The Department of Labor, Health and Human Services, and Treasury released final regulations on June 13, 2019 that allows employers to offer a new “Individual Coverage HRA.” This new rule loosens restrictions on health reimbursement accounts.
Beginning January 1, 2020, employers can offer individual coverage HRAs (ICHRAs) to provide tax-exempt dollars to their employees for the purchase of Affordable Care Act (ACA)-compliant individual coverage. Employers can offer their employees either a group health plan or an ICHRA, but not both.
This allows employees to use the dollars in employer-funded HRAs to purchase individual coverage both on and off the public Marketplace. The rule increases workers’ choice of coverage, the portability of coverage, and will generally improve worker economic well-being, according to the Department of Labor.
Employees can use the funds to pay the premium for individual insurance coverage, which promotes employee and employer flexibility, while also maintaining the same tax-favored status for employer contributions towards a traditional group health plan. HRAs are designed to give employees greater control over their healthcare by providing an additional way for employers to finance health insurance.
The new rule also creates “Excepted Benefit HRAs,” which permit employers to finance additional medical care at up to $1,800 a year even if the employee declines enrollment in the traditional group health plan.
The Department of Labor estimates this expansion of HRAs will benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members.
A new individual market Special Enrollment Period (SEP) has been established for when an employee or their dependent gains access to an ICHRA.
Contact your Brio representative for additional questions or information.