Insurance companies often offer additional products that may not meet the IRS reimbursement guidelines. We cannot recommend whether to purchase these products since they may suit your lifestyle, but this guide will provide you with information to make informed choices.
Examples of products that are ineligible for reimbursement include indemnity plans, riders, and membership or discount policies that are unrelated to medical. These ineligible products may offer perks such as travel discounts, cyber security, fitness and wellness classes, CPR/first aid classes, or classroom grants/scholarships.
If you bought a bundle deal that includes ineligible policies, please provide a breakdown of costs so that we can identify the eligible portions. See the example below.
This is an illustration of a package deal that contains both eligible and ineligible products. The Premierchoice Specified Disease/Sickness, PremierChoice Accident, PremierVision, and SecureDental are eligible, while the PremierChoice Health and Wellness, MedGuard, Accident Protector, Life Protector, Income Protector, and AIBC Executive Diamond policies are not eligible. The ineligible policies are fixed-payment plans, discount plans, and memberships that may include discounts and payments for non-medical items or services. Therefore, they do not qualify for reimbursement.
Indemnity Plans
The IRS defines fixed indemnity health plans as policies that pay a specified amount of cash to covered individuals for certain health-related events, such as office visits or hospital stays. The amount paid is not tied to any medical expenses incurred or coordinated with other health coverage. Consequently, these policies aren’t eligible for reimbursement with your HRA.
Indemnity policies can be standalone plans, benefits embedded in medical policies, or riders. Some common keywords to look out for include:
- Life insurance
- Disability insurance
- Accidental Death and Dismemberment (AD&D)
- Accident
- Specified Disease and Sickness
- Limited Medical
- Gap
Travel insurance is a typical example of indemnity benefits embedded in another policy. These policies may function like major health insurance but provide lump-sum benefits in the case of lost luggage, canceled flights, death, or severe injury. Any policy that includes an indemnity benefit is ineligible.
Here are some policies that we’ve identified as indemnity plans:
- United Healthcare Health ProtectorGuard
- National General Plan Enhancer
- TrioMED Guaranteed Issue
- Health Saver Plus Gold
- PremierChoice Health and Wellness
- PremierAdvantage Accident
- PremierAdvantage Specified Sickness
The second policy mentioned above is not eligible for reimbursement. However, the dental portion is eligible, so we can verify this policy for $56.38.
The above is an instance of a limited medical plan, as indicated by the area highlighted in red. With this policy, the policyholder will receive a fixed amount of money per day, regardless of the actual expenses incurred. Policies or riders with this type of structure are not eligible for reimbursement.
Discount Plans
Discount plans are not eligible for reimbursement because they are not insurance. Although medical discount plans may appear to be insurance, they do not provide any of the protections of an insurance policy. Instead, they simply give members a discount on services and/or products.
The image below shows a card that appears to be an insurance plan card, but the text at the bottom explicitly states that it is not insurance.
Membership Plans
Membership plans can provide benefits such as discounts on services or access to special services, but they are not considered insurance policies and are not eligible for reimbursement through your HRA. Examples of membership plans that are not eligible for reimbursement include AIBC Executive Diamond, FACT, and in-house dental savings membership plans.