The Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) issued proposed guidance that, if finalized, creates a mechanism for employers to offer Health Reimbursement Arrangements (HRAs) in connection with individual health insurance coverage.
The proposed regulations add two new HRA options for employers to consider:
• HRA integrated with individual health insurance coverage. Beginning with the first plan year on or after January 1, 2020, permit integration of an HRA with individual health insurance coverage provided certain conditions are met.
• Excepted Benefit HRA. Beginning with the first plan year on or after January 1, 2020, employers that offer traditional group health plan coverage may consider offering an Excepted Benefit HRA with a maximum annual benefit amount of $1,800.
The above options are in addition to the already existing options of (i) HRA integrated with group health plan coverage, (b) retiree-only HRA, (c) limited purpose dental and vision HRA, and (d) qualified small employer HRA (QSEHRA). Additionally, the proposed rules provide helpful clarifications including:
• Individual health insurance policies purchased through an HRA (as allowed by this rule) or through a QSEHRAs do not become part of an ERISA plan, provided certain conditions are met.
• While premiums for individual health insurance coverage purchased through the Marketplace, referred to as a qualified health plan, may not be paid for by the employer pursuant to pre-tax salary reductions under a Section 125 Cafeteria plan, the rule permits employees to purchase non-qualified health plans (e.g., individual health insurance coverage not sold in the Marketplace) on a pre-tax basis, if the employer’s cafeteria plan includes that option.
• The availability of premium tax credits (PTC) when the individual has access to an HRA that can be integrated with individual health insurance coverage.
• Special enrollment opportunity provided to purchase individual health insurance coverage (both inside and outside of the Marketplace) for individuals who gain access to an employer based HRA that is integrated with individual health insurance coverage.
For the full release and information on changes to HRA Rules, please click the following link: Guidance Proposes to Broaden HRA Rules – 110718R
As always, if you have any questions or concerns about your Health Insurance options please give us a call here at Total Benefit Solutions, Inc at 215-355-2121!