Feds Clear Path to New HRA Options

The ruling “New Health Coverage Options for Employers and Employees” (www.irs.gov/newsroom ) was announced on June 13, 2019 by the departments of Labor, Treasury and Health and Human Services. We first told you about the proposed rule in October via an alert published on our website. Although the ruling presents new options, existing HRAs are not impacted. Highlights of the legislation are as follows:

Individual Coverage HRA (ICHRA)

• Employers of any size may establish an HRA that reimburses an employee’s premium for major medical insurance purchased in the individual market (including the Exchange) provided that certain requirements are met.

• If the premium cost exceeds the available HRA benefit, participants will be permitted to pay the difference with pre-tax salary reductions via a Section 125 plan provided that the plan was NOT purchased on the Exchange.

• Employers may continue to offer an existing group health plan to current employees while offering only the ICHRA to new hires (a choice between the two is not permitted).

• ICHRAs do not disqualify participants from contributing to an HSA unless the ICHRA also reimburses out of pocket medical expenses.

Excepted Benefit HRA

Employers who offer group health insurance will be permitted to also offer an HRA to reimburse premiums for certain “excepted benefits” (e.g., vision and dental insurance premiums, COBRA premiums and in some circumstances, premiums for limited duration coverage) up to an annual maximum benefit of $1,800.

As with all HRAs, a limited or unlimited carryover provision may be included. We found the Frequently Asked Questions published along with the ruling helpful.

The new rule dovetails perfectly with GDI’s existing HRA services. We are excited to enter this next phase of consumer-directed health care with our clients and broker partners. Stay tuned!