agent can help you understand your options and make the best decision for you.
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