Final Rule Allows Employees to Purchase Individual Health Coverage Using HRAs; Expands Types of HRAs Available
Employers will now have additional flexibility to use reimbursement arrangements to help employees pay for health care costs.
On June 13th, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) announced a final rule expanding the use of Health Reimbursement Arrangements (HRAs) to reimburse employees for the cost of individual health insurance policies in qualifying circumstances. The rule creates a new type of HRA for this purpose, called an Individual Coverage HRA (ICHRA).
Additionally, employers sponsoring traditional group health plans may now offer an Excepted Benefit Health Reimbursement Arrangement (EBHRA) even to employees declining to enroll in the traditional group health plan. Beginning January 1, 2020, this vehicle permits employers to reimburse up to $1,800 per employee, per plan year for qualifying excepted benefits such as dental, vision, short-term, limited duration insurance, and COBRA premiums.
What You Need to Know
- Employers are required to have a plan document outlining eligibility, terms and conditions.
- Employers should review the legal requirements carefully and ensure plan language is correct and up to date prior to designing an HRA.
- Employers should assess how offering these new HRAs fits into their overall benefits strategy, and whether these options are advantageous.
We’re Here to Help
As always, American Fidelity is committed to providing our customers with up-to-date information on employee health and welfare benefits compliance. For more information about this and other regulatory developments, visit our website at HCReducation.com.