This is a bit squirrelly, sorry.
1.
The general concept is that anything of value provided to an employee as compensation for their services is taxable income, unless it is one of the allowable tax-free fringe benefits, which are described in IRS publication 15-B. Tax-free group health insurance is allowed, as long as the employer follows all the rules, including non-discrimination test, highly compensated employee test, and so on. But just giving cash, so the employer can buy their own private insurance, is not an allowable fringe benefit. Therefore, it must be included as taxable income.
2.
A health reimbursement arrangement (HRA) is an allowable tax-free benefit, but it has certain rules. For example, it must be offered to all employees under the non-discrimination rules, and the employer can only reimburse proven qualified medical expenses, they just can't hand out cash. See publication 15-T and publication 969.
3.
Back when the ACA was new, I seem to recall an IRS ruling that HRAs could not be used to pay for private insurance premiums. Partly because it would constitute double-dipping (because the employee might get an ACA credit to cover premiums they were paying from a tax-free HRA) and partly because an HRA did not satisfy the shared responsibility portion of the ACA (that all employers provide group coverage).
However, I am now seeing something different. It looks like HRAs can be used to reimburse employees for private marketplace policies.
https://www.irs.gov/newsroom/health-reimbursement-arrangements-hras
https://www.irs.gov/pub/newsroom/health_reimbursement_arrangements_faqs.pdf
4.
Publication 15-B now includes a provision for Qualified small employer health reimbursement arrangements (QSEHRAs) that allow an employer to reimburse up to $6150 (single) or $12,300 (family) of qualified medical expenses. (I expect the limits are inflation-adjusted each year.) Qualified expenses can include premiums for private marketplace insurance. However, the HRA must follow all the normal rules for HRAs, including non-discrimination and only reimbursing proven expenses. Unspent funds in an HRA can never be paid to the employee directly, they can only be used to reimburse qualified expenses.
https://www.irs.gov/publications/p15b#en_US_2024_publink100072580
5.
So in conclusion, I believe the employer can offer an QSEHRA as an employee benefit and provide tax-free reimbursement up to the stated limits. However, they must follow all the legal requirements for fringe benefits and QSEHRAs in publication 15-B and other regulations. If the employer provides free money without restriction and without verifying the qualified medical expenses, or if they exceed the specified limits, or if they only provide the benefit to some employees, then the money is treated as a taxable raise/bonus.
Lastly, I would suggest that if you are an accounting professional, and the employer refuses to follow the regulations (as now explained), then you might want to drop them as a client and have them seek other representation. You don't want to put yourself at risk if you know they are not following the laws and regulations.
