This week, the Departments (of the Treasury, HHS, and Labor) released proposed regulations that would greatly expand an employer’s ability to offer a Health Reimbursement Account (HRA). An HRA is a self-insured group health plan funded solely by employer contributions that reimburses employees for medical care expenses up to an annual maximum amount. These regulations would permit two types of HRAs.
- Integrated HRA – Currently, HRAs cannot reimburse for individual health policies, except for QSEHRAs which can be offered by small employers only. The proposed regulations would allow employers of any size to integrate an HRA with individual health coverage subject to certain conditions. The proposed regulations include rules about permissible classifications of employees, verification of individual coverage, and notice and opt-out requirements, to name a few. It also addresses ACA’s Employer Mandate and meeting the affordability and minimum value standards.
- Excepted Benefit HRA – The regulations would allow an employer to offer an HRA (not integrated with an individual plan) that qualifies as an Excepted Benefit, avoiding applicability of ACA’s PHSA mandates (like annual maximum prohibition and preventive care requirement). This HRA could reimburse for excepted benefit premiums, including certain dental, vision, short-term limited duration medical, and COBRA coverage, subject to an annual maximum of up to $1,800 (indexed annually). However, an employer cannot offer this HRA to an employee who is eligible for an integrated HRA.
The proposed effective date is for plan years beginning on/after January 1, 2020. In the meantime, the Departments are accepting public comments through December 28th and considering additional issues. Final regulations should be released next year.
A copy of the proposed regulations is available on the Federal Register site.
Our bulletin (read here) contains more information about the proposed regulations.
If you have questions or need help, please contact one of our benefits consultants.