Changes allow employers to offset premiums for individual plans.
On June 13, the Departments of Labor, Health and Human Services, and Treasury issued a final rule that finalized HRA regulations proposed in 2018. The final rule adhered to most of the provisions of the proposed regulations and introduced “individual coverage HRAs” effective January 1, 2020. The new regulations allow employers to offset the cost of premiums their employees pay for coverage through health insurance exchanges or products like Businessolver’s MyChoiceSM Marketplace.
Key points for the individual coverage HRA include:
- Eligible employees must receive a notice to help them understand this type of HRA.
- Employers must confirm that employees who enroll in the new HRA have individual health insurance coverage. This can be accomplished through an attestation from the employee.
- Employees are ineligible if they are offered a group health plan.
- There are some restrictions that employers must consider (e.g., age variations in HRA contributions) that can impact plan design. Due to the complexity of the new HRA and considerations for adequate employee communication, employers may be challenged to implement the new arrangements by the January 1, 2020 effective date.
Some analysts predict that the individual coverage HRAs will be very popular and encourage employers to achieve defined-contribution healthcare coverage. Others have indicated that in a tight labor market, employers will find it difficult to replace more traditional benefits to attract and retain talent. The federal government believes the new HRAs will be especially beneficial for smaller employers.
New Excepted Benefit HRA
The new regulations also created an excepted benefit HRA. Capped at a maximum of $1,800 per year (indexed after 2020), the excepted benefit HRA can be used to reimburse employees for certain medical expenses, dental/vision premiums, COBRA and short-term limited duration insurance coverage. To participate in the HRA, the benefit must be offered in conjunction with a traditional group health plan, although enrollment in the traditional group health plan isn’t required.
Want to learn more about how you can take advantage of these recent final rulings? Listen to our webinar, Beyond the Paycheck: Get full-time loyalty from part-time and gig workers. The discussion includes Individual Coverage Health Reimbursement Arrangements (ICHRAs), and how they can enable employers to provide their part-time employees with an employer-branded health plan experience that has many of the conveniences of group health plans, but without the risks, high costs or lack of financial controls.
Employers can contribute as much, or as little, as they wish to this benefit, while delivering an employer-branded experience to their part-time workers that can save the employees money and increase employee loyalty.