A recently issued rule (published jointly by the IRS, DOL, and HHS) that loosens restrictions on health reimbursement arrangements (HRA) creates two new types of HRAs effective January 1, 2020:
Individual Coverage HRA (ICHRA)
Employers will be able to offer reimbursement through an ICHRA for individual health insurance coverage for employees and their dependents, including individual health insurance policies and health insurance purchased on the Exchanges. Previously, employers were prevented from offering stand-alone HRAs providing tax-favored reimbursement for coverage on the individual market.
Excepted Benefit HRA (EBHRA)
Employers that offer “regular” group health insurance coverage can also offer a special HRA to reimburse workers for health insurance expenses like deductibles, copays, dental, and vision costs. The maximum annual benefit is $1,800.
The DOL has indicated that these new HRAs will increase coverage choices, increase portability of coverage, and generally improve worker economic well-being. They expect this expansion of HRAs to benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured. Industry groups hailed the final rule, saying it would boost access to healthcare.
Vita will be providing additional details on these new HRA options to employers in the coming months.